The importance of good planning and execution seems obvious to most of us, and as we continue creating and finalizing our plans for 2014, that importance is even more evident. A good strategy that is well executed has the ability to impact a market, competitive position or business model. Yet, there are many companies at all stages that invest time in planning, but lack the processes and leadership needed to ensure a strategy achieves the desired results. Failure is expensive and wastes precious resources.
What causes execution to go wrong? Two common causes: lack of communication and shifting focus of the strategy. Forbes Insights has conducted studies on why strategic plans fail and has found that an almost all CEOs say “communications is critical to the success of their strategic initiatives and that strategic initiatives often fail due to a lack of understanding, commitment and follow-through by key stakeholders.”
It’s not uncommon for companies to change strategies, the challenge is to be sure the organization can support the shift. For example, if your initial strategy is to compete on price, then your processes and focus need to support the execution of this strategy. If you then try to change your strategy to be one of service, the organization may not have the infrastructure for this strategic shift.
Perhaps a simple way to start addressing execution is to think about how your organization is going to synchronize itself to ensure the right products get to the right customers at the right time. Synchronization is not easy. It can involve reconfiguring supply chains, knowledge of numerous foreign markets, addressing your cost structure and more. Communicating the plan to all the people involved and securing their support are critical to success. It’s common for organizations to resist change.
Managing change and addressing the resistance, which may be well-founded, are important steps. Once the plan is decided upon, the infrastructure and processes put in place to support it, and the organization is on-board, it all comes down to follow-through. Studies continue to indicate that less than 15% of companies routinely track how well they performed in comparison to their targeted performance. The first year’s goals may be measured because they are often tied to bonus thresholds, it’s the follow through that tends to slip. Companies who invest in putting the right people in place to get the right things done and emphasizing process deliver the best results. Companies that combine attention to process with executive development tend to deliver the best return to shareholders.
We like the four steps outlined by experts at Wharton that any company can take to improve the odds of execution success:
1. Develop a model for execution. You can adopt Michael Porter’s theory of comparative advantage, William Sharpe’s capital asset pricing model, or some other model. The important point is to have a model that defines the critical variables to support successful implementation of the plan.
2. Choose the right metrics. Without a doubt sales and market share are going to continue to be the dominant metrics of business, but there are additional metrics that are critical to monitoring performance and success. Keep in mind that marketing is given money to invest on behalf of the organization. The leadership team wants to know how this money is helping the organization achieve more of something, faster, and less expensively then if that money were directed somewhere else. Use these mandates to guide your metrics selection. For example, speed to penetrating new markets as a way of understanding marketing’s impact on achieving something faster.
3. Keep the plan center stage. Once you’ve earned internal and stakeholder buy-in, initiate a formal process that will keep the team engaged and focused. Meetings between the executive team and unit managers should be regular and ongoing and they should foster collaboration, dialogue, and problem resolution in order to maintain momentum.
4. Assess performance frequently. Annual reviews don’t allow the organization to make necessary adjustments. Assess the performance frequently to secure real-time feedback on the quality of execution down the line.