Planning is one thing for companies – making it all happen is quite another

Performance strategies make sense, but putting them into action can present a challenge.

Companies in various industries are trying to maintain their operational and capital efficiencies amid increasing costs and market competition. Even organisations that are comfortable with their current status are developing strategies to ensure that their performance is on a sustainable trajectory and that their patrons are assured the future is at least as bright as the present.

However, the greatest strategies of organisations cannot achieve the intended objectives without a solid implementation. Strategy development and strategy implementation are two different things; designing a corporate strategy and agreeing on the way forward is one thing and implementing this strategy by committing human resources, funds and time is another.

Strategies are normally aspirational and ambitious about how the company should look in the future. The question of whether the strategy is of any use depends considerably on how well or poorly the company can implement it. Robust strategy implementation is the key differentiator between successful companies and the rest of the pack. All companies can develop strategies – with or without help from third parties, but few can implement them and achieve their strategic objectives.

According to a recent survey – among senior executives from across the world – conducted by the Economist Intelligence Unit (EIU), in the past three years an average of only 56 per cent of all strategic initiatives have achieved their objectives. This kind of weak performance indicates that companies are confronted with a high degree of complexity in making things happen on the ground.

The statistics are even bleaker when we look at the implementation of turnaround and transformation strategies. According to McKinsey, of all the change programmes that have been implemented since 1995, only 30 per cent have been successful.

The importance of strategy implementation is further emphasised when it is correlated with financial performance. As per the same study by the EIU, the higher the success rate in implementing strategic initiatives the better the financial performance.

The study also highlights that leadership support is the most important factor in successful strategy implementation. It is clear that there is no magic formula for successfully implementing strategies. However, those who are more successful than others in achieving their goals mention factors such as senior executive involvement, talent, good communication, sufficient resources and solid processes.

In the same survey, when executives are asked to rate their organisations on strategy formulation and strategy execution, interestingly enough, 64 per cent say they are excellent or good at formulation, but only 46 per cent say the same for execution. Another interesting question is: “When strategic initiatives succeed at your organisation, what are the main reasons?” Leadership support comes as the top success factor emphasised by 51 per cent of the respondents. The second most commonly cited factor is “skilled implementation”, highlighting the importance of human resources, robust processes and governance.

Another difference between the best implementers and average implementers is the way they view strategy implementation. One-third of the best implementers state that strategy implementation by itself is a strategic initiative, whereas only 15 per cent of all other companies give it as much strategic importance. Capability building is another factor that sets the excellent strategy executors from the rest. Comparing both groups in terms of hiring the right talent to implement the strategy, 79 per cent of best executors say that it’s “a somewhat or very high priority” for them. On the other hand, only 51 per cent of the average executors consider it as important.

The gap is the same when it comes to hiring leadership talent to drive strategy. Seventy six per cent of best executors recognise the importance of leadership talent in strategy implementation versus 48 per cent of the average executors. One important strategy enabler that few companies pay attention to is culture. Looking at the same two groups of executors, more of the best executors appreciate the importance of culture than all other executors, 72 per cent and 40 per cent respectively.

Many executives consider strategy implementation more important than strategy development. It would be unrealistic to develop a strategy, put it on paper and hope strategic objectives would be achieved automatically on their own. Even if the strategy was the best in the world, if it was not followed by robust implementation, it would remain just that, a strategy. Strategy implementation is more powerful than strategy development at separating star performers from average performers.

Ebrahim Hashem is a strategy adviser at an Abu Dhabi-based company. He can be contacted via twitter @EbrahimHashem

Follow us on Twitter @Ind_Insights

Published: May 7, 2014 04:00 AM

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