Success Doesn't Just Happen.

I t ' s P l a n n e d F o r.

Bridging the Gap Between Strategy and Execution

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The Gap Between Strategy and Execution

90% of organizations fail to successfully implement their strategies. Learn the keys to creating and implementing a strategic planning process that will put your organization on the right side of this statistic. As so often, Peter Drucker makes the point most clearly: "It is meaningless to speak of short-range and long-range plans. There are plans that lead to action today - and they are true plans, true strategic decisions. And there are plans that talk about action tomorrow - they are dreams, if not pretexts for nonthinking, non-planning, non-doing." The familiar grim statistics about the failure of companies to gain the benefits of strategic planning can make decision-makers wary of planning. The problem with this is that it is impossible to reach goals effectively and efficiently without defining them and then organizing the resources needed to reach them. Traditional planning models have frequently contributed to these failures. They tend to favor a command-and-control approach that implements planning through a top-down organizational structure without integrating the interests of the corporations typical customer or its operating units into the process. The result is often a strategic blueprint without foundations, lacking consistency with the objective conditions of the businesss values, functions, and structure, and without a meaningful way to recognize let alone measure results. Method Frameworks Plan4SM corporate strategic planning process is designed to produce a strategic plan that is fully and openly reflective of and embedded in the day-to-day operations of the business. In this way, the plan becomes an operational guideline that is transparent and meaningful to the staff responsible for implementation. Execution is necessary consequence of a properly conceived plan.

What is Strategic Planning?

Corporate strategic planning is the process of devising a plan of offensive and defensive actions intended to maintain and build competitive advantage over the competition through strategic and organizational innovation.

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Fully operationalized strategic plans are comprehensive. They go beyond just defining business strategy by addressing all of the actions and resources required to implement the strategy, including: Timelines for the actions Required resources Metrics tied to goal accomplishment Accountability in goal-related initiatives Plan governance structures Scenario planning Training Risk mitigation Industry trend analysis Core competencies analysis Core values analysis For strategic planning to be effective, corporate strategy must be communicated throughout the organization. Strategic goals are like a message packet that must be circulated, understood by all and acted upon in orchestration. If the message is garbled, ambiguous or not communicated well, the intent will be lost in translation and operational execution will become misaligned with the corporate strategic goals.

The Role of Strategic Planning in the Organization

A well-formed corporate strategy lays out the bumper-pads to keep organizational momentum aimed in the proper direction, accomplished through unambiguously expressed strategic goals (outcomes) and operational actions to achieve those strategic organizational outcomes. At a minimum, for strategic planning to yield competitive advantage, it must address three key questions: "What do we do?" "Who are our customers?" "How do we do what we do better than our competitors?" These three questions go to the heart of the organizations most important mission: to create a customer. They point at issues in the innovation of product or service that differentiate the company, and to the fundamental marketing strategy that is used to communicate the offer. Strategic planning must illuminate the objective conditions of these factors in a company and provide a road map to measurable changes that will fuel future growth.

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Strategic Planning and Operations

For effective implementation, strategic planning has to relate corporate strategy to the operations of the enterprise at the initiative level and below that at the project level. Initiatives must be identified that support plan goals, then the projects within initiatives must be carved out and planned. Detailed operational planning drives the creation of budgets, because we deep dive into the initiatives and lower-level projects at a level that includes: time frames, human capital, technology requirements and in many cases, dependencies on other projects or programs (the ecosystem of groups of projects). Careful attention to detail at this level can help avoid collisions with other projects down the line. Even then, there may be inter-dependencies between these groupings of initiatives and resources where shortages or overlaps exist. Tactical planning must delineate to the maximum extent possible the time-lines, dependency relationships, resource allocations and costs relative to the allocated budgets across operational areas to avoid as many collisions and conflicts as possible. The required communications include: Disseminate plan goals throughout the organization Empower informed employees to make line-level decisions about the plan Supply performance metrics to discipline decisions and enforce accountability Finally, the initiative and project level plans and performance have to be rolled up into an organizational view to highlight how they contribute to strategic goals or where problems or conflicts exist. These rolling reviews (we usually suggest quarterly) can then be communicated again throughout the organization for any needed course corrections.

Strategic Planning and Technology

Technology is an increasingly important element in the execution of business strategy. Much of the productivity gain we have seen in the last 20 years is due to the vastly improved information available about all aspects of a business. IT contributes strongly to the achievement of strategic goals when it is aligned with the business effectively.

