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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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. elderflowerlegal.co.uk
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