As per this recent article on putting strategy into practice in Strategy+Business, which followed their article on the seven chapters of strategic wisdom (which inspired Sourcing Innovation’s recent series on What is Strategy? And How Is It Obtained? [parts I, II, III, and IV]), intent and execution must go hand in hand where strategy is concerned. So what are the foundations of a successful execution?
According to the article, the foundations are the four “building blocks” defined by Neilson, Martin, and Powers in their recent paper on the secrets to successful strategy execution. Specifically, decision rights, information flow (including metrics), motivators, and the organizational chart. The first two in particular are critical, as decision rights and information flows were found to have twice as much impact on strategy success as motivators and structure. So what does the organization have to do?
According to Neilson, Martin, and Powers the organization must start with decision rights — and specify who “owns” each decision and who must provide input, and information flows — and promote managers laterally so they build networks needed for cross-unit collaboration … and only then alter organizational structures and realign incentives to support the initial moves. For example, the organization might start by delegating accountability for profits unambiguously to the divisions (to prevent wasted man years on strategy development only to have a solid business case dismissed by a hand wave of an uninformed corporate VP after a five minute review) or delegate run-of-the-mill operational decisions (to prevent decision paralysis). Then it might institute regular business meetings where the C-suite and division / unit leaders meet to discuss a particular issue or action (to prevent information flows from being “censored”) or establish standardized back-office processes and analytical tools for deal customization (to prevent sales people from crafting customized one-off deals that cost the company more than it will make in revenue). These two actions will make sure everyone knows what decisions they are responsible for, when they’re supposed to provide input, how much leeway they have in interpretation and execution, and where they go for more information. Only then would organizational structures (to remove unnecessary layers or improve cross-organizational collaboration) and incentives (to drive greater performance and profitability) be altered, because, until the organization has its people working together and properly aligned to the strategy, it won’t know what the right structure and incentives are.
The reality is that, as Neilson, Martin, and Powers stated in their ground-breaking paper, while a brilliant strategy, blockbuster product, or breakthrough technology can put the organization on the competitive map, only solid execution can keep it there. Solid execution requires clear decision rights and unimpeded information flow because unclear decision rights not only paralyze decision making but also impede information flow which, in turn, results in poor decisions, limited career development, and a reinforcement of structural silos.
So how does the organization accomplish this? While Neilson et. al don’t address the how, it’s pretty obvious where the organization needs to start — Business Process Mapping. Once the organization has mapped out everything it does, it can identify what decisions need to be made and what information is required. Then, it simply assigns responsibility for decisions and institutes mechanisms for information flow. After these responsibilities are assigned and the information mechanisms are put in place, the organization can align organizational structure to mirror the decision rights and necessary information flows and adopt incentives to support the changes. While the devil will be in the details, the process itself, like the process for developing a strategy, isn’t magic. It is within the grasp of every organization.
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