“Implement Strategy under any Circumstances”: How to Understand why your Company’s Strategy Remains on Paper

Many studies show that only 22% of companies successfully implement the approved strategy (The State of Strategy Execution “survey by The Economist Intelligence Unit). We live in a turbulent time when failure to implement any strategic goals can be attributed to external circumstances.

But does their achievement depend only on external circumstances?

How to build such a management system that would contribute to or even guarantee the constant relevance and feasibility of the strategy?

For almost four years, management consultant and Chairman of the Board of IT company David Dunning, has been developing the BIG framework — that stands for Business Integrated Governance, to answer this question.

Last year, I joined David to contribute to BIG development in order to create a clear framework that would help organizations implement their strategies holistically, not by fixing what’s easy to fix (for example, project direction).

In BIG’s philosophy, the strategy and mechanisms for its implementation are not something additional but the “blood circulation system” of the company.

In essence, a framework is a platform or an ecosystem that allows you to see the entire landscape of necessary conditions and elements and consciously choose precisely the element that is the bottleneck in the current management system. Other elements are not ignored.

I would simplify a little bit BIG concept in this overview, but it will give some idea what it is about.

So what are these elements?

Strategy

The strategy often does not contain clear goals and a plan to achieve them based on external drivers and internal resources; it is not integrated with project, product, and operational activities, and it is not cascaded to performers.

Often, a strategy is dealt with once a year at a strategy session, and the rest of the time, it lies on the shelf until it’s time to develop the next one. Of course, now there are such methods as, for example, OKR (Objectives and Key Results), which allows you to dynamically adjust the goals and plans formed based on the strategy quarterly or more often. But they cover only a tiny part of the ambitious goals and are clearly insufficient to synchronize the company’s activities with the strategy fully.

Also, in most strategies, there are no explicit priorities, focusing the company’s efforts on specific initiatives. Without this, it is impossible to implement it with the limited resources available (human and financial).

How to fix it?

To successfully implement a strategy, it must at least exist. Moreover, the strategy is not just any presentation on the CEO’s bookshelf but a particular document, which, among other things, takes into account the following:

• shareholder goals,
• threats,
• opportunities
• external regulatory imperatives.

It should also define the organization’s goals, objectives, targets, or challenges, cascading through strategic, operational, or business plans. The strategy must be linked to the execution mechanism, and if some strategic goals cannot be achieved for objective reasons, the strategy is to be promptly adjusted.

Organization

To allocate responsibility, it is necessary to clearly define the entities for which the accountable persons are assigned. These can be permanent organisational entities — departments, divisions, or temporary — projects, programs, and products. It is impossible to manage if these objects are not defined, their boundaries are blurred, or they do not formally exist (not approved, not equipped with resources).

What is worth changing?

Organizational units (entities) must be clearly defined in the company. Scope and time boundaries must be defined for each temporary entity (project or product).

Governance

Includes decision-making bodies such as committees, management boards, etc. The purpose of these bodies is to make timely and balanced cross-functional and cross-disciplinary decisions that consider strategy, available resources, and organisational entities (see Organization).

We often have to deal with situations where there are no collegiate bodies; they do not include all stakeholders (formal and true), meet too infrequently, conflict on authority and agenda, use controversial or unreliable information, and do not make the expected decisions. This is due to an oversight or insufficient authority. Often the meetings of these bodies are not coordinated with each other. This does not allow management to “keep abreast” and at the same time not drown in a vast number of meetings.

How to fix it?

For the successful functioning of the governance bodies, it is necessary to determine the required information for “input”, decisions for “output”, powers, and a standard agenda, and coordinate the cadence of meetings of various collegiate bodies with each other. Also, this element implies the integration and synchronization of all other BIG elements with each other.

Accountability

A common situation is the absence of a top management sponsor for a project or product or the narrowing of its actual area of responsibility to certain aspects of the project (for example, commercial ones). This means that the sponsor is not responsible for the entire project.

Also, often the employees responsible for entities associated with products and changes report to the heads of organisational units of the organization. The latter, in turn, do not bear due responsibility. As a result, their motivation is shifted from developing to operational activities.

In any case, when accountability is not assigned, not backed up by the necessary resources and powers, and there is no reward or punishment for achieving/failing to achieve the planned goals and targets, such “accountability” does not work. In addition, it is crucial that those accountable for it, and not just “accountable people”, take part in making decisions on the entity — accountability node.

How to fix it?

One accountable person should be assigned to each accountability node in the organization (for example, a project, product, or department). That is the person who is ultimately responsible for achieving the organization’s goals, obtaining targets, and overcoming the challenges cascading to him from the strategy level. In the case of projects, this is most often the project sponsor, in terms of products — CPO (Chief Product Officer), organisational units — heads of functions, departments, or domains.

