3 secrets of successful strategy execution
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This presentation focuses on overcoming the common obstacles to successful strategy execution. The relevance of Hoshin Kanri is also discussed.
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3 secrets of successful strategy execution
- 1. 3 SECRETS OF SUCCESSFUL STRATEGY EXECUTION
- 2. KEY TOPICS 1 Why is Strategy Execution the #1 CEO Priority? 2 Why is Strategy Execution Difficult? 3 What Are the 3 Secrets to Executing Well? 4 1. Stay Focused – Reinforce The Right Behaviors 5 2. Close the Loop – View Planning/Execution as an Integrated Process 6 3. Follow-up Relentlessly – Leverage Strategy Execution Software 7 Summary/Key “Take-aways” Copyright i-nexus 2013. All rights reserved.
- 3. GOOD STRATEGY IS NOT ENOUGH… Good Strategy x Good Execution = Superior Results Good execution is the critical determinant of superior results • You can beat expectations with good execution of a mediocre strategy But... • You can miss expectations with poor execution of a brilliant strategy
- 4. WHILST MANY ORGANISATIONS CRAFT GREAT STRATEGIES, FEW EXCUTE WELL… “70% of companies believe they select the right business strategy, but fail to execute it due to short-comings in their management system” – Accenture Report “…only 11% of companies employ a fully fledged strategic control system” – Ashridge Strategic Management Centre “… over 66% companies with over $500M in revenue set targets that exceeded 9% real growth, yet less than one company in ten achieved this level of success.” – Chris Zook, Havard Business Review “In the majority of cases – we estimate 70% - the problem isn’t bad strategy but … bad execution” – Fortune Magazine “ex-e-cu-tion (ek si kyoo shun), n 1. The missing link. 2. The main reason companies fall short of their promises. 3. The gap between what a company’s leaders want to achieve and the ability of their organisations to deliver it…” – Larry Bossidy and Ram Charan, Execution: The discipline of getting things done “90% of organisations fail to execute their strategy” – David Norton, Balanced Scorecard Report
- 5. THE CEO PERSPECTIVE… i-nexus Solves a Big Problem Execution is the #1 CEO Priority Key Execution Problems – CEO Perspective • • • • Poorly Communicated Strategy Unclear Accountability Poorly Defined Roles/Responsibilities Inadequate Execution and Performance Monitoring
- 6. THERE AREApproaches and Tools Simply Don’t Work... Current SEVERAL UNDERLYING CHALLENGES… Senior Management Goals PerformanceRearview Mirror Reporting Underlying Challenges: Problem Process Goal Cascade Process Ensuring Alignment and Accountability Maintaining Focus in the Whirlwind 10% Problem Operational Looking Ahead – Not Behind Operational Management Management Review Goals/Action Plans Urgent vs. Important Problem Execution
- 7. Some interesting numbers... Help shine a light … THE EVIDENCE BACKS-UP THESE HYPOTHESES on the root causes of poor execution... “<15% of companies routinely track how they perform over how they thought they were going to perform” Marakon Associates/Economist Intelligence Unit “95% Employees don’t understand their companies strategy” Kaplan and Norton, Harvard Business Report “<27% employees have access to their company’s strategic plan” Kaplan and Norton, Harvard Business Report “86% of executive teams spend less than one hour a month reviewing strategy” Kaplan and Norton, Harvard Business Report “70% of organisations do not link middle management incentives to strategy” Kaplan and Norton, Harvard Business Report
