The dangerous blinkered view of strategy execution
Hardly a day goes by that I don’t read a blog detailing the “key” barriers to strategy execution. The usual suspects are trotted out for inspection – poor leadership commitment, lack of resourcing, no front-line involvement, inappropriate measurement, etc. The posts then invariably go on to explain how to overcome these barriers – again the usual bunch of solutions: build an execution framework such as the Balanced Scorecard, manage change, communicate extensively, etc.
The glaring omission
When I read these missives, I am struck not only by their similarities (and to be fair much of the advice is logical and sensible), but by an almost universally glaring omission. The barriers identified and the solutions proffered tend to focus fully on the inside of the organization. Let’s break down the functional silos, ensure accountability for delivering the pieces of the plan, and rigorously (or even religiously) measure progress. There is little, if any, mention of how to capture ongoing changes in the external environment as part of the strategy execution phase. Perhaps through measurement, external issues will emerge, but this is generally reactive rather than proactive management.
Indeed, comprehensive research into the “barriers of strategy execution” by The Leadership Forum (and soon to be published) found that the interviewed managers made minimal reference to external factors as strategy execution barriers – though there was much mention of internal politics and bureaucracy. The outside world seemed to matter little once the plan was in place.
Now, we know that we must change structures, processes, approaches etc., to deal with the digital era (and I regularly write on this) but I ponder what this all means with regards to “strategy execution.” The norm for most is still to build the strategy plan and then execute. After exhausting ourselves with Five Forces, SWOT, PESTEL, “business model innovation,” etc. (that do consider external factors), we simply implement as is and all energy is directed inwards. Clearly this is no longer fit-for-purpose.
What this means for the Balanced Scorecard system
No matter how well an organization overcomes the internal barriers (and consultancies are awash with solutions), it won’t count for much if external shifts change the dynamics of the market or customer behavior. This has implications for how we think about execution and for the architecting of classic Strategy Maps and Balanced Scorecards. I am becoming increasingly uncomfortable with the fact that conventional maps and scorecards do not explicitly capture the external environment: of course, these might show up as customer or financial outcomes, thus triggering a desperate response, but by then it just might be too late.
I am becoming increasingly uncomfortable with the fact that conventional maps and scorecards do not explicitly capture the external environment
The role of risk dashboards
Many would argue (as I did in my book Risk-Based Performance Management) that the building of risk dashboards to support the Balanced Scorecard system is one way to deal with the external threats. Professor Kaplan argued the same in a recent interview I did with him. The scorecard describes how to deliver success to the strategy, if all goes well and given our current understanding of the competition, marketplace, etc. The risk dashboard enables us to play close attention to what might derail that strategy. Perfectly sensible and this requires that eyes must be continually scanning the external world and feeding back insights that can then be actioned.
So, to better integrate the external with the internal, we need a much better understanding of strategic risk management and for line managers and employees to understand its importance. But that’s not all. Internal and external integration goes further than this.
We also need to develop marketplace-oriented capabilities, as my associates highlight in their research. That is developing the externally focused capabilities to be able to read what’s happening in the markets and respond proactively. The fact is that execution that achieves plan goals (and so deliver “all green” on a scorecard) may still unwittingly generate the seeds of organizational failure if it is not geared to building, enhancing and integrating external and internal capabilities.
Execution must be designed to enhance all facets of marketplace learning (note I’m not talking about doing better customer experience surveys or even better utilizing Big Data – although both are important contributors, but capturing and responding proactively to technology shifts: so, technology-based planning as opposed to finance-based planning for instance) and this needs to be captured on our maps and scorecards, which must become significantly more adaptive than they are presently. In short, we must remove the internally focused blinkers that dictate our approach to strategy execution and meld external and internal factors into a holistic capability focus.
I will write more on what all this might look like in upcoming blogs.
As always feedback is welcomed.