Strategy Execution and Alignment

In today’s rapidly-changing and increasingly-demanding world, achieving sustained success depends on having a solid strategy and aligning an organization’s decisions, effort and resources to execute that strategy. While a ten-year study showed that the ability to execute a strategy had a six-times greater impact on value than the choice of strategy, most organizations—70 to 90 percent—fall short when it comes to executing their strategies. Their struggles to achieve the needed alignment greatly hinder their productivity and ability to achieve their highest priorities. The opportunity to improve the alignment of decisions, resources, projects and daily activities within organizations is typically the most powerful way to improve performance and strategy execution in organizations of any size.

Efforts to improve alignment and strategy execution are most effective when supported by a robust framework that addresses key enablers:

Communication

Top organizational priorities are too often not clearly communicated to employees. This leads to reduced organizational effectiveness, reduced productivity, and increased frustration due to employees not understanding how they can best contribute to those organizational goals. A major poll by the Harris organization, for example, found that only 15% of the employees surveyed could actually identify their organization’s top goals or priorities, and over half said that they, personally, didn’t understand what they were supposed to do to help the organization accomplish its goals. Given the high total cost of employees, this lack of clarity is likely to be the largest hidden (but manageable) cost for most organizations.

When the strategy is clearly defined and the contributions of each part of the organization are well understood, the efforts, decisions and resources can be aligned to accomplish the strategic priorities with greater effectiveness and efficiency.

Resources Allocation

Strategy is about effectively allocating resources toward the priorities of the organization. Without a robust framework to define and communicate the critical drivers of strategic success, the investments and resources are not likely to be applied in alignment with the most valuable strategic priorities of the organization. The result is that resources—such as IT investments, training dollars, innovation, and process improvement programs—are wasted and strategy execution falters.

Most organizations have far more opportunities to make improvements than they have resources available. Therefore, the choices about where to focus efforts—and whether or not those choices are well-orchestrated or fragmented—has a powerful impact on the organization’s profitability and mission effectiveness. With a systematic, rational approach to identifying and managing the critical performance drivers, scarce resources can be allocated to achieve maximum value and impact.

Organizational Effectiveness Orchestrated Across Multiple Functions

Traditional organizational structures, responsibility assignments and budget allocations create organizational silos, reducing effective collaboration between various parts of the organization for effective performance. Operational and tactical activities are usually well executed within silos. Strategy execution usually involves collaboration between all parts of the organization. Due to siloed structures, strategy is usually very poorly executed. Organizational silos create frustration and diminished teamwork. They also de-motivate employees, reducing engagement and increasing expensive employee turn-over.

Mapping out strategy, with cause and effect linkages, conveys very clearly the organization-wide cooperation and collaboration required for efficient strategy execution. Linked objectives, with clearly-related measures and initiatives, create the alignment required for effective strategic performance. In addition, individual employees and departments can identify their contribution for achieving the overall mission of the organization.

Strategic Performance Measurement and Management

Managing strategic performance requires different tools and techniques than managing operational performance. And the most valuable types of measures are likely to vary significantly from organization to organization. Simply expanding the use of operational and financial measurement is not the answer. In fact, the over-reliance on backward-looking financial measures has been consistently identified as one of fundamental obstacles to creating aligned strategy execution. Sales analysis, financial modeling, real-time operational monitoring, and budget variance reporting are all useful performance measurement and management tools. But they were not designed for orchestrating strategic alignment and execution.

Measures are powerful when used properly. But too many organizations have assumed that “you get what you measure” and have overwhelmed people with so many measures that the impact of measurement is greatly diminished. Instead of providing focus and accountability, the measures become a costly burden and the potentially powerful measures are lost in a sea of less relevant measures. Without strategic alignment, an emphasis on measurement can lead to sub-optimization,

The magnitude of these alignment problems is sobering. Imagine a sports team where half the players didn’t know what role they were to play to score more points or win the game? Or consider the bottom-line impact of significant dollars being invested in fragmented, low-impact ways while potential high-impact investments go unfunded? Is it any surprise, then, that organizations that significantly improve their alignment are able to frequently leap ahead of their peers and competitors?

Best Principles for Improving Alignment and Strategy Execution

A myriad of academics, authors, and consultants have developed a vast array of methodologies and techniques for addressing these issues, but the abundance of approaches has often led to organizations leaping from one “flavor-of-the-month” approach to another—each with a different language and philosophy. In addition, software vendors have put forth dozens of alternatives for addressing different aspects of performance management, but usually with less-than-impressive results. Yet out this rich marketplace of ideas, key concepts, tools and principles have emerged, rising to the top and proving that breakthrough results in alignment and strategy execution are possible.

Insightformation integrates experience, expertise and innovative technology to improve alignment and strategy execution. Through our past experiences, we have a structured implementation methodology of guiding clients in breaking down strategy into an operationally executable platform. Or clients experience breakthroughs in communication, collaboration and results as they align around their strategies.

Insightformation integrates the best principles of these powerful management practices with innovative technology to improve alignment and strategy execution. Many of these practices evolved around the work of Dr. Robert Kaplan and David Norton, who developed and popularized the concept of the Balanced Scorecard. Many organizations that tried using a Balanced Scorecard found that it had little impact on their performance. Others, however, found that the Balanced Scorecard approach enabled them to have breakthrough results. The main difference, according to Kaplan and Norton’s research, was the emphasis on alignment and strategy execution in the process of designing, deploying and cascading the scorecards. A close examination of those that achieve great success through using the Balanced Scorecard reveals some remarkably common principles that have been fused into the state-of-the-art Balanced Scorecard methodology. When properly understood and applied, these “best principles” provide a powerful framework and process for improving alignment and executing an organization’s strategy. Learn more about the Balanced Scorecard methodology.