- 8. STRATEGY EXECUTION - WHAT HAPPENS IN REALITY… The Off-site Strategy Day The Ivory Tower Exercise •Grow Sales of New Product •Customer Focus •Invest in China •Improve employee satisfaction .ppt deck Poorly Defined Goals Unclear Accountabilities Divisional President Functional Heads The Ad Hoc Cascade Give me your numbers... Way too much! Cut by 25%! Funding Constraints If I don’t include it I’ll lose it... Departmental Heads Project Project Project The Budget Dance I need to include some contingency... It’s close enough for Military work... Projects Middle Managers Employees
- 9. VALUE OF AN EFFECTIVE EXECUTION SYSTEM IMPACT OF THE DANAHER BUSINESS SYSTEM
- 10. 3 SECRETS TO SUCCESSFUL EXECUTION… 1. STAY FOCUSED FOCUS ON 1-3 BREAKTHROUGH/WILDLY IMPORTANT GOALS ONLY •Actively decide what not to do, not just what to do •Ensure there is absolute goal clarity – make sure the finish line is clear •Ensure every employee understands what winning means 2. CLOSE THE LOOP LOOK FORWARD, NOT JUST BACKWARD, ON AN REGULAR BASIS •View planning and execution as an integrated process •Define the leading measures that predict achievement of the goals •Set targets based on expected impact of actions and review progress periodically •Continually test assumptions and act quickly if hypothesis is wrong 3. FOLLOW-UP RELENTLESSLY USE STRATEGY EXECUTION SOFTWARE TO DRIVE RELENTLESS FOLLOW-UP •Ensure every employee can easily see, understand and update their progress against the plan •Leverage automated exception reporting to reinforce ‘monthly’ heartbeat •Create focus on action by taking the ‘heavy lifting’ out of preparing for execution reviews •Create accountability for results through clarity and transparency
- 11. STAY FOCUSED – THE CONFLICTING FORCES… The Whirlwind or The Day Job URGENT Goals New Activities IMPORTANT
- 12. STAY FOCUSED – AVOID THE URGENT NOT IMPORTANT TRAP HIGH LOW URGENT 70% 10% URGENT NOT IMPORTANT NOT URGENT NOT IMPORTANT URGENT AND IMPORTANT IMPORTANT NOT URGENT 5% 15% LOW HIGH IMPORTANT
- 13. STAY FOCUSED – CREATING CLARITY AND FOCUS Less Structure More Structure FranklinCovey 4DX Kaplan & Norton BSC Hoshin Kanri Wildly Important Goals Strategy Maps/BSC Planning Tables/X-matrices 2-3 Breakthrough Objectives 1-2 WIGs From X to Y by When LAGGING MEASURE LEADING MEASURE LEADING MEASURE
- 14. CLOSETHE LOOP – CHANGE VS. RUN THE BUSINESS CH AN GE T HE BU SIN ES S RU NT HE BU SIN ES S
- 15. CLOSE THE LOOP – WHAT’S THE REAL QUESTION? Goals Translate Business Goals into Executable Initiatives and Create Clear Accountability for Delivery 1. Are we on track? 2. Insight If we are not on track – are we doing something about it? 3. Action In aggregate, will the Measure and Forecast the Impact of Those Initiatives Indicatorson Performance CLOSED-LOOP actionsSTRATEGY underway EXECUTION CYCLE Impact get us where we want to go? Drive and Review Execution of The Resulting Initiatives Initiatives
- 16. CLOSETHE LOOP – HOSHIN AS BEST PRACTICE 1. Establish Vision Develop 3-5 Year Breakthrough 2. Objectives Develop Annual 3. Objectives Catch-ball Planning Deploy Annual 4. Objectives P D C A Reflection 5. Implement Annual Objectives 6. Monthly Review 7. Annual Review Hoshin Process in Concept
- 17. CLOSETHE LOOP – HOSHIN BOWLING CHARTS/ COUNTERMEASURES Are we likely to hit the future targets? Bowling Chart If not, why not? What’s the root cause and what can we do about it – short and long term? Countermeasure Plan
