Mapping Out Strategic Execution: Part 2 of “Why We Fail at Strategic Implementation“

In the first article of this series, we discussed a number of factors that lead to failure in execution. In that article we addressed that failure to execute has several root causes and looked at several common reasons why companies fail to execute their strategic plans fully, which include:

• Poor prioritization
• Lack of detail planning to support strategic goal achievement
• Poor communication and coordination
• Strategy and culture misalignment
• Plan goals lacking accountability
• Poor planning governance
• Ill-defined strategic goals

In this article, we address mitigation approaches and techniques related to all of the causes of execution breakdown listed above.

Step 1: GPS Inputs

You wouldn’t dream of jumping into your car and driving off to an unfamiliar destination without first plotting your course on your GPS or consulting an online map service. Instructions are needed to determine what roads to travel, which exits to take and what turns to make. It’s easier and much faster to get where you want to go when you plot the course ahead of time, based on where you are beginning your journey (where you are today) and where you are planning to go (the future).

Where are we originating?

Execution planning requires understanding where the organization is today in order to plot the course to the future state - our destination. The destination in this case is defined by strategic plan goals. Before embarking on a cross-country trip, you’d want to determine the best route, get your vehicle checked and make sure you have enough gas in the car to get to your destination or safely to a point where you can refill your gas tank. All of these housekeeping tasks must be done to ensure we arrive safely at our destination.

Planning execution is a similar tactical exercise, requiring good data on which to base decisions. To accomplish our plans, there are many current-state information inputs to consider. Some preliminary inputs include:

• What processes, people and technology will be needed and are they available?
• Can we meet the target implementation dates of the plan goals based on current capacity?
• What are the risks involved with the plan?
• What are the consequences of not achieving our goals?
• What are the consequences of meeting the plan goals?
• How will we mitigate the known risks and plan for unknown contingencies?
• What will this cost and does the budget exists to fully implement?
• What will be the ROI for the effort?

In order to answer some of the questions posed above, it becomes obvious that execution planning also requires accurate financial data as inputs, specifically budgetary information to drive planning and to validate the business rationale.

Budgets and Financial Gobbledygook

Enterprise, division, line-of-business and departmental budgets determine the resources that can be invested towards a goal’s achievement. Goal timeframes may not be accomplishable if financial resources are too limited or, worse yet, do not exist in key areas of the enterprise ecosystem (see more on the Enterprise Ecosystem in the article Enterprise Myopia).

During tactical planning, financial constraints will begin to emerge and must be resolved. Sometimes plans must be scaled back or adjusted to reflect the limits of capacity to meet goal objectives in certain areas of the organization without additional investment by the enterprise. Finalized budget allocations allow the detailed aspects of the plan to be developed fully.

The Business Rationale - ROI

What is the key outcome worth to the business and what will it cost to accomplish achieving the goal? Before launching a program of initiatives related to a plan goal, the business rationale should be fully understood in terms of expected benefit to the enterprise. A preliminary cost/benefit analysis should be a part of the business case for moving forward on a plan goal and the program of initiatives associated with the goal.

Understanding the potential rewards to be gained as results of plan goals allows tactical plans to be developed that will satisfy the required timelines and budget constraints without compromising the intended ROI.

Where are we going?

Defining the future state of anything is a difficult task for most of us. It’s difficult because it doesn’t yet exist and must be defined in terms that we can envision and understand. This is where key outcome visioning helps.

To examine this point, let’s consider the most simplistic example: an organization that is comprised of departments representing the functional areas of the business. With this departmental perspective, the organization’s desired future state will consist of the enterprise vision and goals, which in turn is represented by departmental goals that accomplish that vision and those goals of the enterprise.

Step-2: Key Outcome Visioning

Plan goals are an expression of the future state we desire, but we’ll initially consider them as “key outcomes” we must achieve. It is very common to feel overwhelmed with the quantity of ideas presented, but that is normal and healthy. Dealing with more input leads to better options to select from and helps the organization to develop selection criteria based on the enterprise vision, core values and capabilities.

Some of the key outcomes that will be identified will eventually become our future state goals, but not all of them. Until they’ve been processed, refined and ultimately selected through a Darwinian “survival-of-the-fittest” process, they should be considered only as candidates. “Visioning” helps the innovation and creativity flow during planning, and in the key outcome visioning stage we are looking for both quantity and quality, even as we refine the definition of our future state.

