- The crucial link between organizational and individual performance
- The top-down and bottom-up execution highway
- The continuity of strategy execution
You can look at performance from an organizational perspective or an individual perspective. And the two must be linked in order to realize your strategy. Most will agree with this statement, but few actually make it happen. There are plenty of reasons why companies fail, but the three major ones are: the fragmented views from finance, HR and – if present – the strategy department; a lack of ownership by middle management; and the absence of a simple methodology.
Everyone – from the CEO to the blue-collar worker − is involved in executing the strategy. Their roles might be different, but each individual contributes to the organization's overall performance. Successful Strategy Execution includes both top-down as well as bottom-up processes.
If you tilt the 8 over onto its side, you get the sign for infinity. Strategy Execution is not a one-off exercise. It’s a continuous, ongoing, ‘endless’ process. Most companies aim for an annual, recurring cycle. But in challenging times like today, the cycle goes much faster. With each cycle, you can improve your execution capability and get a better performance return on your strategy.
1. Update Strategy
Your strategy is your long-term action plan designed to achieve your vision. Each strategy is unique, and it should also be measurable and easy to understand. Depending on the industry you are in, it maps the road your company should take for the next 3 to 10 years.
On a regular basis − most companies should do this annually – a company needs (and wants) to update its strategy based on changes in its competitive environment and on the Strategy Execution feedback from the previous cycle.
2. Communicate
As soon as your strategy (or strategy update) is finalised and approved by all stakeholders, you should focus on strategy communication. Transparent and easy-to-understand communication creates the necessary understanding and engagement for the new/adapted strategy.
It is essential to use all available communication platforms. One big strategy event and a single strategy e-mail are not nearly enough. Use other meeting platforms, discussion groups, informal and formal encounters, performance management sessions, intranets, websites, screensavers, coffee corners, billboards, etc. to communicate the strategy. You cannot over-communicate your vision and strategy!
3. Cascade
When you cascade your company’s strategy, you break down objectives into smaller chunks for the next organisational level. The process stops at the smallest unit level − these are often teams. In the end, the size of your organisation will define the size of the cascade.
It is crucial to achieve macro alignment between all the objectives – horizontally and vertically – in your organisation. On a micro level, you need to balance your objectives across perspectives. The 4 traditional perspectives are: financial, customer, internal processes, and people. You can add other dimensions, as appropriate.
In addition to the balancing act on the macro and micro levels, you need to select the right indicators – often called Key Performance Indicators or KPI's − to track the objectives and define appropriate targets.
4. Compare & Learn
Your strategy is a hypothesis. It’s your best estimate of the route to success … but it’s still an estimation.
It’s crucial to take some time at the end of a cycle to go back and check your hypothesis, to compare your initial strategic assumptions with what you have learned from the reality of the Strategy Execution cycle that is being completed. But at the same time, make sure you don’t just look back at your strategy: take a look at your Strategy Execution capability as well. All too often, we see companies jumping automatically to change their strategy, because they did not reach their projected performance. But, upon examination, there is nothing wrong with their strategy. The problem is in executing it. So, make sure you evaluate your execution capabilities as well!
This ‘compare & learn’ step will help you verify your hypothesis, update your strategy, and fine-tune your execution capabilities accordingly.
5. Manage initiatives
Initiative management is the activity in which your dreams run up against reality, your strategy meets operations, and resources are added to the strategy formula. This is one of the most difficult steps in Strategy Execution − and so it’s also where execution quite often goes wrong.
Initiative management is about selecting, prioritising and executing the right initiatives: those actions that will lead to the realisation of your objectives.
6. Set Objectives
Setting individual objectives is one of the best things you can do to improve performance − your own performance, and (if you have them) your team members’ performance. The positive impact of goal-setting is one of the most widely researched and scientifically validated aspects of today’s organisational science.
Make sure you link all individual objectives with the strategy at the organisational level. If you don’t, you might have a great objective … but it’s of no use to the organisation!
Also, make sure you focus on the way you secure agreement on the objectives. It’s the quality of the objectives – including the link with the overall company objectives – AND the acceptance of the objectives that will make your individual objective-setting a success.
