08 September 2020 09:27:51

Biggest hidden problem with your business strategy today

Setting a stretching, yet achievable strategy and rallying the troops to deliver it might seem like a simple prospect. However, it often plays out very differently in reality.

Historically, many businesses have been forced to learn the hard way when their strategies have not quite gone to plan. In the 1990s, Apple was just 90 days from being insolvent, making a loss of US$867 million. In 2003, Lego came within six months of filing for bankruptcy and BlackBerry shares went from US$144 to US$6.50 in just five years through some poor strategic choices.

With many businesses today under increased pressure due to COVID-19 complications, getting the strategy right and executing it effectively has never been more critical. However, the research on successful strategy delivery suggests some serious underlying issues.

Only one in five businesses are hitting 80% of their strategic targets, according to a June report from the Harvard Business Review this year. Data from Gartner in 2019 also indicates that 56% of strategic planning is seen as wasted time.

A simple google search on strategy execution unveils more than 250 million results. Therefore, it is not from lack of information or interest that effective strategy execution remains a problem. Working with over 750 businesses in 76 countries over the past 30 years, at Quest Worldwide, we have seen the full gamut of where strategies fail.

The most common shortfalls are:

The strategy isn’t actually a strategy at all – it doesn’t make clear choices about where to play, how to win and how to configure the business.
Focus is too tactical and short-term – not enough deep thinking is given to staying relevant and delivering value in the future.
A small number of clearly defined lead and lag performance indicators are not summarised on a page.
There are too many strategic or change initiatives at the one time.
Lack of capability and resources.
No buy-in from frontline employees.
Senior leaders do not agree on how to execute the plan.

The biggest problem we are seeing with business strategies today, however, revolves around one critical area.

Quality and timely strategic performance conversations

The great thing about a GPS navigation system is it keeps you on track. Once you plug in your desired destination, it will guide you through the most effective way to get there. ‘Quality, timely conversations around strategic performance’ is the GPS navigation system for strategy.

If I was to ask a typical team member – how specifically are you tracking against your strategic imperatives? The kind of ‘honest’ responses you’d expect to see fall in three categories:

Not sure.
I’ve got an idea where we are at (but the numbers or figures are outdated or wrong).
What are our strategic imperatives again? (originators of the Balanced Scorecard Robert Kaplan and David Norton suggest that a mere 7% of employees today understand their company’s business strategies and what’s expected of them in order to help achieve company goals).

A number of leaders have a blind spot in that they think their team ‘gets it’. Successful execution relies on your team knowing their role and playing their role to achieve specific outcomes. It is hard to successfully plan your workflow to hit a bullseye you can’t see. Too often though employees are not singing from the same strategic song sheet.

So how do we get better in this space and improve strategic performance?

Have an effective scorecard in place

This seems like a no-brainer, but it surprises me how many businesses don’t implement it well. And even if a business has an effective scorecard in place, the results are often not shared in a meaningful way across the business.

A traffic light system is simple, but highly effective when done right. It should be colour coded and clearly visible, so those responsible for execution can quickly see whether they are on track or not. Automation of the scorecard is great, but not critical.

Proven examples include:

A dedicated wall in a central office area (for a billion-dollar gas project).
Excel and/or PowerPoint balanced business plan scorecards (ASX 100 mining business).
Large digital screen scorecard connected at multiple locations (a major Australian retailer).

Ensure frequent, quality conversation around performance

A scorecard is a useful tool, but only when accompanied by quality conversations around performance. According to a recent HBR article, 85% of leadership teams spend less than an hour per month discussing strategy. This is often because too many leaders get pulled into the day to day, tactical operations of the business. As a result, it becomes harder to see the forest from the trees. Great leaders have regular, effective conversations focused on how the business is tracking on short-, medium-, and long-term objectives.

Whether it be through deep strategic thinking days or monthly scorecard meetings, great leaders get the balance right, understanding the optimal time they need to spend working ‘on’ the business as opposed to working ‘in’ it.

Make clear choices and avoid the ‘washing machine’ effect

We have all been in meetings that don’t go anywhere worthwhile. I have been an ‘observer and coach’ in enough executive scorecard review meetings to know that they often don’t deliver what the business actually needs. It can be frustrating when leaders don’t see eye to eye on how strategic issues will be resolved and even more frustrating when clear course corrective actions are not agreed.

Leadership teams need to be clear on:

How strategic choices will be made (including time frames).
Who needs to be involved and in what capacity (for example, RAPID decision-making methodology – recommend, agree, perform, input, decide).
Which decisions can be parked (for now).
How those choices need to be effectively communicated to others in the business.

Businesses invest huge amounts of time, money and energy developing strategies to ensure the focus is on the right areas for sustained success. The bridge between a winning strategy and successful execution is ‘quality, timely conversations around performance’. And your strategy deserves a strong strategy execution bridge.