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IT-business alignment is a challenging topic because technology has an almost independent existence driven by its esoteric power and the continual revolution in capacity that makes todays technology infrastructure obsolete by tomorrow. In the final analysis, technology should benefit the business through increased efficiency in the delivery of products and services, leading to a boost in market value and competitive advantage for the organization. The strategic plan has to help technology leadership and key staff to align this critical business function with the enterprise goals and develop a comprehensive strategy and operational plan to position the technology group to contribute to the business strategic key outcomes. The CIO in a successful company usually has a seat at the table in strategic planning efforts, including reviews of on-going implementation processes. Strategic plan documents are updated frequently, on a rolling quarterly basis, including goal attainment and target information related to IT operations as they are embedded in every operating unit. The IT operation is highly customer-focused, both with respect to internal customers for information and to external customers who are ultimately the beneficiaries of IT efficiencies. Again, the CIO needs good interactions with managers of units throughout the organization to continuously build end-customer outcomes into IT processes. Managers of units throughout the business ecosystem have to be aware of and interpret the strategic plan goals objectively in order to communicate accurately with IT. There is no one silver-bullet approach to recommend for achieving and maintaining business-IT alignment. The bottom line is: closer involvement with the business is crucial.

Why Strategic Plans Often Fail

Study after study shows that strategic planning often fails to deliver the promised benefits, and corporation executives are understandably skeptical about undertaking yet more ineffective planning. Yet given the importance of planning for success in any endeavor, the real question is why does planning fail and then what can be done about it. In our practice, we have found a number of common reasons why planning fails a business.

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Poor prioritization: At the highest level of strategy is the selection of priorities. What you choose to work on determines the future of your company. Too often these decisions are made on an intuitive basis, or worse, to accommodate the internal politics of the company. Obviously, a strategic plan that is focused on the wrong goals will not be effectively implemented because the people in your ecosystem will know that it is pointless. A commitment to effective strategic planning means you need to have an objective basis for deciding what to work on first. Lack of detail planning to support plan goal achievement: A destination without a road map cannot be reached. Every organization is composed of multiple layers of activity, and all of them have to be accounted for in the plan or the execution will come to a grinding halt. Line operation managers will not know what to do, or be able to lend their own creative efforts to the process, without guidelines. Poor communication and coordination: Announcing a plan and posting it to your company intranet isnt communicating any more than sending an e-mail and assuming someone read it. Lacking a process to send and receive feedback about the plan is almost certain to ensure that it will not be executed. Strategy and culture misalignment: Strategic plans are about the core values and purposes of your organization. If the plan does not incorporate the culture that actually exists, it is literally not addressing the company at all. The real company is a human system with both formal and informal operating procedures. If the plan fails to recognize these realistically, it will fail. Accountability missing from plan goals: Accountability is one of the first concepts the young MBA encounters, and it can be one of the last things they experience in executing a strategic plan. Lines of accountability mean clear responsibilities, authority, and status information for which a person receives rewards or sanctions. When a plan does not incorporate these factors into the execution directives, the plan goals will fall victim to other priorities where real consequences do obtain. Poor planning governance: At the highest level, the strategic plan needs a controller that is accountable for overall plan performance. Where this does not occur, a high-level accountability failure takes place, with predictable effects. Ill-defined strategic goals: Even if the goal is the right one for the organization, if it is defined in a sloppy or ambiguous way, there are too many ways for operating managers to avoid or evade, or simply to misunderstand, the purpose of the plan.

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Method Frameworks: Success Doesn't Just Happen.

I t ' s P l a n n e d F o r.

Building Blocks of a Successful Planning Process

Ecosystem
To ensure the execution of a strategic plan, you have to understand how the plan will affect every part of the organization, and how each of those parts in turn contributes to plan outcomes. The Plan4SM process accomplishes this by describing the entire company and its environmental context as a business ecosystem. The resulting framework allows a company to visualize the entire enterprise and design the key outcomes that will help the company dominate its competitors. The ecosystem is comprised all of the functional areas that are involved in developing and delivering the offering to the marketplace. Using this method, it is possible to assess how the business ecosystem operates and more specifically, how decisions within one segment of the ecosystem can impact (or have consequences on) the enterprise as a whole or to specific segments of the chain.

Visualization
Literally seeing where you want to go makes it possible to get there. Envisioning the future state of the company is a creative exercise disciplined by objective data about where we are today. The resulting vision is the focal point and motivation that leads to success. In this step of the Plan4SM process, we define the future state of the organization or area of the organization that we are dealing with and define in detail the key outcomes to be achieved. We use advanced techniques developed over time by the Method Frameworks team to create an overall picture, with which people can identify, of the desired future state. The vision creates the rationale, the business case, organizational excitement, and most importantly the platforms for change.

