Strategy Execution Statistics: 6 Steps to Successful Strategy Execution
Most companies that successfully execute their strategy achieve outstanding results. These
6 proven practices and statistics make it easy to see why companies that apply the best
practices when executing their strategy, in average, see their stakeholder value triple in just
3 years.
Correctly executing a strategy is the most effective way for a company to create value for its
clients and shareholders. However, studies show that only 10% of organizations are
successful in doing so, primarily due to a lack of alignment between their structure and
strategy.
Consider the following strategy execution facts and figures:
- 60% of organizations don’t link their budgets to their corporate strategy.
- 67% of HR and IT departments don’t link their priorities to the corporate strategy.
- 75% of middle managers don’t have incentives linked to the organization’s strategy.
- 95% of the typical workforce doesn’t understand what their company's strategy is.
Benefits of Strategy Execution
Even though between 85% and 90% of companies fail to execute their strategies, those that
succeed achieve outstanding results (they generally increase their revenue by 80%-120%
in a three-year period), that subsequently translate into billions of dollars.
Likewise, a recent study demonstrated that 70% of companies that have a formal and
established process to execute their strategies outperform their competitors. These
organizations are also eight times more likely to rely on technological solutions to automate
processes such as budget preparation, financial reports and forecasts. This, in turn, allows
them a greater adaptation capacity of their internal processes.
This same study identified six best practices that directly contribute to these companies’
successes. (We will henceforth refer to these organizations as “successful companies”)
1. Define and measure the strategy.
77% of successful companies have an established mechanism to translate their
strategy into operative terms and evaluate it on a day to day basis.
One of the biggest barriers to strategy execution is not being able to describe it, as you
cannot manage what you cannot measure. The Balanced Scorecard and Strategy Maps,
methodologies employed by these successful companies, help fill this gap. The first step for
their implementation is assembling the executive team to develop a common standpoint of
the organization’s strategy. Frequently, this is the first time the team reaches a consensus
on the matter.
Once a general strategy is defined and agreed on, it must be translated into operational
terms through a Strategy Map. The Strategy Map is composed of strategic objectives that
are later reflected on a Balanced Scoreboard, along with metrics that can be easily
communicated and acted upon.
2. Focus on strategic initiatives
76% of successful companies focus on a limited number of strategic initiatives to
reach their objectives.
A normal organization executes hundreds of processes and dozens of initiatives on a regular
basis. However, the majority of said processes are operational, rather than strategic. In other
words, even though their execution is vital for the company’s operation, they do not
necessarily contribute to the strategy’s development or grant the organization a competitive
advantage.
By identifying which projects are truly strategic and devoting more attention to them,
companies can greatly improve their overall strategy execution capacity. Some examples of
key initiatives may be R&D, asset retention and operational excellence.
3. Establish regular meetings to monitor strategy
75% of successful companies have a formal and pre-established system to inform on
and manage their strategy.
Regardless of how good it may be, a strategy remains a hypothesis; it’s the company’s best
guess of how to guide the organization toward its goals.
Certainly, having a clearly defined strategy is an importing starting point, but for it to be
successful, a strategy must be assessed and adapted continuously.
Regular strategy review meetings allow for the company to continuously monitor the
strategy’s performance as it develops. They serve as a forum where the strategy’s progress
may be discussed and the team can decide upon the necessary actions to tackle their areas
of opportunity.
4. Communicate the strategy to all levels
73% of successful companies have a formal mechanism to communicate their
strategy.
The strategy is designed by the top management, but executed at the bottom. Front-line
employees (like customer service agents, sales attendants and drivers) are the closets to
the clients and to the company’s core business. Therefore, it is fundamental that the
decisions they take on a regular basis reflect the strategy’s priorities; a task that would result
impossible unless they know the strategy and understand the way their job contributes to its
success.
Marketing and communication literature state that, for a message to be successfully adopted
by the target audience, it must be delivered numerous times and in numerous ways. Some
of the ways that the strategy may be communicated is through newsletters, brochures or as
a part of the personnel’s regular training. However, the most communication is the one that
leaders send by walking the talk and embedding the strategy in their own day-to-day actions.
5. Aligning business units and support areas to the strategy.
63% of successful companies have all their business units aligned to their overall
corporate strategy.
The implementation of the strategy requires all parts of the organization to be coordinated
and integrated. The company’s HR programs, staff incentives and IT priorities should
integrally reflect the company’s overall strategic priorities.
Unfortunately, most organizations are unable to effectively manage their interdepartmental
processes in a holistic and unified way. The problem lies in that these different areas
frequently do not know the overall strategy and, therefore, do not align their priorities to
corporate needs.
Developing strategic maps for different areas of the company helps eliminate this barrier.
This way, leaders help create a shared vision of the strategy that, in turn, helps support
areas focus their efforts on the organization’s strategic priorities.
6. Link budget initiatives.
64% of successful companies build their budget based on their strategy, rather than
on past behaviors.
Most successful companies efficiently coordinate their planning and budgetary processes.
Unfortunately, however, up to 60% of organizations fail to do so due to a structural
inconsistency between these two processes.
Strategic planning deals with long-term aspirations while budgets deal with short term
operational issues. Moreover, strategic planning calls for interdepartmental initiatives, while
budgets are usually restrained to specific functions or areas. However, linking the two is
fundamental to integrate each area’s short and medium projects, and thus successfully
execute the strategy.
A key factor in this step creating a separate budget for operating expenses and another
designated for strategy expenses (also called STRATEX).
In summary
This article provides an overview of the six best practices in strategy execution and Balanced
Scorecard management. However, these techniques are not isolated from one other; only
implementing some will not yield the desired results as they are all part of a comprehensive
process.
These best practices provide a framework for your company to successfully convert its
strategy execution into a competitive advantage, and consequently achieve extraordinary
results.
Source: http://www.trissaconsulting.com/articles/strategy-execution-statistics-6-steps-to-
successful-strategy-execution