Execution planning to accomplish the future state always relies on clearly defined strategic vision and unambiguous direction. Work done in this stage has a huge payoff down the line. Not only does planning execution for future-state goals require an understanding of where the organization is currently, but also requires plotting the best course to get there based on current and factual data.

For more information related to defining the current and future states, refer to the following articles:

Topic: Inputs - The First Critical Step to an Effective Planning Process: Inputs

Topic: Current-state Analysis - The Second Critical Step to an Effective Planning Process: Current-state Analysis & Review

Topic: Visualization - Improve Your Corporate Planning Process with “Visual Facilitation”

Step-3: Plan Creation – Closing the Gaps

With the current state and future state defined, evaluate the gap between these states and make decisions on which goals best represent the enterprise vision. When the goals which represent the vision of the enterprise have been decided upon, the task remains of creating a plan that is realistic and executable is more possible, but still daunting.

Much remains to transition the gap between the point of origination (the current state) and the destination (the future state) into step-by-step plans that the organization can execute over a specified period of time.

Define the Benefit for Our Customer

To aid in defining the customer benefit, step back and consider the customer value involved with the candidate key outcomes.

We should be able to glean a customer value proposition from our proposed key outcomes and translate the value into statements expressing tangible benefits. Might we improve upon our cost-effectiveness or fulfillment response times? Perhaps we can offer a more competitive pricing strategy because we are considering ways to trim costs from our direct labor or other COGS inputs. Whatever it is, we should define it for the customer and for our own organization’s employees so we do not lose sight of the purpose of our objective.

Framing our perspective around customer value will help in the next step, prioritization and selection and later in plan execution. Work remains to be done…so let’s continue building upon the roadmap to execution.

Step-4: Prioritization and Selection

Following our simple departmental example, executives will develop the enterprise strategy that articulates the goals of the future state in collaboration with the department leaders.

At this point, prioritization of key outcomes becomes necessary. One simple technique is Relative Valuation (RV), which places all key outcomes on a level playing field to select the ones to go into the plan now.

RV looks at two simple but important variables:

Importance – On a scale of 1-10, what is the importance of the key outcome to the organization?

Satisfaction – On a scale of 1-10, what is the organization’s satisfaction level with the current situation?

The formula for determining relative value is:

RV = (I X 2) – S

RV should be calculated for each key outcome being considered, then the opportunities can be ranked to determine the highest opportunities relative to one another.

Once RV has been calculated for each key outcome, they should be ranked in order of highest to lowest RV. Now comes the hard part. No organization has the capacity or the desire to take on every goal all at once, so selections must be made on which goals will go into the plan now, and which get deferred.

One very effective approach is to focus attention on only the top 20% of the ranked key outcomes, using the calculated RV. That sets up a smaller and more easily managed set of goals upon which to construct the plan. Using this approach, the remaining 80% will go into the backlog and be readdressed each time the plan is refreshed. Such an approach allows the organization to update the plan quarterly and to use data inputs based on real-time and accurate information. We will discuss more on this topic later.

At this point in the roadmap, we are moving towards the final statement of enterprise strategic goals and the development of the underlying operational plans to achieve our outcomes. The execution tactics will be defined based upon all of the groundwork accomplished so far, including:

• The current state the organization is starting from
• The future state the organization wants to reach
• Planned outcomes agreed upon in coordination with executive management and department leaders

The process described so far has laid the foundation for determining the final selection of enterprise strategic goals and later will drive the creation of the supporting operational goals and plan(s) – all of which will be defined using quantifiable and measurable enterprise / departmental outcomes.

Step-5: Removing Variability From Our Plan Goal Language With our key outcomes now defined, prioritized and narrowed down to a manageable number, it is time to make sure they are each worded in crisp language and are measurable in some fashion. Ambiguity must be stripped away from the goal statements and replaced with clear and concise wording.

Use of a controlled vocabulary in goal statements is a helpful technique to get the plan on good footing. Restricting language to the use of “minimize”, “reduce” or “increase” statements with specific percentages or amounts will accomplish this task. For example:

• “Increase gross margin by 3% by Q3 of 2010”
• “Decrease direct labor cost by 3% by Q3 of 2010”

Where possible, it is recommended that the value that the goal will introduce to the end-customer be incorporated into each goal statement. For example:

“Increase cost competiveness for top-tier customers by reducing raw materials expense by 3%”.

