Attaining Sustainable Organizational Growth and Profitability
Strategy execution is a disciplined and systematic approach to managing - directing, controlling and facilitating - the day-to-day decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers that contribute to making the implemented strategy work as intended, and turn implemented strategy into commercial/social success.
Effective strategy execution involves closing the "execution" gap - the gap between actual/current strategy performance and intended desired performance. The actual strategy realized from execution is the combination of the executed part of the intended strategy - what managers have set out in advance and intend to do - as part of some important strategic plan, and the executed as-needed reactions to unanticipated developments and fresh competitive pressures. Execution involves doing things (such as making decisions and directing activities) to create "fits" between the way things are done and what it takes (how things should be done) within the context of the strategy implementation to make the strategy work as intended.
Why Organizations Fail at Strategy Execution
Strategy execution can fail - not accomplishing the desired outcomes - for myriad reasons including the inability of the organization to manage its strategy very well when faced with the following challenging situations:
The economy, competitors, the market and its challenges, and the availability of resources are not the reasons at fault, since other businesses are able to survive, grow nd thrive. The real (causal) reason can be attributed to mismanagement - inability of the business organization to manage its strategy very well. Strategy management is a function of strategic management. Strategic management is one of the most vital activities since it encompasses the business organization's entire scope of strategic decision-making.
Factors Influencing Effective Management of Strategy Execution
Successful strategy execution involves the successful transformation of the organization to better position it to deliver its mission and meet the desired outcomes. Management needs to also understand the interactions among key execution decisions and actions, and contextual forces that create significant and persistent execution gap as measured by the Operating Model. Successful strategy execution involves decisions about managing elements of the Operating Model which is concerned with how resources are organized and operated to get critical work done. Changes to certain elements of the organization's Operating Model such as governance, accountability, or culture, and in some cases overhauling the whole structure, when a company's strategy changes. These decisions about change take place within an organizational context of power, culture, leadership, and ability to manage change. This makes it more difficult for managers to control execution. Execution also involves more people at all levels in the organization than strategy formulation, this creates a challenge in communicating down the organization and/or across different functions relevant to the effective implementation of the strategy.
All these factors are interdependent and their influences are non-deterministic; this typically, makes it very difficult for managers to comprehend the contribution of each of the factors to successful outcomes of strategy execution. Each of the factors influences execution success/failure in a different way; if an organization fails to pay proper attention to one of these factors, it can result in execution failure, therefore an organization needs a system and approach to support management of these factors and their influence on successful execution.
Effective Execution Management
Execution management is a function of strategic management. It facilitates and guides a complex mix of decisions and actions strategy execution. The strategy execution is a process of managing people, strategy and operations and demands ownership at all levels of management and workers at customer touch points. People must commit to and own the process and actions to control effective execution. Strategy execution involves change in people that typically takes over a long period of time, this makes it more likely that the conditions under which the strategy formulation took place will change and unforeseen circumstances may arise to derail the execution. Execution involves both top-down and bottoms-up integration. The top-down integration involves cascaded flows of coordinated decisions and actions (participation and communication) through the implemented layers of corporate strategy, business strategy and operations strategy in the organization. The bottom up flows of participation and communication of information up to the organization managers through feedback mechanisms. Successful execution requires the capacity to monitor and evaluate changing environment factors and take decisive corrective action.
The success of both approaches is reinforced by functional strategy such as; marketing, finance, IT, HR, sales, etc., that appear simultaneously at all three levels of the implemented strategy hierarchy. The whole execution system/engine is synchronized by functional strategy that provide resources and capabilities to all three (3) strategy levels.
Strategy implementation is the process of making the chosen strategy operational by translating it into action plans so it can be executed successfully. Implementation provides the connecting loop between the strategic choice - selected strategic option from formulation - and execution and control. A strategy has to be successfully implemented and effectively executed to be of any use to an organization.
Key Success Factors
The primary concerns of strategy implementation is making the selected strategy operational throughout the entire organization so it can be successfully executed. Implementation requires the collaboration of everyone inside the organization, and on many occasions parties outside the organization. The key factors to take into consideration to ensure the implementation plans are feasible include the following:
These factors are generally in agreement with the key success factors or prerequisites for effective strategy implementation as identified by McKinsey.
If the corporation has the capabilities, enterprise advantage, and business portfolio it wants its corporate strategy is implemented. If the business unit has the customers, value proposition, and skills it has chosen to have, its business strategy is also fully implemented. Technically, a strategy can never actually be fully implemented because everything that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There will always be a gap between where the company is and what its strategy call for. Closing this gap is implementation.
Factors Influencing Successful Strategy Implementation
Strategy Implementation is fraught with challenges as evidenced by the low percentage of strategies that are effectively implemented. Strategy implementation require a number of key components to be successful, including:
All these factors that influence the successful implementation of a strategy are interdependent and their influences are non-deterministic it is typically very difficult for managers to comprehend the contribution of these factors to the successful outcomes of strategy implementation making strategy implementation very hard.
Each of the factors influences implementation outcomes (closing the gap) in a different way; if an organization fails to pay proper attention to one of these factors, it can result in implementation failure, therefore an organization needs a system and approach to support management in successful execution.
Effective Strategy Management
Successful strategy implementation provides the context for successful execution, and involves managing change in the organization's internal environment which then allows the organization to successfully adapt to the changing external environment in which it operates but cannot control.
In a rapidly changing world any competitive advantage a firm creates is temporary and not sustainable; without systematic changes to the firm's strategy and plans so it can respond and take advantage of opportunities that emerge as a result of changes in the environment while managing emerging threats that successful execution.
Strategy execution is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers while meeting stakeholders expectations.
Typically, the implementation gap - the gap between the strategic plan and its implementation - is caused by missing integrative links such as:
Typically, the value delivered by enhanced and strengthened existing assets or new assets is causally and temporally separated from the successful completion of the strategic initiatives that produced those assets. Any cause-effect relationships may involve two (2) or more stages; making it difficult for managers to fully comprehend the contribution of these assets to the success/failure of the implementation and execution of the strategy.
In the absence of certain cause-effect relationships or experience in how these dialectical (verbal) processes between organizations will unfold, the firm can only hypothesize about the effects of different possible initiatives, and learn more about them through interaction with other actors such as competitors, regulators, customers, suppliers, and partners in its competitive landscape.
Implementation Gap and Gap Analysis
Strategic gap analysis attempts to determine what a company should do differently to achieve a particular goal by looking at the time frame, management, budget and other factors to determine where shortcomings lies.
Strategy implementation involves change - closing the gap between organization's current capacity and the capacity the strategy calls for. The implementation gap can be manifested as:
Strategy implementation decisions and actions are the means through which management intentions and choices are actually realized.
I am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders.