There are key factors for moving strategy from a theoretical formulation to tangible results. In this article, I explore from my experience the most relevant factors and why they matter in this process.
“A mediocre strategy that is well-executed yields better results than a brilliant strategy that is poorly executed.”
A statement like this, as popular as it is controversial, motivates this brief examination of some of the elements that experts prescribe as the key factors for translating strategy into the generation of tangible results. Here, I will explore the most common and relevant factors that I have found during my time as an executive, and now as a consultant in the field of strategy, who is also in the final stage of a doctoral degree in the subject.
Clear strategy
A clear vision and understanding of the strategy itself, so that it is simple yet challenging, but mainly easy to communicate, are definitely fundamental requirements for moving execution forward. At this point, I should note that one of the controversies in academia and among some consultants gravitates around two contrasting views: (1) strategy formulation and execution are two separate processes, and (2) they are interacting parts of the same process. Given what I have witnessed, from a practical point of view, a good strategy formulation is critical for execution, and that same execution is also a valuable source of feedback for refining that formulation.
Communication, understanding, and identity
A strategy that is easy to share with those involved in execution turns into a call to action, as it generates a strong sense of belonging once people identify with it. Individuals value finding meaning in what they do. That is why a deep understanding of the company´s short- and long-term goals, its value propositions to customers, and its key levers to successfully compete and differentiate allows them to recognize the relevance of their daily contribution. In fact, a necessary condition for the attainment of good execution is the generous communication of the strategy so that people understand it, trust it, and finally make it their own. Therefore, communication is not a one-time event. It is actually an ongoing process through which people gain confidence and identity. In the sphere of corporate strategy, simplicity also represents the highest sophistication: It generates clarity, engagement, and results.
Human factors
Another indispensable factor on the path from imagination to reality is related to human talent and the way in which it is organized. Practice has shown me the truth behind Drucker´s famed saying that “culture eats strategy for breakfast.” Therefore, besides the necessary leadership, it is vital to have an organizational culture that fits the chosen strategy. A clear strategy is also valuable for identifying the required people’s skills and mindsets, as well as for assembling a structure that favors the organization’s key processes for delivering value to customers. A good structure also precisely defines responsibilities and decision rights, which are two powerful engines for moving implementation forward.
Resources
A critical issue for execution is how far we can count on resources. Whether they are related to finance, infrastructure, experience, or, as is very often the case, talent, strategies that are outlined in unrealistic terms (for instance, merely as a desire and with only a long-term focus), often turn inviable due to lack of resources. Long-term goals are reached after traveling the short- and medium-term roads. In fact, companies that show outstanding results focus their first scarce and costly resources on critical issues that allow for early victories. They do this in order to set the process in motion, thus building confidence in all stakeholders. And this is another key issue: Gaining early, positive inertia is critical for successful execution.
Metrics
Experts always suggest that the definition of the metrics that will allow for the right monitoring of the execution process is also key for success. And here lies another meaningful challenge: In order to measure what is really strategic, an organization must be very clear about its strategy and goals. A clear strategy allows a company to easily identify the key metrics in order to follow up on execution. And metrics are a powerful tool for aligning resources, clarifying priorities, and generating the right incentives for the people involved.
Formulation vs. execution
When a company is not happy with its results, it is always worth initially checking on its strategy and then its execution. A poorly defined strategy is the most significant obstacle to execution. Experience tells me, however, that execution problems tend to be more common. Perhaps following the elements listed here, in the form of a check list, will allow you to identify some potential sources of difficulty. When it comes to the execution of a carefully formulated strategy, I have also found that the biggest obstacles and opportunities normally exist around issues related to people. These include culture, climate, structure, skills, mindset, compensation, and incentives.
The most relevant decision, however, is to move forward, from diagnosis to treatment, once it is clear what is holding a company back from executing. It is the only way to shorten the process of moving strategy from words to results.