Posts Tagged ‘implementation’

Good Strategy Execution Pays Off

Tuesday, October 28th, 2014

I’ve believed for many years that how a company executes its strategy is more important than how it develops the strategy.Good strategy execution pays off well when you focus on these 7 key capabilities

I’m talking about the business strategy, the one that deals with all parts, departments or functions of a company.

My point could also apply to departmental or specific strategies; for example, sales or marketing strategies, since theoretically, these all flow from the business strategy and are integrated with it.

Previously, I’ve never had any evidence to support my belief since common sense, apparently, does not qualify as evidence.

No more.

Earlier this year, no less an authority than McKinsey & Company¹ gave me evidentiary support for my arguments.

They used their Implementation Capability Assessment to separate companies that are good at execution from those that aren’t. The survey then found that good implementers:

  • Maintain twice the value from their prioritized opportunities after 2 years.
  • Score their companies 30% higher on a series of financial performance indicators.

So there! Executing well pays off – literally.

How do you know if your company is a good implementer or a poor implementer?

McKinsey identified 7 key capabilities for executing well. Every company may have them to some extent. Yet businesses which are good at execution, are almost twice as good at them.

The 7 capabilities are:

  1. Ownership and commitment to execution at all levels of the company.
  2. Focus on a set of priorities.
  3. Clear accountability for specific actions.
  4. Effective management of execution using common tools.
  5. Planning for long-term commitment to execution.
  6. Continuous improvement during execution and rapid reaction to amend plans as required.
  7. Allocation of adequate resources and capabilities.

Finally, here’s the good news. Good implementers believe that execution is an individual discipline, which can be improved over time.

Does this confirm my belief that how a company executes its strategy is more important than how it develops the strategy?

Partially. More importantly, it does demonstrate that time spent improving a company’s ability to execute is time well invested.

As for the comparison to developing a strategy – I’ll just have to keep on looking.

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¹ “Why Implementation Matters”, McKinsey & Company Insights, August 2014

 

If you enjoyed this post you’ll also enjoy To Grow or Not To Grow – That Is The Question

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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Is Strategy Static or Variable?

Tuesday, January 28th, 2014

This week’s guest is Dick Albu, the founder and president of Albu Consulting, a strategy management consulting firm focused on engaging and energizing leadership teams of middle market private and family business to formulate robust business strategies and follow through on execution of key strategic initiatives.

 

 

In last month’s issue of AlbuonStrategy we discussed three reasons why strategy fails (3 Reasons Strategy Fails).  I would like to follow up on that conversation with a question—is strategy static or variable?  From our own client experience, we believe there is both confusion and difference of opinion about the answer to this question.

Would you agree that strategy is a dynamic, continuous and adaptive process and it needs to be managed over the long term?   Let’s be honest, as sound as you might feel your strategy is today, you should never stop questioning it.  Strategy is simply a bet on the perceived future.  No one has yet found a way to predict all that will happen in the future. Rather, we accept a forecast of the future based on our current knowledge and past experiences for our business and industry.

Think about the surprises you have encountered in your business:  Technology changes, departure of key employees, competitors gaining advantages, loss of a major customer, etc., etc.  These are just a few examples of disruptions that might cause a change of course at any point during the implementation of your strategy.   In our experience, we have seen how effective this “variable” mindset can be.  The bottom line is if you accept and operate under the concept that strategy is dynamic, continuous and adaptive, you will develop a heightened awareness of internal or external changes that might impact your strategy and be better prepared to deal with these challenges in a deliberate manner.

So are all elements of your strategy variable?  No.  While your strategy needs to be dynamic, continuous and adaptive, the strategy’s foundation should be static.  The strategy’s foundation defines the way you play and win in the market. Think of it as the way you create value for your business and the capabilities that support your advantages.  Not to say that the strategy’s foundation cannot change, because it can, but it usually takes a commitment of time and resources over the long term.  This is why a client of ours decided to limit the product categories they participate in, or another international business restricted itself to operate in only a few select countries.

What are the differentiating capabilities that support your strategy’s foundation?  How do these capabilities define what business you are in and how you do business with your customers?   If you are clear about what comprises your strengths and capabilities, you will make better strategic decisions more often and with more confidence.

Your strategy needs to be variable to deal realistically with the unpredictable and stay relevant in the fast changing business world we live in.  At the same time, the foundation of your strategy needs to remain constant so that short term strategic decisions build off your value proposition and differentiating capabilities.  Are you prepared to manage this paradox?

Dick can be reached at 203-321-2147 or RAlbu@albuconsulting.com. For more information on Albu Consulting visit www.albuconsulting.com.

Strategies That Get Results Are Developed By Thinkers And Doers

Tuesday, September 10th, 2013

The companies we work with are less complex organizations than those in the Fortune 500.Include strategy developers in the execution process for better results

But our clients can experience the same types of problems that the big guys face.

Here’s an example.

