After a strategy is developed, it must be translated into a comprehensive strategy execution plan. Developing a strategy execution plan is a task of the strategy execution team. An strategy execution Plan or implementation plan is a comprehensive plan that clearly outlines the objectives of the strategy execution, the activities that are needed to achieve these objectives, who are responsible for these activities and when the objectives are to be achieved. The strategy execution plan outlines in a detailed way the manner in which the strategic vision is to be achieved. The implementation plan translates the strategy into day-to-day management.
FORMING AN EXECUTION TEAM
The task of the execution team is develop an implementation plan and to execute the strategy. The members of the execution team are often line managers who have to translate the strategy to their organizational unit, perform the activities required to achieve the goals of strategy and monitor the performance of the strategy and its execution. Where the strategy team that developed the strategy is often rather small, the execution team tends to be much larger. While the strategy can be developed by a project organization that is detached from the existing organization structure, the strategy is executed by the existing line organization. The execution team consists of some of the members of the strategy team and key managers of organizational units that have to execute key activities. Ideally are (most) the members of the strategy team part of the execution and vice versa. By including members of the strategy team, the execution team can learn what the ideas and assumptions are behind the strategy. When some of these ideas or assumptions prove wrong or obsolete during the execution the strategy may be adapted more easily. Strategy development and execution are integrated processes that should never be separated.
WRITING THE STRATEGY EXECUTION PLAN
After the strategy execution team is formed its first task is to write the strategy execution plan that guides the execution. First, the team translates the strategy into ambitious but realistic objectives. Next, the team defines concrete tasks and activities that are required to achieve the objectives of the strategy. After this the execution team assigns clear responsibilities for the achievement of the tasks and activities. Finally, the execution team writes the strategy execution plan. The strategy execution plan should be kept short and action oriented. It is focused on what actions to take, who will do it, when it must be done, what results are to be achieved and how progress is measured. In large organizations, the strategy execution plan is often translated into the annual organizational unit plans that are the primary focus on the strategy management cycle. This way the strategy execution becomes part of the regular management control system. The execution team is responsible for the whole management control system or strategy management system. It is responsible for reporting the progress of the execution of the strategy as described in the strategy execution plan to the responsible managers and top management.
The strategy execution plan covers the following three subjects: the objectives of the implementation, the tasks and activities that are required to implement the strategy, and the responsibilities for the achievement of those tasks.
SETTING AMBITIOUS BUT REALISTIC OBJECTIVES
The first step in developing the strategy execution plan is to translate the objectives of the strategy into clear, concrete, measurable and feasible operational sub-objectives that are linked to departmental, process and individual goals. In addition, progress measurement points or ‘milestones’ are established. It is important not to just focus on the end results of the strategy but also on the intermediate goals or milestrones. Strategy execution is a process that often takes a long period to achieve its goals. Therefore the strategy needs to be divided in a series of planned steps with intermediate goals. This way organizational members do not become overwelmed by the end results. Concrete, measurable and realistic goals have the following advantages for strategy execution.
Measurable objectives give employees something to strive for. Before a strategy is implemented, organizational members must be aware of the strategic goals of the firm. Goal setting provides a sense of direction and pace setting for the implementation effort. When organizational members have concrete (and realistic) objectives to pursue, they have something to work towards.
A strategy with concrete goals is easier to understand for employees. Concrete goals can make a strategy more concrete for employees. A concrete strategy increases their commitment to the strategy. Employees cannot support a strategy that they don’t understand. Without concrete objectives and milestones, organizational members do not know what has to be achieved and where the implementation effort is going.
Concrete objectives enable monitoring and control. Without concrete and measurable objectives and milestones, it is difficult to monitor whether the implementation is on track or whether adjustments need to be made. This makes managing and improving the strategy implementation impossible. Therefore, the implementation plan needs to contain clear and measurable objectives or targets. Unclear objectives leave room for differential interpretation and discretion and can contribute to implementation failure.
Concrete objectives enable rewarding the implementation performance of organizational members. When there are no concrete objectives, organizational members cannot be rewarded when they achieve the objectives. This may reduce the motivation of employees, which in turn reduces their performance.
Ambitious but realistic objectives give organizational members a challenge. This increases their work motivation. When the objectives of the strategy are perceived by managers and employees to be too ambitious, this can have a very negative influence on their level of motivation. Research has shown that specific and ambitious but realistic goals, which are accepted by organizational members lead to the best work performance. People who set high goals perform better than those who set comparatively low goals. People need realistic challenges to perform well. When organizational members have decided that it is impossible to reach a goal they will stop trying to reach that goal. Goals that are too ambitious goals reduce the motivation of organizational members. It is crucial to involve organizational members in the setting of goals for the execution. Participation by organizational members in the formulation of goals significantly increases their acceptance of those goals, which in turn contributes to their performance. Participation in goal setting appears especially effective in securing acceptance when people are presented with a goal that they initially reject because it is perceived as unreasonable or too difficult.
