What is Strategy Execution?
Who is this article for?
This article is for anybody who is involved in driving strategic change and is interested in the role of strategy execution.
We hope that at the end of reading this article, you have a good understanding of the different aspects of strategy execution, difference between strategic planning and execution. We will also cover the difference between strategy execution and programme delivery.
As with all Shapecast content, we hope you like this content and we would love to get your feedback and your own perspectives on this subject.
Strategy and specifically strategy execution as a field is not new. The whole field of strategy and strategy management was propelled to the forefront of business leaders thinking by Michael Porter in the 1979 with the publication of Porter’s Five Forces in Harvard Business Review. Since first publication, the field of strategy execution in both academic and organisation thinking has continued to mature although the failure rates for strategic change continue to be worryingly low.
The overall field of organisational strategy is a deep subject for discussion, so in this article, we focus mostly on the latter phase of strategy execution specifically, the differences with strategic planning and its role within executing strategic change.
Objectives vs Strategy
Goals, objectives and outcomes define what we’re seeking to achieve but not how. Typical examples of objectives include “Grow Revenue”, with an associated KPI defining how much revenue growth is expected and in what timeframe.
The fundamental role of strategic planning and the subsequent phase of strategy execution is to define an optimal path of how you will achieve your objectives and goals, in our case above, how we will specifically grow revenue. The strategy should take in to account the challenges and barriers to achieve the desired outcomes while making the best of available resources.
We view strategy planning as a human-centric process (often driven by good data, industry knowledge, deep insight and experience) of identifying options, considering challenges, considering the environment, and differentiators available to you. It is the process of weighing up options to overcome hurdles and make the best of what you have available.
Clarity of objectives
Given the focus of most, if not all strategic planning is ultimately focussed on how best to achieve objectives, the first stage in the process requires both clarity of objectives but also strong alignment between the leadership team on the outcomes and performance measures.
For the purposes of this article, we will assume that there is already a clearly defined set of objectives and performance measures in place, and we are mostly focussing on the strategic paths to achieve the objectives.
Strategy planning vs strategy execution
What's the difference and why should we care?
Having clearly defined the goals, objectives and measures of performance (defined through key performance indicators or key results), strategy planning is the phase where we identify the optimal way of achieving goals.
Strategic planning can be a complex process as it involves understanding the challenges that the organisation faces in achieving its goals and identifies what resources and differentiators, can be most used to overcome the challenges faced in the most effective way.
It involves a deep and meaningful understanding the big picture, what are the forces driving outcomes and assessing the context of our organisation, knowing what is really working and what isn’t. Part of the complexity involves evaluating a vast array of permutations or variables, discounting noise and finding what really adds value.
For most organisations this planning process must be performed in the context of the wider market, understanding the threats of competitors and trends that will affect how we go about trying to overcome strategic challenges.
The strategic planning phase is therefore a delicate balancing act of assessing the outcomes sought, our resources, constraints and the context of the market challenges and trends, so that we can identify the most effective path to achieve the goals.
In doing so, it means being efficient with what we have but also rejecting a series of potential options that don't perform as well as other proposed ways of achieving
Strategy as ideas to be tested
Once the context, objectives, constraints and opportunities have been fully analysed, its usual to create some ideas of how we think we can pursue opportunities. Given this is usually a paper (or whiteboard) exercise, any ideas we generate are nothing more than that, ideas! Ideas come with a series of assumptions, challenges and positions to be validated in the real world to ensure we have understood the environment correctly and there are no false assumptions or gaps in thinking.
Ideas come with opportunity, but also risk which needs fully testing. Depending on the level of risk, the more cautiously we should tread. Once tested and refined and confidence levels are higher, we can consider to committing more resources and defining our idea as the chosen direction of strategic change and intent.
We are making these two different aspects of strategy out to be very different, but the phases of planning and execution can be much more intertwined and iterative with fast learning cycles between each.
In contrast to strategic planning, strategy execution is the process of turning ideas for use of resources in to concrete initiatives and then executing them whilst monitoring their effect on outcomes expected.
Strategy execution is much more focussed on the implementation and use of resources to deliver the desired goals. As such, it involves planning initiatives, assessing contributions of various aspects of the organisation, identifying gaps in the organisation’s capability required to achieve the outcomes and then moving into delivery.
Strategy execution is focussed on the linkage of initiative to objectives and their impact on key performance indicators, but necessarily it is also important to ensure the right execution capability is applied across the organisation to ensure that the delivery at the lowest level of detail is successful.
It is vital at execution phase to plan and maintain linkage from the highest-level outcomes to the lowest level of delivery.
The complexity of execution involves many moving parts, making sure the right initiatives are planned and subsequently delivered. As initiatives move into delivery, active monitoring is required to ensure that the initiatives deliver to plan and create the value expected.
Managing the risk of execution
Depending on the level of complexity and risk of our chosen path, the process of executing strategy can be as tentative or aggressive as we like but should match the level of uncertainty identified in the strategic planning phase.
For example, if the chosen strategic path carries a high degree of novelty, uncertainty and risk, then the strategic initiatives which will measure the progress of those strategic initiatives should be cautious and measured so that we can ensure that the proposed path yields the results that we had hoped for without investing too much before knowing whether the path is the right one.