A gap between the thinkers and the doers

I read this week about the gap that exists in large corporations because the people who develop strategy aren’t the ones who have to execute it.

In most of the companies we work with, a gap like this shouldn’t exist. However, it does occur in some.

In this case the gap is not caused by the separation of responsibility for developing and executing strategy. It’s caused by a strategy development process that isn’t sufficiently inclusive.

In our clients, the business owner is responsible for both developing strategy and ensuring that it’s executed.

Arguably, everyone else is responsible only for execution. And their responsibility is very often limited to only the parts of the strategy that directly affect them.

The owner can:

a)  develop the strategy by him or herself, or

b)  involve her/his management team, or

c)  involve the management team and key players from all parts of the company.

In the companies we work with, the gap occurs when the owner opts only for alternative a) or b).

Disadvantages of having a gap

There are several disadvantages of excluding key players.

•  They are the people who have been intimately involved in executing all of the strategies that have been developed in their past, either with their current employer or in other companies. As a result, they know what is involved in making a strategy work, in getting results. They can provide valuable input at the development stage, even nipping impractical strategies in the bud before time and resources are wasted on them.

•  If the key players understand the reasoning and logic behind a strategy it will help them make the right decisions and best choices when circumstances change (as always they do) during implementation.

•  People are more committed to a course of action when they’ve had a part in developing it. So the key players are more likely to keep persisting in the face of difficulty.

An example of how to prevent the gap

One of our clients had a workforce of 300 unionized employees, spread across the Province. When it came time to renew the strategy, the General Manager invited 10% of the workforce to participate in the process.

The representatives, chosen by their teammates, were expected to represent their areas in the sessions and to provide feedback when they went back to work units.

The quality of the input the representatives brought with them and the value they added to the discussion and debate was quite remarkable.

 

If you enjoyed this post you’ll also enjoy 5 Reasons Why I Love Execution

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Top Ten in 2011…….

Wednesday, January 11th, 2012

The votes (page views) have been counted, the results can be announced!

Our top 10 blog posts in 2011 were:

  1. The 2 Truths Every Business Owner Has To Face which I wrote in early May was the winner by a significant margin. It talks about why many  owners ignore the second truth.
  2. 4 Things Every Business Owner Must Think About deals with the 6 reasons companies are sold and the 2 factors which are common to all of them.
  3. 10 Tips To Improve Your Public Speaking Body Language written by Mark Bowden of TruthPlane, is the first of our guest posts to make the list.
  4. Why You Need A Consultant With Hands-On Experience is one of several posts we wrote during the year about how to work with consultants.
  5. Bad Strategy – How To Spot It discusses the 4 hallmarks of bad strategy identified by Richard Rumelt in his book “Good Strategy/Bad Strategy: The Difference and Why It Matters”.
  6. Leading Business Plan Execution is the second guest post to make the list. Brian Brennan a Chartered Accountant and Chair for TEC Canada wrote this piece for us.
  7. Strategy, Culture and Leadership deals with how these 3 things affect the development and the execution of strategy.
  8. Social Media And Strategic Planning Make Interesting Bedfellows Marie Wiese of Marketing Co-Pilot demonstrates how social media can be used to strengthen the strategic planning process.
  9. 3 Surprising Strategies (Or Not) comments on 3 surprising things that emerged from the responses to our survey of 600 people in our database.
  10. 4 Laws Of Effective Implementation is one of the first pieces I ever wrote. If a weak plan strongly executed really is better than a strong plan weakly executed here are 4 “laws” that will make sure you execute effectively.

If you haven’t seen them before, here’s your opportunity!

Adaptive Strategy – A Way To Profits In The New Normal?

Monday, February 28th, 2011

The types of strategy required to be successful in an economy and society, in which there is more uncertainty and a faster pace of change than ever before, is generating a lot of discussion. (See Why Strategy Is Still Worth A Business Owner’s Time.)

Adaptive Strategy is an alternative developed by The Boston Consulting Group (BCG)1. Here’s how I think it applies to owner managed businesses.

Adaptive strategy is built on the 3 R’s required in a changing environment2.

1. Responsiveness (or agility). Means a company can respond quickly to changes in the market and begin to act while plans are still being finalized; is flexible in process and structure; and can deal with short cycle times. This should be an advantage for small to mid-size owner managed businesses which, by nature, can react to change more quickly than corporations.

2. Resilience (or robustness). Is a characteristic of owner managed companies which have strong balance sheets and good cash flow. They also must be good at thinking through all of the alternatives, having contingency plans and hedging bets. This gives them the ability to withstand any surprises.

3. Readiness (or anticipation). Is a result of how well a company stays in touch with its market – the quantity and quality of information it obtains from customers, suppliers and other industry players. This can’t be left to front line people. The owners and managers must get out there – they are the ones who use the information to think through different scenarios and improve forecasts.

An adaptive approach is applied using a 4 step closed loop process.

An adaptive strategy is a dynamic approach in which better-fitting strategies continuously evolve in response to change. It is applied via a 4 step process.

