Why a great strategy must be implemented
A well-designed plan shouldn’t be another classified document for the CEO — it should be for all EXPERT VIEW
What is strategy? Ask this question and chances are you will get multiple, complex answers. Simply put, “strategy is a roadmap to achieve the vision”. More importantly, it is critical that the strategy gets implemented. Organisations are keen to incentivise employees, thinking they will drive strategy implementation. However, employees need direction. Prior to developing individual performance measures (IPMs), it is critical to develop an enterprise performance management system (EPM) with aligned IPMs. One of leading tools is the balanced scorecard (BSC) framework, which has been used successfully across organisations globally.
Developing the BSC is a simple but scientific process. Based on the organisation’s strategy, identify the top 20-22 strategic objectives that the leadership team have prioritised. These are across various perspectives, typically financial, customer, process, and organisational and IT. These objectives provide a cockpit view of the strategy — when a pilot is flying an aircraft, there are thousands of operations taking place. However, the pilot monitors few critical aspects. If they are doing okay, he knows the aircraft is flying alright. Similarly, for the organisation’s leadership team, if the strategic objectives are performing well, they know the organisation is moving in the right direction towards achieving its strategy. It is critical to create focus on delivering strategy.
Next is to track achievement, done through measurements. What gets measured gets done. It is critical to identify key performance indicators (KPIs) to determine success in delivering the strategy. Have a good mix of lead or lag indicators. Most financial indicators are lag. You only know how well you have done after the event is over, with no reversal. It is important to create lead indicators, to allow course correction. Process turn-around times is a good lead measure, since they allow course correction in delivering services to customers
Then put in the goals — targets for the KPIs. Define a mix of stretch and easy targets, depending on the focus of the organisation for that period. Management needs to push hard enough on the stretch targets, to deliver its strategy. Keep some easy targets. All easy targets and the organisation will become relaxed; all stretch targets and staff may be demotivated due to fear on non-achievement. The right mix will create a drive towards achievement.
The responsibility for objectives is be shared amongst the management team. The CEO is solely not responsible to deliver the organisation’s strategy. Identify owners for each objective to create accountability amongst the management team. The CEO takes some objectives responsibility (eg, overall revenue, profitability). The management team member who has direct control over an operational area, takes ownership of other KPIs (eg, manufacturing process improvement ownership by the operations head)
Next, take a stock of projects across the organisation. Each project has defined timelines — start date and end date. In addition, requires resources — financial or human capital or both. Projects are mapped to the strategic objectives. Excess projects may need to be dropped or discontinued, if they do not drive enterprise strategy. New projects may need to be identified if missing and invested in.
So what’s next? Employees are expected to be a part of the strategy implementation team. But do they know what is the organisation’s strategy? As a part of its annual excellence audit in an organisation, employees were randomly picked and asked if they knew the Vision and strategic direction of their organisation. Most employees gave vague answers. Some said they were not aware since they were not part of the strategy formulation exercise. There was a disconnect in what the management wanted and what the employees knew.
Strategy communication starts from the top. Once the strategy is agreed, identify strategic themes for the year, based on the BSC. This can be around customer excellence, process improvement, performance enhancement, etc. Themes can be communicated by the CEO through various media. The CEO can also touch upon the themes during conferences, townhalls or similar employee gatherings. The necessary details can be communicated further by the department heads. The efforts can be supplemented by converting each theme into a communications topic, contests, training agenda and recognitions programme.
A basic rule in working life is what’s important for the boss is important for the employees, and gets done with high priority. Hence, clear communication contributes to a culture of employee engagement. With clarity in enterprise performance framework using the BSC, creating an aligned individual performance measurement system will be easy. In turn it ensures strategy is implemented and not locked as another confidential document in the CEO’s desk.