Step-6: Plan For Execution and Execute the Plan

With the current-state now defined and the future-state goals agreed upon, the next step in execution planning is to develop the tactics to bridge the gap between current and future. In tactical planning mode, the operational layers become even more deeply involved in the planning process. Each enterprise plan goal explodes into a number of supporting operational plans, where tactics are defined, executed, managed and measured.

Term Definitions

• Plan Governance: Refers to the management of plan execution, tracking alignment of plan goals with the supporting initiatives.
• Portfolio: The collective body of all underlying programs supporting plan goals.
• Program: A grouping of related initiatives / projects within the plan portfolio.
• Initiative / Project: A discreet grouping of tasks related to the accomplishment of a component or sub-component of a plan goal.

There are six interrelated dimensions through which detailed tactical planning of the operational layers must be orchestrated:

• Time
• Processes
• Technologies
• Culture
• Budget
• People

Step-6.1: High-level Operational Planning

Against the backdrop of the six dimensions listed above, we are now ready to dive into operational planning. This process should be approached in a bi-directional (top-down / bottom-up) fashion.

“Card-storming” is one technique that is very effective in beginning the operational planning stage. Card-storming can be used in a workshop setting where all participants are in the same location, or via video conference with multiple locations involved. With this technique for high-level planning, lots of wall space is recommended.

Here is a quick synopsis of how the process works. Corporate goals are listed on flip chart pages and placed on the walls around the room. Participants then use 3X5 or 5X7 index cards to write down tasks and project ideas related to each goal – placing the index cards under the plan goal it should be associated with. In card-storming, participants can work individually or in teams for a short defined period of time to write down as many ideas or tasks as can be accomplished during the timeframe related to each topic. At the conclusion of the time period, each person or team presents the ideas back to the larger group. From there, duplicate ideas are removed, and cards are categorized by topic area (grouping). All of this must be done while passing no judgment on the ideas presented by the other individuals or teams.

This technique can take a lot of time to complete and might easily require a two-day workshop to fully identify project interdependencies. It benefits the group enormously by allowing for very productive brainstorming and builds an early visual task list indicating where work will be required to accomplish the outcomes of the enterprise strategic plan. The identification of interdependencies that present themselves can save man-months of work down the line. Groups of related projects can begin to be associated together as one program, even though they may span several departments or even divisions within larger organizations.

Step-6.2: Detailed Operational Planning

Detailed operational planning relates corporate strategy with the operations of the enterprise at the initiative / project level. Projects that have been identified can now be planned for at the detailed level, including: timeframes, human resource requirements, technology requirements and in many cases, dependency on other projects or programs (groups of projects). Careful attention to detail at this level can help avoid collisions with other projects down the line. Even then, there may be inter-dependencies between these groupings of initiatives and shortages of resources where overlaps exist. Tactical planning must delineate to the maximum extent possible the timelines, dependency relationships, resource allocations and costs relative to the allocated budgets across operational areas to avoid as many collisions and conflicts as possible.

Estimating

To estimate effort, past metrics are essential to help answer questions such as:

• How well can resource horsepower be utilized?
• How much resource horsepower is at our disposal?
• What is the expected productivity of their horsepower?

The best predictor of future performance is the organization’s own history (see recent article The Role Of Acceleration In Corporate Strategic Planning). Historical Acceleration reduces uncertainty in detailed tactical planning by defining execution based on calculations of the organization’s past performance in meeting goals.

Accountability, Performance, and Reward

Accountability requires clarity. Clarity regarding roles and responsibilities relative to plan goals requires people who have sufficient incentive and understanding to execute to that plan. Employees that understand what is being done, the reasons why, when to do what, and how they can contribute become empowered team players.

Tools such as RACI models can aid in mapping out Responsibility, Accountability, Consult and Inform roles relative to the programs or initiatives supporting the plan.

Individual accountability cannot exist without consequences -- both positive and negative. Teams and individuals must understand both the organization’s desired outcomes and their specific responsibilities in achieving those outcomes. Furthermore, their role and impact in meeting organizational objectives should be rewarded, while any behavior that impedes the achievement of organization goals should hold an appropriate consequence.

Job descriptions must be updated in coordination with Human Resource departments. Job descriptions must be kept current and support the accountability factor needed to sustain execution standards of excellence over the long haul.

Accountability also must be clear in terms of expected timeframes. For accountability to exist, all who are affected by the plan must understand what is to be accomplished and within what timeframe. After all, it is impossible to hold people accountable for accomplishing a key outcome if there is no basis to measure. Similarly, if an objective that is not bound by time or if the team has unlimited time to complete it, the goal can never be considered to be complete or its progress evaluated.

