Strategy Execution takes place across different organisational levels. Depending on the size of the company, these include: the overall company level, one or more intermediate levels (usually called division, department or team), and the individual level.
Most companies lose 40 to 60 percent of their strategic potential somewhere along the Strategy Execution process. The weak points are often the links between organisational levels. For example, departmental initiatives that don’t fit with the overall strategy, or team objectives that are not translated completely to the individual level below.
You can achieve better alignment by aiming for MECE – mutually exclusive and collectively exhaustive. This simply means that everything from the level below (strategy, initiatives, objectives, etc.) should add up exactly to the level above, without any overlaps. This may sound logical and easy, but practice shows that many companies have a difficult time linking levels correctly.
One of the reasons companies find it hard to get this right is the complex matrix of responsibilities. Strategy Execution accountabilities are often blurred and spread across an organisation.
In large organisations, you can have up to 10 different parties involved, including corporate functions, functional lines, regional structures and countries. In addition, within each of these structures, responsibilities are often dispersed among HR, finance, the strategy department and the various leadership teams. Pretty easy to lose some of your strategy in this structure, wouldn’t you say?
You can improve your Strategy Execution capabilities dramatically by improving performance alignment between the different levels. Think MECE − make sure everything adds up, and avoid overlaps. When it doesn’t seem to be working, take a look at the complexity of the Strategy Execution accountabilities.
Often, a simplification or clarification can boost alignment. This is the first Strategy Execution law.
You can visualise a successful Strategy Execution alignment with an (extended) 8. For more information, go to the 8.