The Execution Gap - from Strategy to Reality

What is the Execution Gap? It’s the gap between what you plan to do to realise your company’s strategic goals, against what your company actually achieves!

Often, we hear the following from organisational leaders:

“We consistently struggle to execute our strategy – is another managers’ conference the answer?”
“How do we get a really good handle on where our business is at now and what its potential is – in an economical way?”
“How do we get more meaningful transparency in our organisation measuring the progress in executing our strategy, and the overall health of our organisation?”
“How do we develop a consistent performance culture?”
“Have we got the capability and capacity within the organisation to execute our strategy effectively?”
“Our organisation has more potential than we are realising – how do we unlock this potential?”

All organisations have the opportunity available, but only approximately 10% achieve full execution of their strategy. Why?

There is a greater focus on organisations to optimise performance through superior strategy execution. Most organisations are reasonably good at formulating their strategy. Their frustration is making it happen – implementing strategy often gets bogged down or stalled.

Executive backing to drive improvement and organisational transformation is important. However, strategy execution is primarily the role of managers.

Executives are accountable for formulating sound strategy, ensuring the intent of the strategy is clearly communicated to managers and employee teams in a way that engages them, and to also ensure managers have the skills, capacity and tools to execute effectively. This must be supported by executives coaching and mentoring managers along the way.

Managers are the principal owners of strategy execution within business units or teams. They are directly involved in all aspects of execution - contributing content, acting as the link between various organisational levels and their direct reports, and serving as a performance role model. If the manager does not take the right actions to effectively fulfill the strategy execution role, the organisation’s strategy falls short of its intention.

Achieving strategy requires managers and employee teams to define the initiatives and action steps, complete them, utilise measurements to test along the way that expected benefits are being realised, and make appropriate adjustments if needed. Managers execute strategy! It requires understanding the strategic intent of the executives, being inspired, motivated and taking action.

To optimise performance requires the top down view and the bottom up view to be fused together in the middle. Failing to link these views creates disconnect between them. This further generates internal confusion, poor transparency, ill-judged decisions and staff skill-set mismatch. Addressing this disconnect will translate strategy into effective operations.

A common contributing factor to poor strategy execution is lack of a formal Strategy Execution Process. A formal process utilises strategy maps, deriving projects and process improvements from it, and associated key performance indicators (KPI’s). Progress against targets are reported and cascaded down into the organisation.

Executives and managers must communicate strategy to their workforce in a way their entire workforce can understand. Often this is done using a visual

strategy diagram. They must also genuinely involve employees in identifying the projects and actions, while also holding them accountable with appropriate measures and targets for those measures.

The executives’ primary role is to set direction. They must firstly solve, “Where we are at now and what does the landscape look like?”, secondly “Where do we want to go?” Managers and employees must solve “How are we going to get there?” The employee teams are there to get the job done – to implement the strategy.

The manager has the key role in strategy execution. Managers participate in all activities, including:

strategy communication,
translating the strategy to their business units, departments or teams,
setting their own objectives,
defining objectives for their teams,
coaching for performance, and
evaluating performance.

The quality of an organisation’s strategy execution is strongly linked to the effectiveness of its managers. The better the managers carry out their strategy execution roles, the better the achieved results.

Research shows that most organisations lose 40% to 60% of their strategic potential. Typically:

Only 5% of employees fully understand the strategy
Only 25% of managers have incentives linked to the strategy
60% of organisations do not link budgets to strategy
85% of executive teams spend less than 1 hour per month discussing strategy
Only about 10% of companies achieve all of what they set out to achieve.
Kaplan & Norton

Given this, it is easy to understand why Boards of Directors, MD’s, CEO’s and GM’s have effective strategy execution as a key priority!
Effective strategy execution is about realising the full potential of your strategy – and not limiting yourself to only 40, 50, 60 or 70 percent.

So, where and how do managers learn to interpret, translate, communicate and execute strategy? Generally, this has to be on the job. Why? Most people learn best by doing – through experiential learning. Typically, facilitation is required to achieve accelerated and higher levels of experiential learning and delivery of benefits to the organisation in a timely manner.

Successful execution can only come when you:

get the strategy execution fundamentals right,
develop your managers skills to execute effectively,
develop a consistent performance culture

So, how is your strategy execution? If you can honestly say you have achieved 80% of your strategic targets, you are in a very small minority. If you are sitting below this, we strongly suggest you seek answers to realise your potential.

Enterprise Plus Ltd
Rhys Walter Mark Cathie
021 490 585 021 60 80 20