Translating strategy into concrete goals is hard and time-consuming. Strategies are often rather vague and lack concrete objectives. Executives and managers are not always sure what to achieve or are afraid to expose themselves to criticism should the objectives not be achieved. As a result, implementation objectives are often too general in nature too. Therefore, it is not always clear what the strategy implementation is to achieve exactly. This creates uncertainty for organizational members. A lack of concrete objectives is a reason of implementation failure at many organizations.
DEFINING CONCRETE TASKS AND ACTIVITIES
A critical factor for successful strategy execution is that there is a detailed specification of the individual steps that are required to execute the strategy. When employee behaviors are not well specified this may lead to implementation breakdowns. When key implementation tasks and activities are not defined in enough detail this constitutes a major barrier to successful implementation. Everyone with strategy implementation responsibilities needs to know what to do in order to implement the strategy and what concrete objectives they have to attain individually. Defining concrete implementation tasks, which are needed to achieve the objectives of the strategy has a positive influence on implementation performance because of the following reasons.
Organizational members know what tasks they have to perform to execute the strategy. This gives organizational members certainty about the implementation effort and their role in it, which in turn has a positive influence on their level of motivation and commitment to the strategy. This in turn has a positive influence on their performance.
Translating the strategy into concrete activities forces managers to work out the strategy in detail. Managers often have a tendency to come up with rather vague strategies, as we saw earlier. By requiring managers to come up with concrete and measurable objectives, clear responsibilities and ambitious but realistic goals this forces them to work out the strategy in a concrete and detailed way. This stimulates them to really think through the strategy.
Concrete execution tasks make a strategy more concrete to organizational members. Making a strategy more concrete makes it easier to communicate it to organizational members and external stakeholders. The more concrete a strategy is, the easier it is to understand. This positively influences implementation performance as organizational members often have difficulty in understanding abstract ideas such as a strategy.
ASSIGNING CLEAR RESPONSBILITIES
Effective strategy execution requires clear implementation tasks, activities and responsibilities. Implementation can only be successful when there is a clear and shared understanding of who does what, when, at what cost. Not only should the necessary actions to implement the strategy be identified and planned, responsibility for these actions should be allocated as well. Clear responsibility must be allocated for the successful outcome of the implementation. When implementation responsibilities are clearly assigned, implementation control becomes easier in three ways.
Clear responsibilities enable management control of the execution. When implementation objectives are not being achieved as planned, the persons who are responsible for the achievement of these objectives can be held accountable. This way, adjustments may be made when the milestones of the execution are not being met.
Clear responsibilities create certainty for organizational members. When clear responsibilities are assigned, organizational members know what their situation is. This reduces the uncertainty of organizational members. This is important in strategy implementation, as an implementation often creates uncertainty for organizational members. Employees must have a clear set of responsibilities in order for management to provide appropriate guidance and direction to ultimately hold subordinates accountable for their performance. When the boundaries of decision authority are clear, individuals can feel confident and competent about their decisions and not fear potential repercussions for decisions made under ambiguous authority. Clear job instructions and low uncertainty result in feelings of competency and intrinsic motivation, this in turn increases the performance of employees.
Without clear responsibilities, organizational members may become languid. It is very important to be very specific and very detailed in assigning responsibilities to organizational members. This is because there is often group responsibility instead of individual responsibility. Thus, no one feels individually responsible for a certain task and tends to shift that responsibility to other organizational members. In addition, organizational members have a tendency to do only what they are told and nothing else and are reluctant to take initiative. To counter these tendencies, it is important to give each individual employee very clear and specific responsibilities and tasks.
DEVELOPING INTEGRATED FUNCTIONAL STRATEGIES
When the strategy has been developed its objectives and activities must be translated to all organizational units who are impacted by the strategy. Each organizational unit must clearly describe how they will contribute to the realization of the strategy of the organization. The strategy is often translated into the annual plan of the organizational unit. The objectives and activities of the annual organizational unit plan tend to be the level on which the progress of the strategy and its execution is monitored. For smaller organizations the objectives and activities of each organizational unit may be part of the organization wide implementation plan.
The task of the execution team is to ensure that the organizational unit contributes to the organizational strategy but also that the objectives and activities of the units are complementary and not conflicting. Departments may work against each other. This can be seen in organizations with a functional organization structure. Such organizations have discrete functional units such as operations, finance, human resources and marketing. In this type of organization departments may become ‘silos’ that aim to optimize the performance of their own department instead of the organization as a whole.
THE STRATEGY EXECUTION SERIES
This article is based on my PhD research at Rotterdam School of Management, Erasmus University – one of the top business schools in Europe. Research has shown that most strategies fail in the execution phase. The aim of my research was to understand why strategies succeed or fail. This series of articles gives a comprehensive overview of the best practices that contribute to strategy execution success or failure. Collectively, the best practices allow executives and managers to successfully executie their strategy and achieve the goals of their organization.