All leaders agree that strategy execution is the holy grail of business. Being a strategy-focused organization is a key agenda. Everybody agrees to this, but the reality is that only 50% of companies successfully execute strategy. So what goes wrong in communicating strategic objectives, and how can we get it right?
The first challenge is knowing what the strategic objectives are, and which ones to pick. Often executives pick projects or initiate objectives as strategic objectives. That confuses the issue, and all of a sudden a company has too many “strategic” objectives being worked on, making it very difficult to identify the key ones to focus on. For example, “maximize revenue from existing customers” is a strategic objective, whereas “complete the ERP project on time” is a project objective. So it’s important to pick 20-25 good strategic objectives to focus the execution of the strategy. Furthermore, the strategic objectives selected need to be balanced across four perspectives using the following framework:
- What are the financial objectives I am seeking to achieve in terms of revenue, risk and cost?
- What are the customer expectations I need to meet, in order to meet my firm’s financial objectives? These can be further broken up into expectations related to product/service attributes, brand, and relationship management.
- What process areas do I need to excel at, so I meet my customer expectations? These could further be broken up into process objectives around innovation, sales, delivery and service quality.
- What is the organizational and technology framework I need to excel at key processes?
Answering those questions—honestly—should allow you to identify strategic objectives that nicely summarize your overall enterprise strategy.
However, we are not done yet. Although some executives may be able to define what the appropriate strategic objectives are, they often struggle to express them in a way that resonates with the entire organization.
- “Maximize revenue” is a bad way to articulate an objective. It’s too generic—it doesn’t even offer a clue to how that will be achieved.
- “Maximize revenue from existing customers” is easy to understand.
- “Maximize revenue from existing customers by increasing the size of the salesforce and the number of salespeople” is overkill. It’s probably okay in a strategy document, but if you are trying to summarize the top 20 strategic objectives to your employees, by the time they get to no. 10, they will forget what no. 1 was about.
With proper communication, your employees can put your strategic plan into action. Not being able to do so is like a general fighting a war that can’t be won. And that’s not an ideal place to be!
Every organization needs to excel at strategic planning and execution. AMA's seminars and other resources provide all the training you need.