7. Monitor & Coach
Regular coaching motivates people and increases their chances of success dramatically. It also simplifies the final performance evaluation. In fact, regular coaching is far more important than the formal review meeting somewhere around the middle of the year.
Providing feedback in the right way − which is a key coaching skill − is a crucial step in boosting performance!
8. Evaluate Performance
Most organisations conduct a formal performance evaluation at the end of the individual performance management cycle. Ideally, the evaluation should answer the question: have the individual performance objectives been achieved?
Although many organisations link performance to remuneration, performance evaluation is − and should be − a separate process.
Your strategy is your long-term action plan designed to achieve your vision. Each strategy is unique, and it should also be measurable and easy to understand. Depending on the industry you are in, it maps the road your company should take for the next 3 to 10 years.
On a regular basis − most companies should do this annually – a company needs (and wants) to update its strategy based on changes in its competitive environment and on the Strategy Execution feedback from the previous cycle.
2. Communicate
As soon as your strategy (or strategy update) is finalised and approved by all stakeholders, you should focus on strategy communication. Transparent and easy-to-understand communication creates the necessary understanding and engagement for the new/adapted strategy.
It is essential to use all available communication platforms. One big strategy event and a single strategy e-mail are not nearly enough. Use other meeting platforms, discussion groups, informal and formal encounters, performance management sessions, intranets, websites, screensavers, coffee corners, billboards, etc. to communicate the strategy. You cannot over-communicate your vision and strategy!
3. Cascade
When you cascade your company’s strategy, you break down objectives into smaller chunks for the next organisational level. The process stops at the smallest unit level − these are often teams. In the end, the size of your organisation will define the size of the cascade.
It is crucial to achieve macro alignment between all the objectives – horizontally and vertically – in your organisation. On a micro level, you need to balance your objectives across perspectives. The 4 traditional perspectives are: financial, customer, internal processes, and people. You can add other dimensions, as appropriate.
In addition to the balancing act on the macro and micro levels, you need to select the right indicators – often called Key Performance Indicators or KPI's − to track the objectives and define appropriate targets.
4. Compare & Learn
Your strategy is a hypothesis. It’s your best estimate of the route to success … but it’s still an estimation.
It’s crucial to take some time at the end of a cycle to go back and check your hypothesis, to compare your initial strategic assumptions with what you have learned from the reality of the Strategy Execution cycle that is being completed. But at the same time, make sure you don’t just look back at your strategy: take a look at your Strategy Execution capability as well. All too often, we see companies jumping automatically to change their strategy, because they did not reach their projected performance. But, upon examination, there is nothing wrong with their strategy. The problem is in executing it. So, make sure you evaluate your execution capabilities as well!
This ‘compare & learn’ step will help you verify your hypothesis, update your strategy, and fine-tune your execution capabilities accordingly.
5. Manage initiatives
Initiative management is the activity in which your dreams run up against reality, your strategy meets operations, and resources are added to the strategy formula. This is one of the most difficult steps in Strategy Execution − and so it’s also where execution quite often goes wrong.
Initiative management is about selecting, prioritising and executing the right initiatives: those actions that will lead to the realisation of your objectives.
6. Set Objectives
Setting individual objectives is one of the best things you can do to improve performance − your own performance, and (if you have them) your team members’ performance. The positive impact of goal-setting is one of the most widely researched and scientifically validated aspects of today’s organisational science.
Make sure you link all individual objectives with the strategy at the organisational level. If you don’t, you might have a great objective … but it’s of no use to the organisation!
Also, make sure you focus on the way you secure agreement on the objectives. It’s the quality of the objectives – including the link with the overall company objectives – AND the acceptance of the objectives that will make your individual objective-setting a success.
7. Monitor & Coach
Regular coaching motivates people and increases their chances of success dramatically. It also simplifies the final performance evaluation. In fact, regular coaching is far more important than the formal review meeting somewhere around the middle of the year.
Providing feedback in the right way − which is a key coaching skill − is a crucial step in boosting performance!
8. Evaluate Performance
Most organisations conduct a formal performance evaluation at the end of the individual performance management cycle. Ideally, the evaluation should answer the question: have the individual performance objectives been achieved?
Although many organisations link performance to remuneration, performance evaluation is − and should be − a separate process.
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