When strategy execution is not linked to outcomes
In this article we to explore what happens in organisations where strategy execution is not linked to business and digital change outcomes.
We will classify some of the common hallmarks of poorly aligned strategy we see in organisations, the impact it has on productivity, team morale and most importantly organisation’s ability to achieve its objectives and drive value.
What do we mean by strategy execution?
Let us first start by defining what we mean by strategy execution and strategic alignment so that we can frame the rest of this article. Strategy execution is the ability to focus limited resources on the initiatives that add most strategic value.
The related concept of strategic alignment is the degree to which the things you do as an organisation can be shown to directly support the outcomes the leadership team expect.
What is the difference between strategy execution and program/project delivery?
Strategy execution is sometimes (understandably) confused with project and programme delivery.
While both result in outcomes, deliverables and change, the field of strategy execution is a broader view of the initiatives and activities across the whole organisation and how those initiatives work together to achieve an ultimate goal or business objective.
Program and project delivery by contrast, is more focussed on an individual point in time outcome, which may or may not be related to business objectives.
In strategy execution we focus on the projects and programmes that can be demonstrably shown to have a direct impact on objectives. It is therefore important to track benefits and the impact of project and programme benefits on strategic key performance indicators so that as the portfolio executes, the benefits combine to measurably contribute to strategic outcomes and organisational performance.
The hallmarks of an unaligned strategy
Having looked at what strategy execution and alignment are, what happens when an organisation executes a series of programs and projects (called portfolio from here) which are not well aligned to an organisation’s objectives?
The following list identifies some of the hallmarks of failure to align. It is worth noting that rather than being independent problems, the list of challenges below often cascades and interrelate.
Problem #1 - difficulty prioritising
The first challenge faced with an unaligned portfolio, is an inability to easily prioritise projects and programmes based on value.
Projects and programmes which cannot be shown to directly support strategic outcomes may present with positive business cases, but if they do not contribute to strategic outcomes could have an arguably weak or even damaging long-term benefit. Initiatives which have strong short-term benefits, take a large amount of strategic resource and focus could actually be at best a distraction, but limiting more beneficial longer term strategic projects.
When this happens, there may be strong differences of opinion between leadership team members on which favourite projects and programmes add the most value without a clear and simple way of resolving strategic importance.
For organisations where projects and programmes are directly linked using a strategic execution framework to objectives, prioritisation becomes simpler as the projects and programmes that directly provide the most strategic impact are the ones that get the priority, focus and investment.
Problem #2 - everything is important and urgent
In a poorly prioritised portfolio, all initiatives have equal weighting, merit and demand of financial and staff resources.
As a result, staff risk being overwhelmed, knowing where to focus their time and find it difficult to focus on what is really adds value. Ultimately staff try to do everything and risk doing nothing well. The burn out and frustration this can cause often leads to a significant reduction of confidence in leadership.
Problem #3 - Underperformance of objectives and KPIs
One the most concerning aspects of failure to align the portfolio to objectives, is the inability to track and actively manage KPI performance and the achievement of targets. As a result, KPIs are frequently missed or consistently underperform.
Surprisingly few organisations ever cross check the expected KPI performance and the contribution of value from the portfolio, to ensure that when the portfolio delivers successfully, the KPIs expected target values will be achieved. The risk is that failure to plan or underinvestment in programs will lead to underperformance of KPIs which are only ever tracked retrospectively.
This lack of management and forward planning leaves executives and leadership teams exposed, and shareholders frustrated with performance.
Problem #4 - Not knowing what is really working or what to do more of
As with problem #2, where there is acceptable or even good strategic organisation performance, if the portfolio is not aligned measurably to the objectives and performance measures, it can be difficult to determine what has worked and why. As a result, it then becomes difficult to know what to replicate and why.
Ultimately, strategy planning and execution is the delivery of a strategic hypothesis of what we believe is the best way to achieve objectives using resources available across the organisation.
Without the control mechanisms monitoring the impact of delivery on outcomes, it is difficult to know how to replicate the experiment at scale. As a result, guesswork and patchy results become the fate of both the leadership team and organisation.
Problem #5 - Poor morale and high staff turnover
Failing to know what's working, not being able to prioritise and unnecessarily overextending teams and staff on poorly prioritised initiatives is both exhausting and demoralising. A continued lack of focus but urgency to deliver everything is a recipe to burn teams out and diminishes the team's confidence that the leadership team really know what to focus on and how to deliver good results.
This in turn can lead to a poisoned culture where poor morale pervades the organisation. Once morale starts to wane and loss of confidence in the leadership team increases this can be a vicious cycle which can be difficult to recover from.
How to avoid the problems and create strategic alignment
As mentioned previously, many of these problems listed above are interrelated. In our experience, addressing the underlying root causes of strategic alignment and focussing the portfolio can quickly result in significant improvement in the organisation's ability to perform and achieve outcomes. In doing so, delivery team develop confidence in themselves, and their leadership team and morale improves.
To address these challenges, it is vitally important that clear a strategic execution framework which links objectives, performance measures (KPIs), strategic initiatives and projects and programmes in a clear framework of contribution and execution is used.
This include managing execution and delivery performance, but also actively tracking and managing benefits of projects and programmes and their contribution to both operational and strategic KPIs is it clear at both planning and delivery, what contribution projects have on organisation performance.
In addition to both execution and benefits tracking, experience shows it is critical to also include accountability and ownership at all levels of the execution and management, so the individual and teams can clearly track their strategic contribution and value they provide to the organisation's objectives.
How well aligned is your organisation?
How well do you recognise these problems within your organisation? Do you feel that strategy execution is not linked to outcomes in your organisation? Are you facing an overwhelming number of projects and programs, all of which have equal priority?
Do you work in an organisation where consistent failure to achieve performance metrics KPIs or where a large portfolio is all equal importance?
If you find yourself in this position, we recommend assessing how well projects and programmes are measurably aligned to operational and strategic KPIs and using a strategy execution framework that can bring together and enable you to focus resources on the most impactful outcomes.
This creates focus, clarity and enables everyone to understand the impact of the work they're doing, but most importantly focuses time and effort on only the things that really drive value. In doing so, it also enables them to defocus and deprioritise things that are not important.
This focus and clarity drives morale and creates confidence in the organisation strategy and leadership team to do the right thing.
We hope you found this article interesting and useful. If you would like us to help measure your degree of strategic alignment and the impact misalignment is having, please contact us.