If you assign accountable persons to one or more entities, these objects will turn into areas of responsibility, which should cover the entire organization. Accountability goes hand in hand with the authority and resources, as well as the attention of management, which is necessary for their implementation. Accountability must be fixed in a business plan (for a department) or a business case (for a project).

Information + Data + Management System IT infrastructure

Without high-quality and timely information, it is impossible to ensure the rapid making of balanced decisions on the portfolio of projects and to give feedback on the progress of the strategy implementation. At the same time, the cost of manually processing this information without the necessary IT tools is exceptionally high and inefficient — errors and duplications inevitably occur. Often management does not trust reporting because of its incorrectness or irrelevance.

How to fix it?

Information should be collected based on uniform, agreed rules that imply a unified calculation methodology and define data sources for the same KPI in various reports.

It is also important to monitor the quality of the data on which reports and forecasts are based.

For information to be promptly available, not duplicated, consistent and consistent, a suitable IT infrastructure is needed. This can be, for example, a multidimensional reporting system, a data warehouse, or integration solutions that collect data from existing IT systems.

Business Support

Companies implementing a large portfolio of projects have long recognized the need for a unique, permanent “headquarters” for collegial management bodies, for example, a project committee — the so-called project management office. In many cases, such a “headquarters” functions informally for each organisational entity, group of them, or decision-making body, while the quality of its work may be far from ideal.

The hard truth is that when such a “headquarters” is absent, the quality of the preparation of collegiate bodies meetings deteriorates radically, or the decisions taken are not sufficiently controlled.

The negative consequences of an approach in which business support is absent, unprofessional, or uncoordinated are apparent. The resources of such units may be insufficient or, on the contrary, excessive; they are not provided with the necessary technical or methodological tools and qualified personnel. As a result, their assistance does not meet the quality requirements of management.

How to fix it?

The organization needs to form a network of such “headquarters” under centralized control. All “headquarters” together must:

• ensure efficient and syncronised work of collegiate decision-making bodies and accountable persons,
• define service standards
• select and implement the necessary tools and methods,
• balance the necessary resourcing and the available staff in “headquarters” throughout the organization.

Assurance

Units that control quality, if they exist (for example, the project management office), perform the function of a policeman rather than an assistant to those responsible. This does not lead to systemic correction of defects in processes.

How to fix it?

The quality of any organization’s process is ensured by transparent technology and measures to verify its compliance with legal standards. To do this, you need to use a “assistant” assurance. Its purpose is to make sure that the process meets the requirements. At the same time, proposals are put forward to correct the situation in case of deviations, and assistance in solving the problems and difficulties that have arisen is provided. An example of such a unit is an internal audit or project management office.

Leadership

An integrated business management system is a living organism, the usefulness of which is tested and confirmed through daily use. Only senior management, which is the primary beneficiary of the entire functioning of the business integrated governance, can make it essential for the organization and treat it with the utmost seriousness and responsibility.

It is impossible to improve the Business Integrated Governance as a system without the key role of the sponsor from the top management. He must maintain and form an order for the building of this system and its maintenance in working conditions.

Enabling Processes

When resources or finances are not allocated as prescribed by the priorities of the strategy, do not support the authority of responsible persons, and there are no mechanisms for escalation and resolution of relevant problems at the senior management level, any decision made will most often not be implemented. And suppose you ignore the impact of changes being implemented in parallel on the same people. In that case, resistance will become insurmountable, and initiatives will at least stall and most likely fail.

The strategy is often not implemented for several reasons:

• lack of human and financial resources,
• the unwillingness of employees to accept changes and change themselves,
• the inability of the organization to communicate priorities and act in accordance with them.

How to fix it?

Supporting processes include:

• investment planning and decision-making
• resource planning and accounting,
• change management (at least in terms of coordination and planning of changes),
• portfolio management processes for projects, products, services, etc.

You need to assign an owner and determine the necessary IT tools for all these processes.

If all system elements are configured correctly, the organization can implement the strategy or make timely adjustments to it successfully.

It is important to realize that a stand-alone management tool, such as OKR, that affects only one of the elements of the system will not help to achieve immediate success unless the rest of the components are already in order (however, this happens extremely rarely).

But the ecosystem, built from the elements indicated in the article, allows the company to develop a roadmap for possible improvements and make them systematically, methodically and consistently using specially selected individual practices, processes, or tools.

As a result, we get the necessary management infrastructure to respond quickly to external changes and focus the company’s resources on achieving strategic goals.