- 18. RELENTLESS FOLLOW-UP – ESTABLISHING AN EXECUTION HEART BEAT Monthly Business Monthly Business Execution Review Execution Meeting Review Meeting Make sure its right M T W T Week 4 Month 1 F M T W Week 1 T F M T W T F M Week 2 T W Week 3 Month 2 T F M T W Week 4 T F
- 19. RELENTLESS FOLLOW-UP - EXISTING PROCESSES AND TOOLS MAKE FOLLOW-UP CHALLENGING…. (Re)Define Strategic Goals Review and Analyse Performance BI Tools/ Spreadsheets Presentation Decks/ Spreadsheets Spreadsheets / Documents HR/Talent Management System ERP System Run the Operation Cascade Goals/ Develop Plans Key Goals for 20XX Project Management Tools/ Spreadsheets/E-mail Execute the Actions © i-solutions Global Ltd. 2007 Set Personal Objectives/ Develop Action Plans
- 20. RELENTLESSthis problem disrupts three big software Solving FOLLOW-UP – A NEW BREED OF CLOUD-BASED STRATEGY EXECUTIONmarkets... IS EMERGING… SOFTWARE Size: $2.2Bn/CAGR 15% (Bersin) “The fundamental problem with traditional “Business Execution software is Primary Buyer: HR performance management software is that emerging as the answer to EMPLOYEE • Management and Automationtwo questions it fails to close the loop – it helps you - how are we as an organisation going to of Employee Goal Cascade PERFORMANCE identify the action to take but doesn’t help do that? And how does it specifically Process MANAGEMENT you understand if the action you have apply to me? Business Execution • Talent Management taken has had any effect.” Translate Business Goals intosoftware brings together people, projects Martin Butler, CEO, Butler Research Executable Actions and Createand corporate performance into a single system.” Clear Accountability for Delivery Bruce Richardson, Chief Research Officer, AMR Research Insight Size: $1.9Bn/CAGR 28% (Gartner) Primary Buyer: Finance • Tracking and Forecasting of Financial Performance • Tracking of Key Performance Indicators Measure and Forecast the Impact of Those CORPORATE Actions on PERFORMANCE Performance MANAGEMENT Action STRATEGY EXECUTION SOFTWARE Impact Size: $1.1Bn/CAGR 9% (IDC) Primary Buyer: Operations • Planning and Execution of Projects and Programs • Optimisation of Project Portfolios Drive and Review Execution of Those PROJECT Actions PORTFOLIO MANAGEMENT
- 21. RELENTLESS FOLLOW-UP – A NEW BREED OF CLOUD-BASED STRATEGY EXECUTION SOFTWARE IS EMERGING… Strategy Execution Software – helps you to: 1. 2. 3. 4. STRATEGY EXECUTION SOFTWARE Translate business goals into executable actions; Tie in the people who need to execute those actions; Drive and monitor execution of those actions; Understand if the actions are actually moving, or are likely to move, the dials that measure achievement of business goals.
- 22. RELENTLESS FOLLOW-UP – THE RIGHT STRATEGY EXECUTION SOFTWARE CAN ACTIVELY DRIVE “FOLLOW-UP” Reminder – Time to Reminder – Time to Focus on the Focus on the Important! Important! What Actions Are We What Actions Are We Taking and Are We Taking and Are We Doing Enough? Doing Enough? Are My Team On Track? Are My Team On Track? Where Do We Need to Where Do We Need to Focus Our Attention? Focus Our Attention?
- 23. SUMMARY – KEY POINTS 1 Strategy Execution is the #1 CXO Priority 2 Current Fragmented Approach Makes Strategy Execution Difficult 3 Success is Function of Right Behaviors, Right Process and Right Tool 4 Focus Requires Tough Choices, Catch-ball and Absolute Clarity 5 The Key is to Look Forward, Not Backward and Course-correct Early 6 Strategy Execution Software Makes Follow-up a Realistic Proposition 7 Stay Focused, Close the Loop and Follow-up Relentlessly! Copyright i-nexus 2013. All rights reserved.
