Implementing a Winning Strategy – Practical Tips for Success

One of the key tasks of any Board in the private, not-for-profit or public sector is to create a strategy for their organisation. Crafting and implementing strategy is inextricably linked to good governance and effective risk management.

Strategy can be defined as ‘the direction and scope of an organisation over the long-term which achieves advantage in a changing environment, through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations.’ (Johnson, Scholes). In an earlier post, we looked at how an organisation crafts a winning strategy by examining its core strengths and weaknesses, analysing market forces and conditions and then deciding how to differentiate its products and services. In this piece, we examine how to put the strategy into practice. And this is a critical area: research by McKinsey found that 7/10 of strategies are unsuccessful. According to Kiechel, successful implementation is even harder, with 9/10 failing at this fence! Given this large failure rate, the ability to successfully implement your carefully crafted winning strategy could easily be a real source of advantage.

Leadership is crucial

The strategic plan will be followed by a business plan which contains business objectives, functional plans dealing with the contribution of, and implications for, operations, finance, marketing, HR and technology. From this work stem targets, budgets, activities and detailed measurement tools.

Many implementations fail because leaders underestimate the scale of the challenge, take their eye off what needs to be done or simply run out of steam. Implementation marks the shift from thinking and planning into live action, managing resources and providing leadership. Do you understand and can your articulate clearly and concisely what you want your people to do differently, and why, as a result of a new strategy? If you can’t do this, don’t expect other layers of the organisation to follow! Leaders need to free up quality time and resources for the Herculean task of communicating a new direction and motivating their people.

Leadership is crucial to create the right conditions for implementation. The organisation must ensure it has the right people on the bus and in the right seats; leaders must clearly communicate the strategic objectives, create appropriate key performance indicators (KPIs) to measure the right things, align the organisation’s culture and behaviours to the strategy, if necessary re-designing internal and external processes and changing the way staff members are incentivised and rewarded to encourage the right behaviours. Progress must be reviewed regularly and the plan tweaked in real time in the light of feedback.

Develop a coherent plan

Successful implementation will require a comprehensive plan to guide action. The plan will contain an analysis of the organisation’s readiness, identify funding and resources and provide discipline and structure. There are various frameworks available to devise the plan. One of these is McKinsey’s 7S model which considers the alignment of the organisation across 7 areas Strategy, Structure, Systems, Shared Values, Style, Staff and Skills.

However, my favourite, which provides a very practical basis for planning and action is Robin Speculand’s Implementation Compass™. The compass examines 8 key areas across the organisation:

  1. People – Do you have the right calibre and type of people in the organisation to deliver the changes required? Do they have the skills and knowledge to execute the plan? Are they motivated? Speculand tells us that we should focus our efforts not on the people that resist change, but primarily on the 20% ‘mavericks’ who embrace it and become advocates and ambassadors for change and improvement.
  2. Business Case – Has the emotional and numerical rationale for change been captured? Has it been explained to staff and do they know why it is important? The use of visual images, branding, slogans and stories to capture and communicate the essence of the message can be very powerful.
  3. Communication – members of the organisation can only adopt a strategy if they know and understand it. Can it be explained in a simple, concrete and compelling way that creates emotional engagement? There are a multitude of channels that can be used nowadays to communicate the message and share success stories and best practice. Traditional media such as advertising, newsletters, as well as social media, videos, podcasts, webinars. Success should be celebrated through awards and bonus incentives.
  4. Measure – The Board will need to adopt the right measurement tools to drive the right behaviours and actions. Remember the maxim ‘what gets measured, gets done’ (some attribute this to the mathematician Rheticus, pupil of Copernicus as far back as the mid-1500’s!). It is likely that a bespoke set of KPIs  will need to be developed to give the Board visibility on progress. These might be quite different from those traditionally used to date. For example, they may track customer or service user satisfaction, staff satisfaction, learning and development, recruitment and retention, teamwork and motivation. Ideally, some form of dashboard report will be generated for the Board.
  5. Culture – This has been defined as ‘the way we do things around here’ (Handy). It is made up of the collection of traditions, values, policies, beliefs, and attitudes in an organisation. Culture is reinforced through rites and rituals, patterns of communication and expected behaviours across the organisation. Will your culture support and foster change? The key questions to ask would be, does your culture encourages teamwork, does it reward innovation, does it stifle initiative? Leaders will need to exhibit visible proof of the expected behaviours – it is no good expecting others to change if the leaders do not lead by shining example! The implementation plan may need to take into account the nature of the organisation’s culture in deciding the pace and style of activities.
  6. Processes – Do the organisation’s processes support the new strategy or do they need to redesigned? e.g. to focus more on the customer and adding value for them? A key consideration is the scope of freedom given to different parts of the organisation to take decisions. If unnecessary roadblocks exist, try calculating the financial benefit as a powerful case for removing them.
  7. Reinforce – Leaders need to continually reinforce the expected actions and behaviours – training and development initiatives may be required; recognition and reward systems may need to change radically to encourage and motivate progress.
  8. Review – The Board must continually review progress and draw upon the lessons learned so far. If necessary, the plan can be adjusted and recalibrated as you go.  Board meetings need to spend an appropriate amount of time on strategic matters, rather than operational items. In carrying out a review the Chair could usefully begin with a critique of his or her own performance to encourage self-reflection by others. One of the most powerful and simplest ingredients can be to start every meeting by checking that all actions from previous meetings have been implemented.

