Tools to help plan and execute strategy

Tools to help plan and execute strategy

By Anton Sirik

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Tools to help plan and execute strategy

All organizations have an existing strategy and existing management practices that help plan and execute future strategies. The last thirty years has seen a plethora of new business frameworks and tools developed to help form, communicate, monitor, and execute strategy, and many of them have been absorbed into the management practices and culture of organizations throughout the world.

We’re thinking of tools, frameworks and approaches such as:

  • Mission, value and vision statements;
  • SWOT analyses;
  • Strategy analysis and formation methodologies from Porter’s Five Forces to PESTEL frameworks, Scenario Planning, Strategy Mapping;
  • The Balanced Scorecard;
  • Translation and action planning tools such as Hoshin-Kanri,
  • Goal Deployment and ‘Management by objective’ systems;
  • Process change and improvement approaches, such as TQM and Lean Six Sigma methodologies;
  • Assessment frameworks such as Baldrige and EFQM;
  • Increasingly sophisticated Business Intelligence software for monitoring process and performance;
  • Activity based costing systems supporting the financial side of a more proactive approach to planning and budgeting.

Each tool or framework addresses one (or perhaps two) of the phases within either the Planning Cycle or the Execution Cycle. Let’s be clear, some of these tools have produced great value to organizations that use them, though none of them do the job of an entire Strategy Execution System, and most organizations would admit to gaps in their version of the cycle.

strategy execution system

Within the many organizations we have visited, we have seen four visible trends in strategic and operational management thinking, and in the tools and frameworks in use. We have found it convenient to categorize these into one of four generic activity areas:

  1. Ever deeper strategy planning in which strategic aims are defined at the top, then cascaded – or translated – into objectives right down to the lower levels in the organization. This is heavily influenced by analytical frameworks, strategy formation tools and new graphical representations such as Strategy Maps and Balanced Scorecards;
  2. Scorecards are appearing everywhere, prompting the increased use of metric measurements, or Key Performance Indicators (KPIs), as way of targeting required change and measuring its achievement;
  3. Increasing use of process improvement methodologies as a way of changing the performance of the operational levels of the business;
  4. Increasing use of process mapping and excellence frameworks which aim to document and understand how the organization works (they are documenting the operational engine).

Having strength in one area does not preclude having mature practices in one or more of the others, but we also have found it convenient to categorize organizations according to their strongest activity as Planners, Measurers, Improvers or Documenters.

Organizations in the first category are very good at planning (Planners). They express concrete objectives based on changing the visible outputs of the organization (and sometimes the related inputs). They have a several layers of a model of how these revised outputs will be created, but they are less able to translate this into the detailed mechanical and management changes that have to occur within the operational engine itself.

Organization in the second category have strong performance management capability (Measurers). They are very good at measuring their inputs and outputs and at analyzing their interrelationships. In many cases, they have a well-developed framework for understanding the performance of their organization, but they are less able to express how that performance may be changed, or how such changes link into strategic aims.

The third category (Improvers) contains organizations that have embraced one or more of the formal process improvement methodologies that have come to prominence in recent years (principally Lean and Six Sigma). Improvers know how to change things inside the operational engine. They express success in terms of financial benefits, calculated by isolating the impact of the improved process within the internal workings of the engine. This may translate into real cost benefits, but usually not into an understanding of strategic impact.

The final category (Documenters) contains organizations that have developed a deep understanding of how their operational engine works. They have mapped all their processes and documented how their internal systems work. They are often less advanced in terms of using this information to drive process improvement, or applying it to help translate high-level strategic objectives into required changes.

In building a Strategy Execution System, organizations from all of these categories are trying to get to the same place. In our view, each of them are starting from an equally valid first step. Though, those organizations with strengths as Planners or Measurers will build the Planning Cycle first; those with strengths as Improvers or Documenters will start with the Execution Cycle.

 

Acknowledging The Challenges

The existing management practices and culture of the organization are both a blessing and a curse. On the one hand, what is already there gives us a platform to build on. On the other hand, our organizations can’t stop while we redesign the processes and management practices.