Opportunity Valuation
Next in the Plan4SM process is opportunity valuation -- where we determine the organizations relative values for the defined key outcomes. This involves using proprietary mathematic models designed for Plan4SM to correctly and objectively calculate the value of each identified opportunity. Predefined Method Frameworks cultural aspect models are compared against the clients organization to help determine the best fit and usage of the various mathematic equations for opportunity valuation.

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Prioritize and Justify

We prioritize and justify selected opportunities using analytical methods we do not rely on intuition or tradition. In this step, the highest opportunity value items are translated using a very controlled vocabulary (minimize and increase statements) that support the identified outcomes. Once we have done the translation we again calculate the opportunity value using our mathematic equations.

Budget Alignment
Investment should follow priorities. We set the stage for budgeting to support strategic priorities and help align existing budgets with respect to priority opportunity valuation to determine where reallocation is needed.

Initial Planning
At this point in the process, the controlled vocabulary introduced previously becomes the basis for a concisely defined planning standard. We have found what the organization is doing, is going to do, and needs to do in order to achieve their key outcomes and realize the associated value. To complete the outline of the initial plan, we look at the organizations resources, add a time constraint, and calculate the organizational acceleration. This is the rate of change (accomplishment of objectives) for the organization - moving from idea generation through implementation. It takes into account both the speed at which the organization accomplishes tasks to achieve desired outcomes and the desired direction of the organization. We use simple metrics, provided by the client, to determine average historical acceleration.

Detailed Planning
In the Plan4SM detailed planning stage, the process entails a reevaluation of the initial planning estimates that were identified earlier and a comparative analysis is completed to ensure that all strategies are firmly based in reality. The acceleration estimates are used to compare reality against initial time lines that were created. The plan is further developed to varying levels of detail 12-months in advance. The greatest level of detail is focused on the first three months, less in the next three, less in the next three and so on. Multi-year plans are similarly constructed. The plan is actively managed going forward as the task list of key outcomes not addressed in the resulting current plan are reassessed for positioning within the planning stream.

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Link to Execution
The building blocks we just described can yield the substance of a welldesigned strategic plan, but they do not by themselves guarantee that it will be executed. To bridge the gap from plan to execution, we enrich the Plan4SM planning process to explicitly convert key managers from every affected level of the business into stakeholders. The key elements in this link to execution illustrate the difference between Plan4SM and traditional planning.

Top-Down, Bottom-Up
Traditional planning methods often fail because they are driven by a top-down directive. Sometimes these orders are not communicated effectively to every level of the organization. Sometimes they meet resistance in areas of the organization where conflicting priorities take precedence. Our holistic approach actively seeks participation from the lower levels of the organization where the plan will succeed or fail. By making operating managers part of the planning process, we improve the plan and we also improve buy in to the plan at the same time.

Understanding of Acceleration
The measurement of acceleration introduces a reality check on the planning process. Expectations about the achievement of key outcomes are placed in the context of organizational capabilities in an objective way, meaning that goal attainment becomes a realistic option for time-challenged managers. Historical acceleration is an indicator of organizational reality and a predictor of the future. By understanding the organizations past accomplishments and time frames, we are able to design execution plans that are achievable and predictable. Additionally, with our approach we have a thorough (complete) representation of the companys culture, which allows us to harness the experience, knowledge and expertise of the clients staff in the execution of the plans.

Accountability, Performance and Reward

Simply put, staff has got to be active in the development and realization of outcomes. This is, in a way, the essence of execution. But for this to happen, incentives have to be properly aligned around the functions, structures and outcomes associated with staff roles. The Method Frameworks approach is accountability and performance driven. Staff incentive, understanding and value to the execution of the plan are far more important than specific expertise. Employees that understand what is being done, why, when and how they can contribute they become empowered team players. We believe that organizational accountability exists when staff both individually and as a team accomplish the organizations key outcomes. Our approach emphasizes Responsibility, Accountability, Communication and Information (RACI).

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Energy and Focus

MIT Sloan finds that Research suggests that the best leaders first mobilize organizational energy, then focus it. But how to define a force like the wind, both invisible and powerful? The Plan4SM process keeps energy, enthusiasm and fun and focuses the efforts to provide targeted, value-based organizational (engagement) outcomes. By focusing the process, we remove organizational entropy - the limits (or ability) to do useful work. Entropy, in the case of Method Frameworks, is the deterioration of focus based on success. As an organization gains market share, often it loses focus by expanding to non-core lines of business. The approach focuses all planning on the key outcomes of the organization and minimizes the deterioration of focus.

Communication
Both clear and well-timed communication is required to translate plan goals into strategy statements that the organization can embrace and enact. Communication must target the right messages to the right people in the organization at the time that they need to receive the message. Timing and messaging constitute effective communication. Effectively spreading the enterprise vision throughout the ranks of the organization empowers and energizes employees to contribute to the successful execution of the strategic goals.