Good implementation of strategy requires the orientation of a series of decisions taken by different people at different times in different places across the organisation towards a common goal. The board needs to provide the leadership to ensure the organisation remains focused on that common goal.  A compelling vision, mission, values and the personal qualities of individual board members are vital to this process. Research shows that Boards are less effective in the field of implementation than they are in creating strategies. If the Board can extend and develop its competence in execution, the rewards can be substantial.

Mark Johnson is a solicitor and chartered company secretary with Elderflower Legal. He is a trusted advisor to SMEs, charities and social enterprises on strategy, governance managing risk and assuring legal compliance.

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Crafting a Winning Strategy: What’s the Secret Sauce?

One of the key tasks of any Board in the private, not-for-profit or public sector is to create a strategy for their organisation. Strategy is inextricably linked to good governance and effective risk management. The UK Corporate Governance Code at C.1.2: “Directors should include in their annual report an explanation of the strategy for delivering the objectives of the company.” Strategy has been defined as “the direction and scope of an organisation over the long-term which achieves advantage in a changing environment through its configuration of resources and competencies, with the aim of fulfilling stakeholder expectations[1]”. For businesses, a winning strategy should provide a sustainable competitive advantage. For other types of organisation, the strategy provides a mechanism to seek an increased share of limited resources, with the aim of advancing a mission, whilst balancing the interests of different stakeholders.

What is an effective strategy?

Creating a successful strategy is not an easy task. It is completely different to operational management. It requires board members to set aside proper creative thinking time, question assumptions and develop a critical enquiring approach. It can’t be achieved by a solo actor working in an ivory tower: it requires contribution and buy-in from a wider group of leaders and senior managers. The statistics show that most boards do not get it right. Studies published by Harvard Business Review show that at least 70% of strategies fail. Some research has found that 85% of directors don’t know what their organisation’s source of competitive advantage is.  In his 2011 book, Good Strategy, Bad Strategy, Rumelt tells us that a winning strategy contains three elements: a diagnosis, which defines the nature of the challenge, a guiding policy to overcome the obstacles identified which builds on or creates some form of advantage and (iii) a set of coherent actions coordinated with each other to accomplish the guiding policy. Typically, insufficient time is spent on diagnosis, as managers rush to action; sometimes the actions are not coherent because of a lack of alignment.

Why do most strategies fail?

Rumelt identifies four hallmarks of bad strategy, which we can all recognise: the use of ‘fluff’ (gibberish and buzzwords masquerading as strategic concepts to give the impression of intellectual thinking!); failure to define the real challenge, mistaking a long list of aspirational goals for strategy (e.g. we will grow our revenue by 20%, we will delight our customers etc, without saying how); setting objectives which are just impracticable in the context of the organisation, or which fail to address critical weaknesses in resources and capabilities.

So how do we avoid falling into this trap? Here I offer a ten point plan from my experience which could be used to help develop a winning strategy.

  1. Start with why?

Simon Sinek has developed a whole business methodology around this question. We first need to understand the motive force behind the enterprise. Why are you in business, what is your core purpose and mission? Has this been explicitly captured and communicated to all your stakeholders? When did you last review it?

  1. Values matter more than ever

Identify what the values of the organisation are and how these reflect your culture (the beliefs, traditions and habits shared by your people). Capturing the values requires input from across the organisation.  Values can be used to set the ethical and legal boundaries for the activities you undertake and to set the emotional temperature of the organisation. However, it is no use articulating a charter if those at the top do not lead by example! Studies show that the Generation Y millennials and Generation Z among your customers and employees are particularly attuned to corporate values- ignore them at your peril.

  1. Assess your current position

Use a SWOT analysis to assess strengths, weaknesses, opportunities and threats facing the organisation. Strengths and weaknesses are normally internal factors, whilst opportunities and threats are external forces. Strengths might include specialist knowledge, a highly skilled workforce; weaknesses might include a lack of working capital or inefficient operating procedures. In looking at external forces, it is useful to employ the PESTEL analysis to identify the political, economic, sociological, environmental and legal factors that could, or do already, impact on your business environment. From this analysis, identify the top 3-5 critical success factors – the essential factors which the organisation must absolutely get right to succeed and keep these front of mind.

