Sunday, August 15, 2021

Investing & Improve Strategy Execution

In a complex world, in a complex system, in a complex domain, strategy and execution are two completely different things and skill sets, but they are interlinked.

Enterprise becomes more complex than ever, the time has come to rethink traditional approaches to invest and implement strategies. The studies have found that two-thirds to three-quarters of large organizations struggle to implement their strategies. It seems logical that the more ambitious the strategy organizations undertake, they should expect high levels of friction to capture those high rewards. 

Opportunities and risks co-exist in the dynamic business environment, Which criteria should investors set to evaluate allocating capital, and which steps the management needs to follow to improve the probability of strategy management success.

The management's vision as stated through the mission statement and strategy: The increasing speed of changes or frequent disruptions often led by emerging technologies, rapid business model innovation, consumerism, and many other factors are creating new challenges and opportunities for enterprises to survive. The executive team needs to provide a clear vision to the staff, share the differentiating recipe for how their strategic approach will accomplish "goals" that exceed those of their competitors, allocate capital and resources scientifically, and then decide how best to reach it for implementing the strategy smoothly.

With “VUCA” new normal, shaping a clarified vision is often difficult as it requires alignment at the most senior levels and needs to link to the overall strategic imperatives of the company. It’s important for managers to take a holistic view or an outside-in perspective, keep their eyes on the higher horizons, imagine the future of the business, and focus on what matters the most, identify what generates the most value for the company and express that in strategic objectives with clarity.

Whether the product/service set and roadmaps are consistent with this strategy: The roadmap is the outcome to mind gaps between “TO-BE” and “AS-IS.” There are different types of roadmap, depending on the nature of the requirement of the stakeholder, with different characteristics. You can define any type of roadmap within the context of an Enterprise Architecture by "doing" the exercise of developing a "To-Be" state first, then defining the strategic roadmap based upon the fallout of what has been discovered from that exercise.

For example, a well-set prioritization roadmap helps business leaders make a priority choice based on ROI and calculated risks. If the road map is an overall business justification for funding, then the map will be more inclusive with roads and detours describing the full enterprise taking into consideration. If the roadmap focuses on a specific "road" within the map, such as technical or software development, then the map is more tactical and in turn determines the importance of what artifacts are necessary to define the road. If the roadmap is heavily focused on the technical aspects of the investment, it may dictate and determine the type of artifacts that you need to garner. Building a roadmap with a clear set of timelines and milestones will lead the execution journey more effortlessly.

How effectively the strategic d planning has been articulated internally and externally: Strategy is nothing until the management and people work collaboratively to implement it. When communicating a strategy, it is always important to explain the "why" behind your communication. Most senior leaders prefer to rush their communication and push the team to do their routine work. But what is more inefficient than a whole organization that attempts to execute a poorly understood strategy? Poor communication prevents the objectives and supporting goals from being “known.” Adaptation and implementation are faster if made with the full involvement of people - employees internally and partners/varying shareholders externally, by leveraging an effective communication framework, efficient communication platforms, channels, tools, and feedback mechanism.

Too often organizations do a great job of sending out their message that enables the strategy yet they fail to ever take in any feedback. There are varying communication channels or styles to enhance strategy related communication. At senior leadership level, as many times, abstraction enables an agreement; involving all stakeholders right from the beginning; encouraging strategy brainstorming to bring up emerging issues; welcoming strategy debates for challenging the business strategy; providing further thoughts or constructive criticism to senior leadership for contemplation! Open your mind - listen or read carefully, and expect to find some new insight. This will help the expectation management/perception management etc.

Employees' ability to execute consistently over time: Strategy execution is more difficult due to its complexity and culture of resistance. You need strategic guidelines and policy setting, but not restricted rules. To make smooth strategy management, the right level of sponsorship will help to get the resources or talent needed for the execution, overcome organizational friction, allow for the occasional hiccup, and achieve the expected business results. Stakeholder involvement and engagement always makes the difficult paths of strategy management easier to tread.

Very often, companies say yes to all the initiatives, with the consequent lack of focus. This is then spread through the organization, and people no longer know where the priorities are. Senior Executives should say no to many of the initiatives and just choose a few where they will put most of the resources, people of the company. It takes greater transparency, trust, and collaboration leveraging repeatable process, expectation management. The strategy management success depends on the employees’ ability to execute it consistently. When strategic complexity can be “visualized” in a better way, individual contributors can for the first time see where they fit in the universe of work and it can bring a great sense of purpose to their work as well as their role in the strategy management.

Valuation based on metrics and projections for future revenues, cash flows and income: You can only manage what you measure. Metrics and KPI management is not an easy task, each new measurement takes some form of time to gather, collate, and interpret. Only through a well-defined set of KPIs, organizations can qualitatively and quantitatively measure value delivery to business objectively. To improve strategy management effectiveness, it is imperative that you link lower-level metrics with higher-level strategic objectives. Balanced scorecard offers a way for a corporation to gain a wider perspective on its strategic decisions by considering the impact on finances, customers, internal processes and employee satisfaction.

The performance analysis takes into account financial and non-financial measures, internal improvements, past outcomes and ongoing requirements as indications of future performance. Velocity of the strategy execution is an important parameter businesses can measure the execution success. The peril of measurement management such as the wrong metrics selection or ineffective measurement practices further causes management conflicts, resource misalignment, or business stagnation. With reliable performance data, the management can guide the team to understand the purpose of doing metrics and engage in that, in order to fix the root causes of the problem.

In a complex world, in a complex system, in a complex domain, strategy and execution are two completely different things and skill sets, but they are interlinked. Execution of a strategy is achieved through a series of interdependent actions and decisions run in the iteration. Unless executed well, the greatest strategy will flop and without all dependencies and influences placed in the melting pot, risk-management of the greatest strategy will be a costly activity. Thus, investors and management need to take stepwise evaluation and improve the success rate of strategy management tangibly.

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