Energy and Focus

Organizational energy and focus are critical components to the achievement of success during execution. Realistic expectations of the long-term performance required of those executing the plan must be considered. Shorter durations of projects allows accomplishment and reward to take place more frequently and adds to the energy and excitement required to fuel the enthusiasm we want the team and individuals to have before taking on the next task. Tactical planners who strive to define shorter discreet tasks that have clear start and end targets as well as crisp expected outcomes, construct operational plans which focus on goal accomplishment.

Communication

An important approach to consider in the successful communication is to translate plan goals into strategy statements that the organization can embrace and enact. To effectively spread the enterprise vision throughout the ranks of the organization empowers and energizes employees to contribute to the successful execution of the strategic goals. As with the business strategy, the communication of the business goals must be carefully planned and well orchestrated to achieve the intended results.

A multi-disciplinary communication strategy that works with the corporate culture is the most effective. Multi-disciplinary means that we have to look at the organization as a whole and take into consideration the way communication is occurring within the current state. What are the issues the existing communication strategy poses to the organization? What changes need to be implemented?

Step-6.3: Plan Governance

Perhaps most important step along the roadmap is plan governance.

Organizations that have matured in their planning process have taken governance to another level and have implemented Plan Management Offices. Plan governance, whether implemented as a formal Plan Management Office or administered through a less formalized committee structure, should be responsible for the functions of selecting, managing and measuring of everything entering or within the plan portfolio. As discussed earlier, the plan portfolio is the overall macroscopic view of all programs and initiatives involved with strategy implementation.

As a function of the ongoing management of the plan portfolio, plan governance also involves refreshing the strategic and supporting operational plans to reflect changes as a result of completing plan goals and taking on new ones. This structure allows for strategic and operational planning to become much more actively managed and based on a shorter time horizons. Shorter time horizons for plans leads to more focus on execution and results in better outcomes. As we’ve discussed in previous articles, a rolling 12-month plan that is refreshed quarterly is best suited for achieving optimal results in execution. There are several reasons why this approach yields better planning outcomes.

One reason for the better results is the tendency of shorter plan horizons to have fewer goals per cycle and therefore be more focusedon tactical execution. Rolling 12-month plans allow the organization to be more responsive to change with goal setting, especially in the operational aspect of planning. Likewise, plans that are refreshed quarterly are easier to manage and keep the organization sharper and focused on achievement due to the shorter cycles to accomplish chunks of work.

12-month rolling plans have proven do better at addressing the pressing needs of the business, while maintaining the long-term focus of the CEO and corporate strategy team. Add refreshed quarterly plans to the mix and you have instilled into the organization a laser-beam focus on results. Plan governance administered on a quarter-by-quarter basis affords management the opportunity to review the initiatives underway and assess any backlog that exists. Management can also assess the organization’s capacity to move an item from the backlog into the active plan – furthering progress towards completion of the plan’s goals.

12-month rolling plans also tend to be more realistic. This is attributed to the higher quality data driving the process, such as: capacity to change, historical achievement, resource availability and current environmental constraints.

Plan governance manages alignment of plan goals and supporting initiatives through effective oversight at the corporate and operational levels. Plan Management Offices benefit the organization by having better visualization into all efforts supporting strategic implementation. Plan Management Offices also position organizations to better manage the interrelationships of all the underlying initiatives, considering dependency relationships and constraints on resources.

Lastly, a plan governance model can harvest metrics and status reporting from across the portfolio of all programs and their underlying projects. Metrics are harvested from the tactical layer to provide historical acceleration data to offer continual improvement to the planning cycle.

In the end, planning governance helps organizations filter through the minutia of everyday tasks to focus on accomplishing key outcomes sought by executive leadership.

Conclusion

By systematically improving your company's holistic approach to corporate planning, you can increase your organization’s strategic implementation capability. In doing so, the organization will measurably improve in performance, in decision making, customer satisfaction and in setting in motion the right initiatives aligned to new long-term strategies and new short-term tactics.

Other Suggested Reading:

• Strategy Execution: Why We Fail At Strategic Implementation
• So You’ve Finished Your Strategic Plan, Now What?
• The 2010 Twelve-step Checklist to Evaluate Your Strategic Business Planning Process
• The CEO Conundrum – Balancing Strategic and Tactical Responsibilities

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