SFO Blog - Helping You Build Your Company into a Strategy Focused Organization

The Winning Business Success Formula: C x V x A x L = R(unlimited)

Regardless of what you are doing in business: running a company, leading a critical project, managing a team, or facilitating organizational culture change, there is a formula for success that transcends the specific work you are doing. What I mean is that, no matter what business challenge you are tackling, if you apply this formula, it is guaranteed that you will be on the road to success!

 

What is this formula for success?

Collaboration x Vision x Action x Learning = Results ^(unlimited)

 

Collaboration: Nothing great ever happens in a business without people – they are the foundation of success. To achieve your desired business results, everyone inside (and outside) your organization must be engaged, involved, committed, and connected. Focused communication, meaningful two-way dialogue amongst leaders, employees, customers, stakeholders, and partners, and direct collaboration on vision and strategy, what it takes to successfully implement it, and how to improve it, makes the work you are doing, and what you are working on, PERSONAL for all involved. This commitment is critical for breakthrough performance and the sustained success of whatever you are working on. This is why collaboration is part of the formula for success.

 

Vision: What will your business or the project you are working on look like when the work is done? How will your customers feel? What will their experience be? What ultimate value will the thing you are working on provide: To customers? To stakeholders? To employees? To your company? These are just some of the things that go into defining the vision of the future for your business or project. As an organizational leader, it is a critical part of your role to ensure that a strong vision is created. An exciting, understandable, and actionable vision, paired with an inspiring mission, paints a picture of the future that everyone can clearly see and work towards - together. This sets the stage for business success.   

 

Action: Once your vision for the future has been defined, a roadmap or execution plan, outlining the required actions and assigning accountabilities, will ensure that your vision is successfully achieved. However, since it is foolish to try to execute all parts of a comprehensive action plan at the same time, it is important to prioritize it. This prioritization helps employees make better work effort decisions when resources are constrained. With a good plan in place, all parts of your organization, including the processes, projects, resources, and your people, must then align with it. Also, any silos in your organization must be broken down. This is because great things can't happen in an organization when its parts work in isolation. Organizational bridges, integration, and synergy multiply the ability of your organization to execute your prioritized plan successfully. Finally, developing people's capabilities strategically will allow your organization to have the right people with the right skills doing the right job in the right place at the right time - critical to the successful execution of your business strategy or the implementation of your project.

 

Learning: Staying on course requires an ability to measure and manage progress of your business or project towards mission and vision achievement. Measurement also allows you to learn and improve what you are working on - strategically. A set of objective-based performance indicators lets you do that but measurement alone isn't enough – your organization must use the results data to focus on the relentless pursuit of the truth in every situation. You must then implement meaningful improvements based on what your REAL root cause issues are. This capacity to learn is also important because your organization's internal and external environments are changing on a constant basis. These kinds of changes could threaten the success of your organization or project UNLESS you are dedicated to strategic learning, are flexible, and are quick to change when required. Organizations that develop these skills will thrive, grow, and achieve sustainable success in their business and projects.

 

Now, you might argue that a variety of other factors contribute to business success and I would agree with you. However, when you strip it down to the bare essentials, I would suggest that these are THE critical four elements for success. In fact,  organizations that faithfully follow this formula routinely achieve greater success than predicted. This is because the combination of these four elements isn’t additive – there’s actually a multiplying effect! However, though the winning business success formula is simple, only as few as 10% of companies put all of the elements in the equation into action.

 

You can begin changing this result for your business and/or project today.

 

Your winning formula for business success?

Just remember: C x V x A x L = R^(unlimited)

The Strategy Execution Challenge – Root Cause Problem or Just a Symptom?

From the July/August 2010 edition of the Harvard Business Review to the group discussion forums on LinkedIn, a lot of attention has been paid to the “strategy execution challenge” lately.

 

This activity has probably been prompted by an old statistic that simply won’t go away. It suggests that, in any given year, between 70% and 90% of business strategies won’t be successfully executed. Unfortunately, this fact hasn’t changed much since it was first reported in Fortune Magazine in the 1980’s. Facing an apparently serious problem, many books have been written on the topic of strategy execution. One of the key assumptions behind several of these books has been that companies are good at strategy formulation and that strategy execution is the root cause of the strategy failure problem.

 

I’m not so sure about that. Just because companies have been doing strategic planning for decades, can we automatically assume that they are good at it?

 

When you look at the reasons for poor strategy execution listed by business leaders, strategists, experts, and consultants, they look something like this: no strategy or plan to implement; an unrealistic strategy with no real chance of success; managers putting themselves and their own ambitions ahead of the company (a leadership problem); poor prioritization; lack of detailed planning to support plan goal achievement; poor communication and coordination; strategy and culture misalignment; accountability missing from plan goals; poor planning governance; and ill-defined strategic goals.