- 24. COMPANIES USING HOSHIN TODAY
- 25. ANY QUESTIONS? Paul Docherty paul.docherty@i-nexus.com Skype: pauldocherty +44 (0) 7985 117784 For a copy of the slides please contact: richard.valentine@i-nexus.com Patrick Pecorilli ppecorilli@virtual-process.com Skype: patrick.pecorilli +1 514-816-0618
Editor's Notes
- Normal practice is to drop in the prospect logo, date and name of i-nexus attendees
- Although agenda’s will change, this format fits with most situations. We always want a focus on understanding the prospect’s business pains, goals, processes etc before we talk about ourselves. As a business we’re not good at exploring needs and the motivations behind these – we tend to take the first level answers we’re given and assume these are correct. We should only move onto section 3 once we are confident we know what the business issues and drivers are. Step 3 is this presentation (up to the end of the Nestle/other case study. Step 4 is a demo (if there is one). Demo always to follow the sequence of view +, Lite, Professional. Although step 5 is short, as we approach the end of the mtg, we should summarise our understanding of the business need and always ask for feedback. E.g. what are your impressions, how do you feel about the solution, to what extent do you think i-nexus may be able to meet your needs etc. If possible, get the prospect to commit to taking further action themselves rather than us doing everything
- The reality is the that the process of: defining strategic goals; [click] translating strategic goals into operational targets; [click] developing business plans to deliver those targets; [click] tasking people with individual objectives and scoping/planning the improvement actions to hit those targets; [click] executing those improvement actions; and [click] understanding the impact of those actions on performance i.e. If we have hit the targets or are likely to hit the targets; is in most organisation is rarely seen or managed as an integrated process... even though as we have seen this is exactly what is required to be able to execute consistently. A major barrier to managing this process in an integrated way is the fragmented tools and systems that are used to manage the different planning and execution activities. [click] Our strategic goals are usually captured in powerpoint decks [click] and broken down into operational targets and business plans captured in a myriad of spreadsheets [click]. The individual objectives that result from these operational goals are typically, but not always, then captured as part of the appraisal process in Talent Management Systems like [Customer’s Specific System] [click]. Whilst the personal objectives and personal development plans to help achieve these objectives are captured in the Talent Management platform, the execution of the actions is typically managed using a variety of project planning and management tools from simple task lists, excel spreadsheets to full blown project management systems [click]. We obviously hope these projects and actions will deliver the performance improvements and changes to the operating model that deliver the performance targets we expect and the it is only through reviewing the transactional data captured in the ERP and other operational systems that we can understand if the strategy has been successfully executed [click]. Although BI technology is widely deployed, many organisations still rely on spreadsheets to understand the progress against plan – particularly in terms of forecasting the expected impact of the actions that are underway [click]. The are many consequences of this fragmented process – the first is that our evaluation of the progress against individual objectives whether it’s a function of the progress of the actions that have been initiated or the achievement of the performance targets is a highly manual and often subjective process, requiring managers to pull data from multiple sources to make a meaningful assessment of whether objectives have been achieved. [click] Secondly, the reality is that the sheer number of moving parts and disconnects within the current process, make ensuring there is close alignment between the strategic objectives, operational targets and ultimately individual personal objectives almost impossible. In most organisations, only a small fraction of the employees, typically senior management, have visibility of the strategic goals and operational targets and even fewer can articulate how their personal objectives impact those outcomes. [click] Finally, while ERP systems can tell us everything we can ever want to know about what has happened, they are poor at telling us what is about to happen. This is fundamentally because the changes we expect in the results are a function of the projects and actions we have initiated and those operational plans are often difficult to see – frequently somewhere on the local hard-drives of the different project leads and action owners across the organisation. The good news is that there is a solution that closes this ‘execution gap’. [click].
- Although agenda’s will change, this format fits with most situations. We always want a focus on understanding the prospect’s business pains, goals, processes etc before we talk about ourselves. As a business we’re not good at exploring needs and the motivations behind these – we tend to take the first level answers we’re given and assume these are correct. We should only move onto section 3 once we are confident we know what the business issues and drivers are. Step 3 is this presentation (up to the end of the Nestle/other case study. Step 4 is a demo (if there is one). Demo always to follow the sequence of view +, Lite, Professional. Although step 5 is short, as we approach the end of the mtg, we should summarise our understanding of the business need and always ask for feedback. E.g. what are your impressions, how do you feel about the solution, to what extent do you think i-nexus may be able to meet your needs etc. If possible, get the prospect to commit to taking further action themselves rather than us doing everything