Every business whether it is small or big, a start up or an established organization should have a way of facing the competition and over coming the competition. These are called strategies. Strategies will lead the organization from where it is right now and where it needs or projects to go by overcoming the barriers. Most of the businesses and entrepreneurs develop strategies. Some obtain the assistance of larger consulting companies whereas others develop them on their own.
Why Strategies Fail?
According to Australia based Berg Consulting, the following three reasons lead to failure of strategy execution:
- Company initiatives don’t aligned with strategy
- Company processes don’t align with strategy
- Employees and stakeholder fail to engage
How Could We Be Successful?
- New Strategies vs Initiatives
Most of the businesses develop strategies spending huge amounts of investments and time. However once the process is over the companies stick to the old initiatives. In such a scenario, new strategies will not be effective. When new strategies are developed, the initiatives should also be new and it should be aligned. A good way of doing this is to create a strategic value measurement tool for existing and new initiatives. Initiatives should be analyzed against their strategic value and the impact to the organization. A highly used tool for this purpose is Balance Scorecard developed by Kaplan & Norton.
- Budget and Performance
In an ideal scenario, the budgets should be decentralized so that the business units could manage their own budgets and carryout the strategic initiatives. Cross functional strategic initiatives should be allocated specific budget (STRATEX) alongside capital expenditure (CAPEX) and operating expenditure (OPEX) budgets. This protects strategic expenditure from being re-allocated to short-term requirements of OPEX whilst subjecting strategic initiatives to a rigorous review much like is done for CAPEX. Organizational performance should be closely aligned to strategies. Likewise performance incentives should be directly linked to performance against strategy. They should include a combination of individual, team and corporate performance measures that ensure staff recognize their direct and indirect impact on strategy performance.
Organizations that try and force a new strategy into an out-dated structure will find their strategy implementation eventually reaches a deadlock. The structure of the organization should allow strategy to cascade across and down the organization in a way that meaningfully and efficiently delivers the strategy.
- Engaging Staff
The key reason strategy execution fails is because the organization doesn’t get behind it. If you’re staff and critical stakeholders don’t understand the strategy and fail to engage, then the strategy has failed. Strategy involves change and human tendency is to resist. Hence as a first step the organization needs to prepare the staff for the change. Include influential employees, not just executive team members into the planning process. Not only will they contribute meaningfully to strategy, they will also be critical in ensuring the organization engages with the strategy. Communicate the strategic vision and each staff member’s role in achieving it.
- Monitor and Adapt
One constant in business these days it’s change. So our strategies must be adaptable and flexible so they can respond to changes in both our internal and external environments. The process should be monitored and reviewed periodically in order to prepare for anticipated internal and external changes that would impact the business.
Are you heading for a strategic planning session ? Do you want to outperform your competition ? Drop us an email on firstname.lastname@example.org We will take you through the vital process.