How Managing Your Strategy Gets You There
Research shows that 90 percent of organizations fail to execute their strategy because of several barriers:
Ř Only 5 percent of the work force understands the strategy
Ř Only 25 percent of the managers’ incentives are linked to the strategy
Ř 60 percent of organizations do not link budget to strategy
Ř 85 percent of executive teams spend less than one hour per month discussing strategy
The successful 10 percent move on to achieve breakthrough business results and set the rules of the game!
What do these companies do differently? Are they great strategists? Possibly! However, our work with clients indicates that the process utilized to execute strategy is just as important as the strategy itself.
In The Art of War, Sun Tzu states that: “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
To be in the top 10 percent of the firms that successfully make their strategy work, you need to ensure that you are maximizing the effectiveness of your strategy, not only in its development but also in its execution. The effectiveness of a strategy is determined by its accessibility, usability, trackability and accountability. Any increase in the effectiveness of an organization’s strategy greatly improves the chances of achieving breakthrough results.
Meticulously developed strategies locked away in a cabinet are of no benefit to an organization. To be effective, the strategy must be accessible to the organization in a format that is easy to understand. The transformation of strategy documents into an easy to understand plan is critical to making them usable by the organization. These plans must have clear metrics to track progress and must have the clarity to get commitment from the organization. Only by creating transparency to the organizational goals can anyone in the organization be held accountable for the results and the accomplishment of the vision.
The factor that differentiates great companies from the average ones is the process they use for improving the effectiveness of their strategy during both the strategy’s development and execution. No matter how much time or money you have spent on developing that strategy, unless you have a way to overcome these barriers, the strategy will sit on the shelf and gather dust.
One framework that has been successful in increasing the effectiveness of an organization’s strategy is Hoshin Kanri. The Hoshin Kanri strategic planning and execution framework has been used for decades as a navigation system that helps set breakthrough goals and deliver consistent results year after year, by reliably and effectively reducing performance variability. It accomplishes the results by producing an effective strategy and making it accessible and usable across the organization.
By relying on what the organization must do, rather than what it can do, Hoshin Kanri helps set benchmark-driven breakthrough goals. The Hoshin Kanri process is extremely effective in taking the vision and the high level objectives and translating them into actionable plans with a repeatable process. Focus, alignment and frequent reviews are the governing principles of Hoshin Kanri Strategic Planning and Execution framework and they ensure effectiveness.
A successful strategic planning and execution process must have the following:
· Widespread participation in the development of vital few objectives
· Alignment of the organization behind the common vision and goals
· Linkage of budgets to strategies
· Concise progress reporting structure
· Clearly defined and reported performance metrics that illustrate progress
· A periodic strategic review process to not only assess the progress, but also adjust the direction to maximize the business value
Strategy implementation is a process. Just like any other business process, it can be made reliable and capable of delivering planned results. Hoshin makes leaders accountable for establishing, communicating and managing strategic priorities and increasing probability of winning consistently.
Periodic review of strategic progress and validation of direction is a key differentiator of the Hoshin Kanri Strategic Planning and Execution framework. In this day and age of ever-changing customer demands, regulatory or technological developments, change is the new norm for businesses. The Hoshin Kanri approach ensures that the company can respond to environmental changes before it is too late by making business strategy a subject that is discussed frequently and revised as needed.
In summary, strategy departments that safeguard strategic goals and targets must be mindful that staying current is a continuous exercise to avoid becoming static in execution. More importantly, a process that involves the entire organization in the development and execution of the strategy will strengthen a successful outcome of goals and targets for employees, customers and investors.
Whether you are managing a department or a global enterprise, undertaking a large transformation effort, managing a merger, or navigating a major shift in your industry, the implementation and utilization of the Hoshin Kanri Strategic Planning and Execution framework will significantly improve your ability to manage the situation.
While no one can claim that achieving breakthrough results is simple, we can say that the use of this framework can provide any organization with a successful methodology for developing and executing strategy, and communicating the breakthrough results to stakeholders.
Content contributed by NouvEON, a management consulting firm. For more information, contact NouvEON Senior Managing Consultant and Strategy Knowledge Domain Leader Gokhan Guley at firstname.lastname@example.org or 704-944-3155, or download a free copy of this whitepaper at www.nouveon.com/insights.