How to close the gap between strategy formulation and execution

Is it that time of year again in your organization? Time to bring the members of the C Suite together for the annual Strategy offsite. Are you excited about this, concerned, irritated about the amount of time this will take? Have these sessions been productive in the past, or have they really only been valuable for fostering better working relationships. Worthwhile on some level, but maybe we should have just met for dinner.

Hopefully your organization has a well-structured strategy formulation and planning process that is engaging, accessible, and drives execution and accountability through all levels of the organization. From our experience, working with organizations of all shapes and sizes, the strategy formulation process frequently does not directly drive executable projects within the organization. The goals are frequently financial, nothing wrong with that, they need to be there. However, they are often lagging indicators that do not provide the structure that the executive team needs to determine what products or services should be the focus for what markets. Who is going to do what, when, and how? How do we develop leading indicators to know when we are on track, what process should we use to prioritize projects for resource allocation, and how will we hold people accountable?

Strategy formulation is the process of identifying the set decisions that define the nature and direction of an organization

It is the basis for an argument or the beginning of a discussion to set the path. If “why strategy?” had to be answered in one word, that word would be “focus”. In addition to guiding daily decision making and channeling the allocation of resources, a strategy establishes an organization’s identity and serves as the backbone of its culture.

Strategy defines the high-level goals from which all others cascade. In today’s constantly changing, global environment, leaders need to control their destiny and invest wisely for the future. Operational pressures are intense and can easily overwhelm strategic vision. When a major opportunity or threat appears, your business strategy can ensure that your strategic framework supports your competitive advantage. While current success does not determine future success, failure does not either. Strategic clarity is often the first step toward extricating an organization from operational difficulty. For many organizations, difficulties can grow from an unshared vision. Getting senior management together and thinking about the future can help them to work as a team, understand where they are going, and appreciate their roles in getting there. The same is true for key business units. When a division has a clear, easily communicated strategy, it is more likely to gain corporate support.

Changes outside the organization—the market, technology, competition, and other factors— are triggers for rethinking strategy. The same is true for changes within an organization. A new leadership team, maturation from an entrepreneurial start-up to a focused enterprise, rapid growth that brings new people into senior management, a greater commitment to innovation—these are a few of the changes that can indicate that it is time to rethink strategy. It is also important to review and, if necessary, update your strategy on an annual or semiannual basis.

When working with organizations to formulate business strategy we look at three key areas:

• Products/services: What will we offer?
• Markets/customers: To whom will we offer our products/services?
• Competitive advantages: Why will customers buy products/services from us rather than from others?

Setting strategic direction, especially given the discontinuity around us, is one of the ultimate critical- thinking challenges facing executive leadership. A second is implementation. Most strategies fail not because they are flawed, but because they are poorly executed. It takes considerable insight and will to embed strategy into the culture, structure, systems, and operating routines of an organization. And it takes real creativity to ensure the ongoing vitality of the strategy and widespread commitment to its execution. As a result of formulating a clear strategy, many projects emerge, the execution of which leads to successful implementation. Most organizations initiate more projects than they can handle, which often leads to poor or unpredictable results.

The design of a Strategy Project Portfolio, consistent with an organization’s strategic intent, is a necessary output of the strategy formulation process, providing clear strategic prioritization.

The creation of a strategic Master Project Plan is the recommended next step in the strategy implementation process. The Master Project Plan provides a detailed definition of each project, a sequencing structure, a project schedule, and indicates the required resource levels for each project. With an agreed and prioritized portfolio of projects identified to develop and implement the strategy, senior executives have a platform to assess and measure the implementation of the organization’s business strategy. The successful execution of approved projects is often a leading indicator that is used to determine that the strategy is being implemented successfully.

Given the rate and pace of change, ongoing review of the strategy is essential for keeping the strategy vibrant, relevant, and a key tool in the continuous quest for success. Typically, executive leaders are adept at reviewing the operations and financial dimensions of the business. The strategic review process is equally, if not more, important. It focuses on monitoring assumptions upon which the strategy rests to determine if they remain valid, assessing the strategic direction to determine if it continues to make business sense, and keeping abreast of progress toward implementation.

Kepner-Tregoe’s competitive advantage is its skill in facilitating the process for setting and implementing strategy. This creates a great sense of involvement and ownership, and a deep commitment to implementing the strategy. The “marriage” of Kepner-Tregoe’s proprietary processes, tools, and techniques with the content knowledge, judgment, and experience of an organization’s leadership, through skilled facilitation, provides clients with optimum leverage for strategic decision making.

Kepner-Tregoe is the leader in problem-solving. For over six decades, Kepner-Tregoe has helped thousands of organizations worldwide solve millions of problems through more effective root cause analysis and decision-making skills. Kepner-Tregoe partners with organizations to significantly reduce cost and improve operational performance through problem-solving training, technology and consulting services.