Governance
Despite the importance of incorporating bottom-up inputs as well as top-down inputs, the strategic plan requires a single monitoring and controlling function. This could be a formal Plan Manager, a decentralized committee, the CEO, or some other mechanism, but there must be one part of the organization that maintains a top-level view of the plan and all its component parts. The governance mechanism is responsible for the functions of selecting, managing and measuring of everything entering or within the plan portfolio. Governance provides a method to view strategic plan-related initiatives grouped into related programs for synergistic reporting and management activities. The plan portfolio is the overall macroscopic view of all programs and initiatives involved with strategy implementation.

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The Case for Bringing Outside Planning Consultants In

Why Look Outside?
The reason to hire an outside consultant is to add value to the company that you cannot achieve with internal resources. The outside expert has the advantage of being an objective third party unaligned with the thinking and politics of an on-going organization. A good consultant will bring the focused experience and specialized methods that are often simply too expensive to keep on staff permanently. Asking for help is never easy to do. Sometimes receiving help is even harder. Depending upon the scope of the management consulting engagement, getting consulting assistance can feel very intrusive at first. Along with some initial excitement among senior management and key staff, there is usually a degree of Fear-Uncertainty-Doubt mixed in as well. Given the understandable reluctance of executives to expose their business decisions to an unknown busybody, companies often put off or refuse outside help. When they finally do seek outside help, it is often because metrics are delivering consistently bad news: Plans are failing to deliver intended outcomes Growth has stalled Corporate culture is eroding Revenue and / or profitability are declining Obviously, by the time the organization is producing these negative outcomes, a lot of value has been lost. Ideally, the outside consultant would be brought in much earlier, if only to provide a reality check on existing strategy.

The Role of External Consultants

The reasons companies hire management consultants in the first place are to be honest, to critically evaluate, to make recommendations and to help plan and orchestrate change. It is the management consultants job to assimilate the right information needed to help make improvements in their clients businesses. That generally entails getting very intimate with the clients culture, leadership, market perception, challenges, and opportunities.

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Here are the key things to expect in an outside consultant: Provide a process and framework for planning process: Consultants can provide a rich process and the structure to analyze and understand the intricate relationships of the organization. The outside consultant brings a framework for strategic planning. Ideally, the framework has been validated across a wide range of industries so its application in the current case is purposefully and knowledgeably designed. Ask probing questions: The management consultant must ask probing questions and risk touching nerves without the use of novocaine to numb the patient. Protect and preserve whats right: Planning prescriptions are not always bad news. Management consultants certainly see the good as well the bad, but their concern with the good elements should be focused on protecting and preserving what is working. Identification and critical evaluation of whats wrong: The most important thing the consultant must deliver is objective information about what is not working in the company, given the key outcomes. This information absolutely has to be based on logical, independent method to give these challenging critiques plausibility. Brutal honesty: Outside consultants have the unique ability to call it like it is and are paid well to do it. The consultant must openly discuss findings with the clients executive team that sometimes reveal individual or group weaknesses. For consultants, it never becomes easy to deliver bad news. The consultant must sometimes discuss difficult challenges with the client and reveal to them the need to make painful changes. When bad news has to be shared with client management, it is the fiduciary duty of the management consultant to do so. Analysis and heavy lifting of strategic and operational planning: It is the consultant's job is to understand the intertwined fabric of the client organization and map out the clients business ecosystem efficiently in order to evaluate it and improve on it. Link strategy and execution: Bridging the gap between strategy and execution should be an integral part of the consultants process. Measurement: Plan execution simply cannot happen without measurement. This may be nonquantitative in some circumstances, but it is hard to imagine that the vast majority of cases would not include quantitative measures of key outcomes, budget allocation, and intermediate performance indicators.

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Conclusion
Linking strategy to action should be an integral part of planning. For this to happen, you need to take systematic steps within the planning process to make the critical organizational elements accountable stakeholders in the plan outcomes. Method Frameworks was born to help organizations link strategy to effective execution. Our clients experience success many times the rate of average. Contact us to discuss your needs and let us share our success stories with you. Better yet, let us make your organization our next success. For permission to use or reprint any portions of this copyrighted article, contact Method Frameworks at articles@methodframeworks.com.

Become a Client
Let us count your organization among our valued and successful clients. Contact us today to learn more about Method FrameworksSM and our Plan4SM approach. (877) 31-PLAN4 (75264)) Email: inquiries@methodframeworks.com Online: www.methodframeworks.com Address: 101 East Park Boulevard Suite 600 Plano, Texas 75074

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