In truth, organizations have regular cycles of activity that go on all the time. They take orders, they consume materials and other resources. By some mysterious internal processes, these inputs are turned into visible outputs – deliveries of products and services, interactions with customers, revenue and profit for the stakeholders (or other output measures of success for non-profit organizations). A simplistic representation is shown in a figure below.

running current operations

Strategy involves planning and then implementing changes to the daily processes whilst they are still churning along. This is not so easy, not only because of the churning processes, but because change involves altering the behavior of the people down in the operational engine-room of the business as well. It’s a bit like rebuilding an aircraft while it’s flying, and simultaneously training the flight crew to use and love their new controls.

In other words, strategy is both cultural and structural. You have to design a Strategy Execution System that helps you change the operational processes on the fly, and you have to capture the hearts and minds of the staff at the same time.

The truth is that, in too many organizations, strategy execution fails both structurally and culturally when it hits the operational levels of the business. Surveys suggest that organizations spend up to $10b per annum on strategy consulting and most of it goes into strategy formation, but nearly 90% of the strategy plans don’t get executed.

In their book “Execution”, Larry Bossidy and Ram Charan argue that the execution failure is largely down to senior managers seeing execution as a tactical activity separate from “strategy”. C-Level executives do the creative work of coming up with the big ideas and then think it’s just an operational management task to get things changed. This disconnected view explains why the CEO often believes his or her strategy is happening when it isn’t, why he or she doesn’t take the necessary steps to monitor progress, and why he or she will be surprised by the failure to deliver on promises to shareholders.

However, in our view, saying “it’s cultural” masks an important truth. What’s actually showing through is a disconnection between the Planning Cycle and the Execution Cycle. The high-level aims of the organization (the corporate level part of the Planning Cycle) will always be set out in terms of the visible inputs and outputs. The objectives expressed use measures like sales, cost, profit, brand image, customer loyalty, number of new products/services brought to market, along with other calculated measures derived from this performance such as organizational value, return of investment etc. The aims and objectives have to be crafted this way, because it’s only these inputs and outputs that mean anything to the external stakeholders (shareholders, analysts, governments, audit bodies etc.)

In order to achieve these things, the levers available to the management and staff of the organization are all somewhere inside the operational engine. The internal workings are the only things that they can change directly. In order to execute strategy, someone has to understand exactly how the internal processes of the operational engine drive the outputs. Without this understanding, you can’t express what needs to be done. In other words, without an Execution Cycle that works in an integrated fashion with the Planning Cycle, your organization will lose its way sooner or later.

In our experience, the cultural problem doesn’t arise because C-Level executives don’t see execution as their job; it’s because the organization has no understanding of how its processes drive the outputs and which processes need to change to get the desired external result. Sometimes, the C-Level executives are guilty of hoping that the operational managers will be able to do the translation for them, but usually, it’s the blind leading the blind. Until there is an effort to build systematic knowledge of which processes affect which outputs, strategy aims can never be turned into a plan of action, strategy can never be executed, no matter how much management effort is applied to the task.

You need a Strategy Execution System to make it happen.

Summary

Although many great business tools are being used by organizations to help plan and execute change, we have to connect them together before we can create an effective way of executing strategy. Clarity and coordination throughout the cycle are essential. We identified that most organizations have stronger systems and management practices in one phase of the cycle than in the others. We have suggested that the development of their strategy execution capability needs to build outwards from this strength towards the eventual goal of an integrated cycle (driven by the underlying Strategy Execution System).

strategy execution system

 

 





Original: https://www.i-nexus.com/stratex-hub/tools-to-help-plan-and-execute-strategy/
By: Paul Docherty
Posted: October 18, 2017, 9:21 am

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Anton Sirik

Proven success in Strategy Execution, Operational Excellence, Business Transformation, Digital Marketing @ i-nexus

i-nexus Strategy Execution Software helps Global 5000 organizations achieve more goals, faster with less effort

I am part of a leading Strategy Execution, Operational Excellence, and Business Transformation solutions provider, who have revolutionized how organizations get important things done

With i-nexus software you will get full visibility into the progress of your programs, comprehensive Hoshin functionality to support robust strategy execution and the ability to replicate the best project solutions. We support multiple performance management frameworks including:
Hoshin Planning/ Policy Deployment
Balanced Scorecard
Business Excellence Model

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