A short, practical guide to implementing strategy.(Suit the action to the word, the word to the action )

Publication: Journal of Business Strategy

Publication Date: 01-JUL-05

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COPYRIGHT 2005 SourceMedia, Inc.

Suit the action to the word, the word to the action (William Shakespeare, Hamlet, Act iii. Sc. 2).

For all the energy and resources invested in the pursuit of the perfect strategy, it's surprising to consider how little effort is directed towards implementation. Most strategies stumble in the implementation phase, regardless of their merit. A recent Economist survey found that a discouraging 57 percent of firms were unsuccessful at executing strategic initiatives over the past three years, according to their senior operating executives [1]. Managing the process of implementation is often more difficult than coming up with the strategy in the first place but ideas that cannot be translated into action serve little purpose. A consistent, straightforward methodology can help drive strategic behavior, galvanize the management team, and enhance the firm's ability to navigate.

Common pitfalls

Many firms undertake an intensive, year end strategy formulation program. In the best cases, rigorous analysis of industry and market dynamics, competitive position, financial performance, and internal issues culminate in a revised vision or mission statement, and a set of objectives or strategies for the firm (e.g. improve efficiency, seize market share, enhance customer service, or less helpfully, become the market leader). All too often in the planning cycle, this session represents the apex of management focus: managers debate choices, priorities are set, the CEO exhorts the team to go back and make things happen.

Managers must then re-immerse themselves into the day-to-day operational grind, where they typically lose their focus, their enthusiasm, and their way. "Strategies" that made eminent sense in the context of the workshop begin to lose relevance, or become untranslatable: "improve internal efficiencies" sounds reasonable, but all change takes time, effort, and resources, and where should you start? Who's responsible? New deadlines and stakeholder demands intercede, old commitments and priorities reemerge, and longer-term initiatives simply lose momentum. In the worst scenarios, overstretched management teams are corralled into painful follow-up status meetings, and compelled to prepare complex reports updating their progress week by week, month by month compounding their sense that "strategy" really means "more paperwork," at the expense of performing their "real jobs." Figure 1 recaps the usual suspects.

[FIGURE 1 OMITTED]

There is, fortunately, an alternative approach that improves the chances of successful implementation and both motivates and galvanizes the management team. While the process was originally designed for mature, middle market firms (revenue $100M-$500M) suffering from bureaucratic inertia, we've applied it successfully to larger, sophisticated firms (where managers are more entrenched, and systems are more resistant to change), and to smaller firms (where conflicting systems don't exist, but distractions abound). The approach works because it stresses simplicity, consistency, and alignment with the firm's managerial systems.

Getting started

The six weeks that immediate follow the strategy development session are pivotal: this is when implementation programs are crafted, expectations set, and targets specifically identified. Figure 2 presents an overview of this period.

[FIGURE 2 OMITTED]

Step 1: refining vision and strategy

Good implementation naturally starts with good strategic input: the soup is only as good as the ingredients. If we assume the management team has done a reasonable and thorough job formulating strategy, the critical output from the annual strategy session is a transcript capturing:

* a draft vision statement;

* a set of broad strategies;

* preliminary performance measures;

* preliminary resources required and expected results;

* critical issues; and

* the underlying (strategic) rationale for these decisions.

Most firms emerge from the strategy development session with a set of three to five strategies (five strategies is typically the upper limit, as implementation hinges on discipline and focus). Before concluding the session, it's important for the group to assign a strategy manager to each strategy to spearhead the creation of detailed implementation plans and shepherd...

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