Components of Strategy Execution
The first and perhaps most obvious aspect of execution involves identifying all the initiatives that are required to deliver a set of objectives. Some organisations will call these strategies that are being delivered, others program portfolios. The key aspect of initiatives is to identify all the large aspects of change that are required to deliver objectives. This will be the subject of a follow up article, but these initiatives could range from strategic initiatives because of regulatory change, digital change programs, development of new products and services, or initiatives to build organisational capability to achieve a future objective.
Once defined, these initiatives can then be decomposed in to contributing programs, projects and activities that can be tracked and managed.
Performance alignment and value management
The primary goal of the execution is to deliver the value and the outcomes that we set out in the strategic planning phase to make sure that the change that we had hoped for becomes a reality.
On often overlooked or poorly planned aspect of strategy execution is value management. The purpose of value and benefits management is to ensure that the benefits delivered from initiatives delivers the outcome expected by our KPIs. In simple terms, each KPI (either strategic or more operational KPIs) should have contributions from initiatives, programs and projects.
It should be clear at planning time what initiatives are contributing to KPIs and there is no daylight between the KPI performance expected and the outputs from initiatives. In many instances in larger organisations, contributions to operational KPIs will feed in to strategic KPIs in a complex hierarchy. This contribution hierarchy will need to map clearly to ensure the benefits of projects filter up to strategic performance.
Once the planning of benefits and strategic value has been completed, it is important to ensure that the results expected at planning time are achieved during or post-delivery. One of the most complex areas of value management is understanding delayed contribution (particularly for marketing strategies which in some instances can deliver benefits long after the completion of the initiative).
Accountability and ownership
An important and sometimes overlooked aspect of strategy execution planning and deliver is accountability and ownership. Critical in regulated industries (mandated by the FCA’s Senior Manager and Certification Regime), but in our experience important to get right from the start and an invaluable tool to validate buy in.
The accountability and ownership should not apply to just the execution and delivery aspects but also include ownership of KPIs and outcomes, including both the delivery and measurement.
The most commonly used framework for tracking accountability and ownership is a RACI (sometimes RASCI) is used defining the role of stakeholders in the delivery of initiatives.
The failure of half a strategy
Given the two fields described above, it should be clear that both strategic planning and strategy execution go together, and it is hopefully clear there is little value in one discipline without the other.
Having a world class strategic planning capability defining the best options to achieve goals without a subsequent execution plan becomes a paper exercise that never makes the light of day. Equally, having the most effective execution capability executing a fundamentally flawed strategy is a recipe for disaster and organisational failure.
Strategy execution creation
Having identified what strategy execution is, how do we go about creating an effective strategy execution plan and then executing it?
We recommend the first step identifying all the major aspects and parts of the organisation that needs to come together to support the chosen path.
Taking a simple worked example where the goal is to drive revenue growth by developing a new product in an untapped market where we believe there is an opportunity either to cross or upsell on our existing product portfolio.
Our strategic plan involves the development and build of a new product in a new market. This involves, all stages of product development, market evaluation and getting the product to market at scale. It is reasonable therefore to assume that we would include strategic initiatives that would include the following:
- Market research
- Marketing analysis and segmentation
- Marketing planning
- Supply chain management
- Distribution & logistics
- Channel management
- Retail management
- Organisational change
- Location identification
- Organisation design and implementation
In this example, the strategic initiatives include the major high-level areas that are needed to achieve the desired outcomes. In this instance they include product development, marketing, sales and organisation development. Under each of these major initiatives, falls a series of programmes which contain a set of discrete projects. The benefits of the programmes and project when delivered must be shown to deliver either directly or indirectly the KPIs to ensure that we are delivering the “right” project.
This list is not meant to be exhaustive, but just to give you a flavour of the kind of strategic initiatives that would need to be identified, planned and subsequently executed when delivering the high-level strategic goal of building a new product in a new market. Each of these broad initiatives needs to be broken down into subsequent programmes of delivery with projects and activities supporting each of these.
Along with this execution planning goes detailed financial planning, risk planning and key decisions that are required to build and execute these initiatives.
As mentioned earlier, once defined, the execution must include regular checkpoints to ensure that the initiatives follow plan and importantly the outcomes in terms of revenue and profitability that we identified as part of the strategic plan deliver as expected.
Difference between strategy execution and delivery
Now we have set out how strategy execution supports strategic planning and we've identified a series of delivery programmes and projects that support the process of delivering strategy, it is reasonable to ask what's the difference between strategy execution and ordinary organisation delivery of projects and programmes?
As discussed previously, strategy execution is the discipline of executing the strategic option that has been chosen to deliver objectives.
Strategy execution is about all aspects of delivery and how the objectives will be realised. As such it involves a much wider understanding of the contribution of the programme and project portfolio to operational and strategic KPIs. Within those initiatives, programmes and projects will be delivered. However, strategy execution is a much wider and more strategic view of the organisation with specific focus on outcomes.
By contrast, project and programme delivery is a much narrower view and involves in delivering a project outcome to time and does not necessarily have any focus on strategic outcomes.
Although programme frameworks such as MSP do provide guidance on linkage to strategy and operating model, the domain of programs and especially projects are typically much lower in the organisation but will form an important part of the overall strategy execution plan.
Organisations therefore can be great at delivering projects and programmes, but those projects and programmes may have absolutely zero strategic impact and are therefore effectively wasted effort strategically.
We hope you found this article useful and would love to hear your feedback I thoughts on this content.
If you would like to discuss how we an help you to build and execution your strategy faster, please contact us.