This blog contains 8 most important aspects of effective strategy implementation.
A Vision is a vivid mental image of what you want your business to be at some point in the future, based on your goals and aspirations. A Mission Statement defines the company’s business, its objectives and its approach to reach those objectives. Developing a world-class strategy begins at the executive level with the creation of a mission and vision for the organization.
An effective strategy involves a clear set of choices that define what the organization is going to do and what it is NOT going to do. Many strategies fail to get implemented, despite the ample efforts of hard-working people, because they do not represent a set of clear choices.
Vision, mission and a few agreeable strategic choices can help employees to foster innovations and, by doing so, support strategic objectives, whilst avoiding some unnecessary micromanagement.
Strategy creation is often an iterative process, and therefore you might need to revisit your vision and mission once strategic choices and objectives are set.
Setting long-term objectives covering 2+ years is the prime purpose of the strategic planning process.
While setting your long-term goals, a good rule of thumb is to have no more than a handful. This may seem like too few goals, but less is more here. The best practice in building an efficient organization is to set challenging, yet obtainable, long-term objectives. The recommended approach is to ask the question “what do we have to do?” instead of “what we can do?”. The other point in spelling out your goals is to describe them as a clear statement of the desired result at the end of the strategy period.
Key Performance Indicators help organizations track their progress. It’s important to select the right KPIs, not a lot of KPIs. For strategy purposes, it is advisable to choose leading indicators, at least on customer behavior and personnel engagement. Many organizations tend to choose and measure only financial performance indicators, which are undoubtedly important. However, primarily following financial indicators often leads to short-sighted actions instead of the desired long-term customer retention and employee engagement.
Defining short-term annual objectives appears to be so simple, yet very demanding to set effectively. It is often easier to set long-term strategic objectives than derive short-term goals from those. Challenges in short-term goal setting are related to non-linear development. As an easy example, we can imagine that a three-year revenue growth goal is +30 m€, whilst the first-year goal would be +10 m€. However, in most cases, the effective annual goal does not conform to such a linear model. Furthermore, it is often advisable to maintain a certain balance between your short-term goals and long-term goals. For example, for the first year, customer-satisfaction-related goals can dominate over other goals.
Setting the right interim goals is extremely important in building a high-performance organization.
Executing a development project or performing an activity makes up the visible evidence of strategy execution. Therefore, correctly choosing priority projects is the key to meeting your objectives.
Many organizations struggle with choosing the right amount of projects considering their resources. It is all too common to let too many projects run in parallel, which in turn results in slow or no progress. Such lack of focus typically frustrates employees and then leads to the unnecessary need for micromanagement. Another point of consideration is the preferred duration of projects. The traditional tendency is to build long-lasting development projects, which, in conjunction with low-visibility employees, creates another source of frustration as nothing seems to happen.
Key points to improve your organization’s performance:
How do you make sure everyone is working towards the same goal? Objectives and key activities need to be aligned horizontally and vertically.
Gaining alignment is one of the tasks most overlooked. In large organizations with multiple business units, alignment is time-consuming without the proper digital tools for strategy execution. One alignment misconception is believing that a high-level-target setting is good enough.
Vertical alignment, in practice, means the validation and synchronization of cascading goals and projects. Horizontal alignment is done between organizational units to ensure the best utilization of internal resources (e.g. ICT) and to secure, for example, coherent customer development.
How do you move strategy from a Powerpoint presentation to reality? Strategy implementation is harder if employees don’t know the strategy.
According to studies, organizations with engaged employees make 4 times more profit. Other studies reveal that typically only 20–40 % of employees are engaged. The number one reason for decreasing employee engagement is a lack of understanding regarding how an employee can contribute to an organization’s strategy.
A few key points for strategy communication:
The results don’t come served. Management processes are important for two reasons:
On average over 67% of strategies fail due to poor execution. Strategy implementation starts at the strategic planning stage. The organization’s capability and culture define what can be achieved.
Amplon is Hoshin Kanri Software that helps you to ensure your strategy is executed efficiently and supports your daily management. Read more about Amplon features.
Implementing Amplon is easy, and it is suitable for both small and large organizations.
Effective strategy requires clear objectives, aligned actions, and consistent evaluation. Key elements of an effective strategy include setting specific, measurable goals, ensuring organizational alignment, and maintaining a feedback loop for continuous improvement. By focusing on these elements, organizations can enhance their strategic execution and drive long-term success.
Operational pitfalls, such as unclear priorities, lack of resource allocation, and poor communication, can significantly hinder strategy execution. Addressing these challenges requires a focus on aligning day-to-day operations with strategic goals, ensuring clear roles, and maintaining consistent communication across the organization.
Structural barriers like misaligned company culture and unclear decision rights can derail strategy implementation. Overcoming these challenges is essential for translating strategic goals into actionable outcomes and ensuring successful execution.
Hoshin Kanri is a strategic planning method that aligns an organization’s long-term vision with its daily operations, ensuring continuous improvement and clear communication across all levels. By focusing on setting and achieving breakthrough objectives, Hoshin Kanri helps organizations stay on track toward their strategic goals.
What unites Toyota Way, Danaher Business System, and GE’s Flightdeck?
These companies have branded the Hoshin Kanri method as their management system.
