Strategy execution or performance management is a complex process. In fact, it’s a mix of several processes. And the ideal picture is different for each organisation. Each best-in-class performance management process should include some basic building blocks. I have selected 8 and will explain the first 4 in this article. You can read the follow-up article if you are interested in the remaining 4.
So, here we go.
1. Update Strategy
Your strategy is your long-term action plan designed to achieve your vision. Each strategy is unique, and it should also be measurable and easy to understand. Depending on the industry you are in, it maps the road your company should take for the next 3 to 10 years.
On a regular basis − most companies should do this annually – a company needs (and wants) to update its strategy based on changes in its competitive environment and on the Strategy Execution feedback from the previous cycle.
We include strategy updates in our execution framework as they take place on a regular, recurring basis at all levels of the organisation. The real strategy work, conducted only once every 3 to 5 years at the top of an organisation, is excluded.
As soon as your strategy (or strategy update) is finalised and approved by all stakeholders, you should focus on strategy communication. Transparent and easy-to-understand communication creates the necessary understanding and engagement for the new/adapted strategy.
It is essential to use all available communication platforms. One big strategy event and a single strategy e-mail are not nearly enough. Use other meeting platforms, discussion groups, informal and formal encounters, performance management sessions, intranets, websites, screensavers, coffee corners, billboards, etc. to communicate the strategy. You cannot over-communicate your vision and strategy!
Pay attention to the quality of your strategy communication. Senior managers, in particular − as strategy ambassadors − should be especially careful about how they communicate. In addition to the content itself, tone of voice and presentation skills are essential elements in transferring content and creating the necessary enthusiasm for others to pass on the message. Make sure you don’t kill your strategy by lousy, uninspiring communication.
When you cascade your company’s strategy, you break down objectives into smaller chunks for the next organisational level. The process stops at the smallest unit level − these are often teams. In the end, the size of your organisation will define the size of the cascade.
It is crucial to achieve macro alignment between all the objectives – horizontally and vertically – in your organisation. We call this MECE. Take a look at the first Strategy Execution law in our free library for more information.
On a micro level, you need to balance your objectives across perspectives. The 4 traditional perspectives are: financial, customer, internal processes, and people. You can add other dimensions, as appropriate.
In addition to the balancing act on the macro and micro levels, you need to select the right indicators – often called Key Performance Indicators or KPI’s − to track the objectives and define appropriate targets.
4. Compare & Learn
Your strategy is a hypothesis. It’s your best estimate of the route to success … but it’s still an estimation.
It’s crucial to take some time at the end of a cycle to go back and check your hypothesis, to compare your initial strategic assumptions with what you have learned from the reality of the Strategy Execution cycle that is being completed. By doing this, you will put yourself in the forefront − research shows that only 15% of companies take this step.
But at the same time, make sure you don’t just look back at your strategy: take a look at your Strategy Execution capability as well. All too often, we see companies jumping automatically to change their strategy, because they did not reach their projected performance. But, upon examination, there is nothing wrong with their strategy. The problem is in executing it. So, make sure you evaluate your execution capabilities as well!
This ‘compare & learn’ step will help you verify your hypothesis, update your strategy, and fine-tune your execution capabilities accordingly.