 

I realize that this is not an exhaustive list and I would add the following based on my experience: failure to create an actionable strategy; not cascading strategy below the corporate level to business units, departments, and teams; failure to align processes, projects, and resources with strategy; and not lining employee goals with company goals.

 

When I look at all of these items, I would argue that they suggest that the true problem lies with strategy formulation and, as a result, strategy execution challenges are a symptom of the problem. It is critical to resist the temptation to fix symptoms to achieve long term change. So, to solve the strategy execution challenge, we must address the root cause problem: strategy formulation.

 

If companies have been “doing” strategic planning for so long, why haven’t they built robust skills and capabilities for completing this activity? I think that the problem is with the approach traditionally taken by organizations to plan. The bottom line is that the traditional approach to strategic planning has several “fatal flaws” that produce a plan that provides a weak foundation for strategy execution success. Let’s take a look at the three most critical flaws:  

 

1. The traditional strategic plan is not a true strategic (i.e. long-term) plan

 

While supposed to be long-term looking in nature, in practice, the traditional strategic planning process is primarily used to produce short-term (i.e. 1 - 3 year) work plans.  This is in contrast to a real strategic plan that outlines the value creating objectives required to deliver the company’s mission and the strategic priorities required to achieve the vision (a “short list” of the value creating objectives that the business will place an enhanced focus on over the next 3 to 5 years).

 

In addition, the traditional strategic planning process tends to mistake goals for strategy. The problem is that when you focus on goal-setting, as opposed to strategy formulation, you end up with goals that may stand alone but, when looked at with all of the other goals, may not be relative and additive. That is, they may not combine well together, resulting in execution challenges and a less than optimal overall, big picture result. In the worst case scenario, the goals that are established for the short-term plan work at cross-purposes and/or the resulting plan does not move the organization forward from a long-term, truly strategic perspective. 

 

2. Local strategic action is unclear

 

The traditional strategic planning process, and the resulting strategic plan, is frequently used to communicate leadership’s strategic intentions and, in many situations, to lay out a list of corporate actions to be completed over the upcoming year (i.e. the operating plan). Unfortunately, the traditional strategic planning process is not generally used to form, adjust, and implement the activities that will be completed at the business unit, department, and team level (i.e. the local level) to put those intentions into action. As a result, employees find it difficult to relate to the strategic plan. This is due to the fact that they cannot see how what they do at the local level connects with, and contributes to, the business strategy. When this happens, employees do not see the strategic plan as a tool that has meaning to their every day work life and does not have a direct impact on how they manage their work. This is a critical problem because, without everyone in the organization making daily work decisions that contribute positively to the execution and implementation of the business strategy, achieving the organization’s mission and vision effectively and efficiently will be difficult to do.    

 

3. Meaningful manager and employee involvement in the process, and buy in, is low

 

In most organizations, the traditional strategic planning process is completed by the Board and/or the executive team. While groups of employees may be asked to participate in the process of gathering pre-session information and data, most traditional strategic planning processes do not include the participation of a cross-functional group of employees in the strategy formulation phase of the process. Generally, employees receive the strategic plan after it has been finalized and are then asked to implement it – few questions asked.

 

Excluding managers and employees from the strategic planning process increases the risk that the strategic plan will suffer from lack of manager and employee buy in – which absolutely will have a significant impact on the successful implementation of the strategic plan.

 

While there are other flaws in the traditional strategic planning approach that contribute to strategy failure, these are the most important ones.

 

The way to solve the strategy execution problem is to adopt a better approach to strategy formulation that:

 

● Concentrates on creating a true strategic plan – one that identifies the critical drivers behind the achievement of your mission and details which sub-drivers or objectives the organization will focus on over the next three to five years to achieve its vision without sacrificing the achievement of its mission;

 

● Creates an actionable strategic plan in the form of a strategy map;

 

● Defines the roadmap to get from here to there by aligning key business processes and projects with strategy, identifying gap-closing projects, and creating a robust accountability framework for strategy and action completion;

 

● Defines the framework for “real time” strategy management (including a strategy-based indicator set and a strategy management/governance framework); and

 

● Includes the participation of a cross-functional, employee-based strategic planning team with an executive-based steering committee to create the strategic plan.

   

This approach to strategy formulation offers organizations an improved process that maintains the valuable elements of the traditional strategic planning process while effectively eliminating its fatal flaws.

 

In the end, I think that the biggest problem here is that people tend to look at strategy formulation and strategy execution as separate processes. This is problematic because the truth is that they are inseparable parts of the strategy management continuum. So, to truly eliminate the strategy failure problem, it is critical for organizations to consider strategy execution while formulting strategy and work hard to lay the foundation for strategy execution excellence as early in the strategic planning process as possible.