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Secrets to successful strategy execution
- 1. Secrets to Successful StrategyExecution Md Rezaul Akhlak (ZR11) Anika Rahman (RQ 53) Batch 52D
- 2. Building Blocks ofCrafting and Executing Strategy Developing Vision, Mission and Values Setting Objectives Crafting Strategy Execution Monitoring and Taking correction action Transitioning from Strategy to Execution
- 3. Strategy guides fewFundamental Questions How will the company reach there? Where does the company want to go? How does the company know that they have achieved what they strategized? • Market leader • Top be top 3 in revenue • Deliver the best service • Cost Leadership • Merger & Acquisition • Differentiation • Balanced Scorecard • Monitoring
- 4. Facts outlined fromHBR Assessment of Organizational Capabilities • 1,25,000 profiles representing executives • 3 out of every 5 rated company as weak in execution
- 5. Why Strategy Failsto Execute? Strategy fails because employees don’t know what responsibilities they are entitled to do? Case: Global Consumer Packaged goods company
- 6. Why Strategy Failsto Execute? Functional Leader vs. Divisional & Geographic Leaders Strong execution Organization: 71% Weak execution Organization: 32% Source: Harvard Business Review Case: Global Consumer Durables Company
- 7. Why Strategy Failsto Execute? Important Information about competitive environment doesn’t get to the headquarter quickly? Strong execution Organization: 77% Weak execution Organization: 45% Source: Harvard Business Review Whitewashed or Vanished along the way Poor understanding of regional pricing Case: Caterpillar Company
- 8. Why Strategy Failsto Execute? Decisions are frequently second-guessed Strong execution Organization: 45% Weak execution Organization: 71% Case: Global Charitable Organization Decision vetted by many Parties Lack of accountability Manager’s Delegation Source: Harvard Business Review
- 9. Why Strategy Failsto Execute? Information doesn’t flow freely across organization Strong execution Organization: 55% Weak execution Organization: 21% Source: Harvard Business Review Case: B2B company •Lack of collaboration •No report to product Unit •Minimal effort assumed by customer Customer vs Product Unit
- 10. Why Strategy Failsto Execute? Field and line employees don’t have the information they need to understand the bottom line impact of decisions Strong execution Organization: 61% Weak execution Organization: 28% Placing differently frond and back bank officers Competing goals between them Failed to provide necessary information Increase in Operational Costs Case: Merger of regional Banks Source: Harvard Business Review
- 11. Good strategy isnever enough… Good strategy + Good execution= Superior Performance
- 12. 4 Building Blocksto Influence Execution Decision Rights Information Flows Motivators Structures
- 13. Mapping Improvement tothe Building Blocks Focus corporate staff on supporting business Unit Decision Focus headquarters on Strategic Issues Establish individual Performance measures Improve Field to Headquarter information flow Create cross functional teams Introducing differentiating Performance awards Reinforce Accountability and Encourage Performance
- 14. STARTEGY EXECUTION A COMPETENCYTHAT CREATES COMPETITIVE ADVANTAGE
- 15. STATS REGARDING EXECUTIONOF STARTEGY 60% organizations don’t link their budgets to their business strategy. 67% organizations have no link between their priorities and business strategy. 75% middle managers don’t have incentives linked with their business strategy. 95% of the typical workforce has no clue about what a strategy is! Source: SHRM/BSCol Research Study 67-17052 “Aligning HR with Organization Strategy”, 2002
- 16. THE UPSHOTS OFSTRATEGIC EXECUTION Companies who successfully execute their strategies experience dramatic benefits. Example: KeyCorp. From a Palladium Group Inc. Survey, it was found that 70% of the organizations with a formal strategy execution process reported superior performance. These organizations were also 8 times more likely to use technology solutions.
- 17. STRATEGY EXECUTION ROADMAP Describeand Measure Prioritize Take Feedback Communicate Coordinate & Integrate Link with Budget
- 18. STEP 1: DESCRIBE& MEASURE Translate the strategy to operational terms Come up with measures that can be clearly communicated and acted upon Convert the strategic objectives into balance scorecard Do the strategic mapping
- 19. STEP 2: PRIORITIZE Identifythe strategic key processes Give them special attention Create “Theme Teams” if required Manage the initiative in a cross- business basis Break down the frequently found silos
- 20. STEP 3: TAKEFEEDBACK Conduct regular meeting Review the strategies Test all the theories with feedback from the real world. Adapt with the strategies
- 21. STEP 4: COMMUNICATE Got to communicate the strategies to all levels of employees. Knowledge workers make decisions on a routine basis. Newsletters and brochures can be good ways to maintain communication. Include strategic awareness in the formal training program Walk the talk. Use quarterly meeting, the email Q & A etc. as a medium to communicate directly with the frontline workers
- 22. STEP 5: COORDINATE& INTEGRATE Align all the business units and support units to the strategy. Create an organized process to achieve the synergies of a better strategic alignment. Take help from strategy Maps and Balance Scorecards. Enable the support units to focus their initiatives on the strategic priorities.
- 23. STEP 6: LINKWITH BUDGET Create structural consistency between planning and budgeting process. Come up with creative new approaches if possible Elcoteq created Stratex (Strategic Expenditure) to differentiate certain expenses from the conventional Opex (Operating Expense) and Capex (Capital Expense) Create a separate process that removes strategic investments from the system used to manage routine operations.
- 25. Make strategy execution acore competency Create a competitive advantage Achieve dramatic benefits for the shareholders
- 26.