Step 1 – Variation (or innovation). A company continually looks to vary the status quo by targeted innovation; natural or proactive modification of internal practices; responding to signals from the economy, customers, competitors; and by leveraging the innovative capabilities of external resources e.g. suppliers.

Step 2 – Selection. The most promising variations/innovations are selected by e.g. pilot projects, limited and full-scale tests conducted directly in the marketplace.

Step 3 – Amplification (or scaling up). Those which show the greatest potential are quickly scaled up. They become a permanent part of the company’s routines and offerings by e.g. allocating resources to them.

Step 4 – Modulation. Modulation is simply fine tuning the application of the first 3 steps in response to what is happening in the marketplace and the company’s goals.

You may feel that you’ve seen each of the steps before. But BCG argues that the way in which they’re combined and applied is what makes adaptive strategy unlike classical strategy in a number of respects.

Practically, the most important difference is that the adaptive approach largely removes the distinction between planning and implementation, since successful strategies emerge from practice rather than from analysis and design.

It’s almost an extreme form of strategy by evolution.

Last words.

Can adaptive strategy be applied in owner managed businesses?

BCG has identified 4 situations in which adaptive strategy can be applied and well-known corporations which fit those situations. I’m not sure if the corporations pro-actively employed adaptive advantage or if BCG is fitting their actions to the model.

I’m waiting for more evidence.

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1 Kilian Berz, Managing Director of The Boston Consulting Group (BCG) Canada  – presentation to the Canadian Association of Management Consultants (CAMC) and Cost and Management Accountants (CMA) in Toronto on 16 Feb 11.

2 https://www.bcgperspectives.com/content/articles/adaptive_advantage/ 

6 Tips for Getting Better Results in 2011.

Monday, November 8th, 2010

In a recent blog posting I wrote that business planning has started/is starting/should have started for 2011. Then the other day I came across these 6 tips which I pulled together at the end of 2008.

At that time, you may remember, there was a deluge of bad news pouring from the newspapers, Internet and TV all day, every day. Some forecasters were saying the economy would rally in late 2009, others were saying it would take years before we saw an improvement.

I made the point then that, when so much of what is going on around you seems out of control, it’s easy to stop focussing on the things that are under your control. So, since uncertainty is still with us, I thought it was worth freshening up the Tips.

Tip #1 – Remember that we have always had to deal with uncertainty when developing plans and strategies. It may be true that there is more uncertainty now than in the past. However, don’t forget that no one has ever been able to accurately predict the future with any degree of consistency.

Three ways to deal with uncertainty are – keep digging until you find the best information available before firming up assumptions; put flexibility into plans and strategies; and think through contingency plans (e.g. plan for the best, worst, and most likely outcomes and be ready to deal with all of them). A fourth technique is to review, and adjust, goals more frequently.

Tip #2 – Make sure that you actually implement your plans and strategies. According to an Ernst & Young survey, 66% of corporate strategy is never executed.

In our experience implementation is handled just as poorly in owner managed companies – which generally have fewer employees (who are often located in the same premises) and which have fewer departments and layers. All of which should make communication and coordination easier.

There are a number of reasons why strategy implementation fails and the remaining tips will help you avoid them.

Tip #3 – Develop detailed Action Plans for execution. Involve key people when figuring out your goals for 2011 – and they’ll buy into what has to be done.

Compare the goals with the current situation and gaps will appear. Then ask them what – specifically – has to be done to close the gaps, by whom and by when. The answers to those questions will form the basis of your Action Plans for 2011.

Tip #4 – Avoid attempting too much, for 2 reasons. Firstly, there may be a long list of things to be done to close the gaps and no company has the resources to attack them all. So, prioritize the things which have the most impact on your goals and focus on them. You can go back and tackle the others later.

Secondly, you want to stay flexible enough to respond to whatever happens.

Tip #5 – Commit enough resources to completing the priorities. Business owners are inclined to tackle too much at once. They also try to do everything in the minimum amount of time – while spending as little money as possible.

Think about the priorities this way. You’ve invested time identifying reasonable goals and figuring out what has to be done to reach them. That effort will be wasted unless you commit the resources required to complete those action plans.

Even if you are allocating too many resources, you’ll complete the job ahead of schedule. Who doesn’t feel good when that happens?

Tip #6 – Follow up regularly and in a structured way. There are also 2 reasons for doing this. First, because no one can accurately predict the future you have to make time to compare what you thought would happen with what has happened and adjust for reality.

Second, what could be more important than making sure you complete the action plans that will lead to achieving your goals? Not dealing with the day-to-day problems, which always seem to be “urgent”. Prevent them getting in the way of the “important” priorities by making time to review progress toward your goals once a quarter.

The odds are that you’ve heard each one of these tips before. But the reality is that a gap exists between hearing – even knowing – the right thing to do and actually doing it. That’s why 66% of the companies surveyed wasted their time.

Winners eliminate the gap.

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