  1. Where else could you play?

Having identified your strengths and some opportunities, in which markets (existing, new or adjacent) could you operate? For example, if you were an enterprise with strengths in residential care for the elderly, could you move into caring for learning disabilities? What discontinuities could occur which could open up new avenues of opportunity for you?

  1. What is the structure of competition in your markets?

Use Michael Porter’s Five Forces model to assess the structure of competition in your chosen markets. Porter identifies 5 forces which influence market position:

(1) current competitive rivalry – if there is strong competition this will drive prices down and increase costs for businesses trying to compete

(2) Is there potential for entry of new competitors? How easy would it be for new competitors to emerge – are there factors under your control which could prevent or delay this, such as a well-defined brand identity, differentiated products or services, exclusive IP rights that you own?
(3) Power of the customer – the customer tends to have power if their purchasing power is concentrated (e.g. through buying frameworks), or if the product or service is seen as undifferentiated;
(4) Power of your suppliers – they may enjoy power over you because of high switching costs or because there are few alternatives;
(5) The threat of substitutes – are there other ways of solving the customer’s problem besides coming to you? Being alert to innovation that could be a complete game-changer is important. If competitive pressure is becoming too great, it may be time to move into more attractive markets where demand exceeds supply, margins are better and the pressure is manageable.

  1. What are your distinctive competencies and capabilities?

Your capabilities are derived from your people, financial capital, materials, technology, information and knowledge, buildings and intangibles such as brand, reputation, IP rights and leadership. Barney tells us that to provide real competitive advantage capabilities should ideally be valuable, rare, inimitable and non-substitutable. This allows you to differentiate your products and services from the competition.

  1. How do your activities create value for the customer?

A useful tool to examine the value added in each stage of your operations is Porter’s value chain. In essence, he divides an organisation’s activities into strategically relevant activities and supporting or ‘back office’ activities. In the strategically relevant activities, we find inbound logistics, operations, outbound logistics, marketing and sales and ‘after sales’ service. These labels can be adapted to suit the particular context.

For example, in a service environment, instead of inbound logistics, we may find customer enquiries, brochures, whitepapers etc. Operations would be the way projects are managed and delivered. In the supporting activities we find HR management, technology, procurement and the general infrastructure of the enterprise.

By taking each element, and forensically considering how it is performed and how it can be improved, you should be able to reduce cost or add more value for the customer and differentiate your offer. This is where ideas and innovations from front-line staff can really come to the fore. Do you have mechanisms to encourage and capture these ideas?

Having analysed the areas above, we should by now have a set of choices to consider. It is time to…

  1. Carry out a sense check

Applying the test formulated by Johnson et al, are the options suitable, feasible and acceptable? Suitability tests whether the strategy fits the vision and mission of the organisation. Does it leverage the strengths and minimise the weaknesses? Feasibility is concerned with whether the organisation has the right financial, human and information resources, culture and structure to pursue the strategy. Finally, acceptability tests whether the strategy fits with the risk appetite of the organisation and whether it is likely to find favour with your stakeholders, such as employees, suppliers and funders?

  1. Set Objectives

Having formulated the strategy, embody this in a set of concrete objectives which should be SMART objectives (specific, measurable, agreed, realistic and time-bound). Ensure the high level objectives cascade down to business units and individual performance goals across the organisation. Make sure there is clear ownership of and accountability for the agreed objectives.

  1. Align the organisation

The chosen strategy will have implications for every function in the organisation, including finance, operations, marketing, HR and technology Alignment is crucial to achieve success. It is no good setting high level objectives which are completely at odds with teams’ or individuals’ performance and remuneration criteria or which run counter to the existing culture of the organisation.

Once the plan is developed and resources are committed, be tough and persistent in applying it. Ensure there are consequences for not delivering. The methodology behind successful implementation will be the subject of a future piece.

Of course these tools and models alone do not give directors the right answer, but they do provide the means to have a better conversation, which leads on to the agreed answer. By using these techniques, you can create an effective planning process, build a realistic business direction for the future, and should greatly improve the chances for successful implementation of your strategy.

In Part 2:  how to implement your strategy successfully to differentiate your organisation from the competition.

[1] (Johnson, Scholes et al, 2011).

Mark Johnson is a legal and governance specialist with Elderflower Legal. He is a trusted advisor to SMEs, charities and social enterprises on strategy, managing risk and assuring legal compliance.