Executing strategy in an everchanging world
A few weeks ago, I heard an interesting presentation by Timo Ritakallio, the new President and Executive Chairman of OP Financial Group. Mr. Ritakallio emphasized that unlike sports, business is a never-ending game, in which the rules and contestants are constantly changing.
While the strategy is often formulated during a relatively short time period, its implementation may take years. During the implementation stage, the external and internal conditions may change considerably. Corporate and business strategies and their execution must take this into account and avoid the ‘best before’ -trap: even viable strategies may get outdated during the long and static implementation period, especially in fast changing environments.
Strategic agility has gained a lot of attention in recent strategic management debate. In the strategy formulation process, the dynamic nature of the business is often addressed through scenario work, whereas the strategy execution approach does not typically include many dynamic elements. In fact, even the often-used term, strategy execution roadmap, reinforces the static flavor: all the roads, distances and destinations on the map can be illustrated beforehand and the path to the destination is clear. This is not typically the case in business.
Driving towards the set direction while staying flexible for changes
A proper approach to execution helps organizations drive towards the set strategic directions more efficiently, while fostering strategic agility and the ability to change course, if needed. Here are some guidelines on how to combine these two, somewhat divergent objectives:
1. Formulate a concrete program to address strategic priorities and specify underlying assumptions. Translating the strategic vision and goals into strategic projects or Must-Win-Battles (MWB) that address the key priorities is a critical component in driving action. An often neglected part is specifying the assumptions under which the strategic priorities were determined. If one or more of the preliminary assumptions become unsound, the priorities within the strategic program can be changed, without the need to reformulate the entire strategy.
2. Define clear goals and milestones for each strategic project. Each project or MWB should form a coherent entity with SMART (specific, measurable, assignable, realistic and time-related) goals and milestones, and the boundaries between the projects should be clear. This strengthens accountability and accelerates the execution, as individuals and teams can efficiently work on specific strategic projects without constantly having to discuss the responsibilities or use a lot of time in aligning their work with others.
3. Allocate resources flexibly to correspond with the strategic priorities. When the strategic priorities change, the resources should also be reallocated to reflect the new priorities. CEOs and other leaders accountable for strategic projects should constantly evaluate where resources would make the most impact. Furthermore, external support can be engaged to ensure that the most critical strategic topics receive sufficient focus and resources and that the overall schedule is not falling behind.
4. Focus less on detailed planning and more on executing the actions. As the market conditions evolve over time and new insights appear during the execution activities, making detailed action plans beyond three months is often unnecessary. The action planning time is more wisely spent on executing the immediate actions and concluding what their strategic implications are. Based on my experience, companies use too much time on action planning and too little time on planning strategic priorities.
Focusing on strategic dialogue rather than follow-up
To enhance the value capture during the strategy execution, the Executive Management Team (EMT) and Board of Directors (BoD) should focus on strategic dialogue rather than strategy execution follow-up. The difference between the two is that the former focuses the strategic priorities to ensure value capture, while the latter focuses on performance evaluation against the set strategic priorities.
The strategic dialogue should focus around the following questions:
- Have we made enough progress in the current top strategic priorities?
- Have the conditions and underlying assumptions changed?
- Should we change the strategic priorities and related goals?
- Do we have enough resources and capabilities to drive the top priorities forward?
Making this a common practice among the EMT’s and BoD’s, the static strategy execution roadmap turns into a dynamic strategy navigation system, that also identifies changing conditions such as roadblocks and congestions.