At a Glance
- Effective strategy execution requires companies to leverage their unique competencies and customer value propositions.
- Successful strategy execution correlates with an increase in the classic drivers of shareholder wealth and profitability.
- If you feel that your organisation’s current strategy is not delivering growth or efficiency you are looking for, it is time for an expert intervention.
Having a clear plan or strategy before you start working towards a goal is essential because without one, you are more likely to get lost, make mistakes, and ultimately fail. In this context, strategy refers to the development of a set of unique and irreproducible competencies and customer value propositions that enable the business to create value.
Additionally, when we talk about competencies, we are referring to a mix of people, systems, structure, skills, culture, distribution, and operations, that enable a business to carry out its day-to-day activities.
Although strategy execution is critical to business success, many companies struggle to put their plans into action. Effective strategy execution requires companies to leverage their unique competencies and customer value propositions. This article discusses what companies need to do to successfully implement new or existing strategies.
Strategy: It’s all about the follow-through
Despite having a well-defined strategy, companies often face challenges, and in some cases, outright failure in implementing it effectively. This is a stark reminder that having a strategy is insufficient; successful execution of that strategy is equally critical to achieving the desired outcomes. Strategy and execution are interdependent and must be treated with equal importance.
Strategy execution is a priority for most chief executives, according to a 2021 survey by the American Management Society. In the survey, respondents reported that strategy execution was both their number one and two most challenging issue. The results showed that over 60% of strategies were not successfully implemented, highlighting the need for better execution.
Although companies invest considerable time and effort in developing strategic plans, their execution often stalls due to a lack of the necessary structures and processes. This problem arises because less emphasis is placed on strategy execution than on formulation stage. As a result, organisations struggle to meet the challenges of a volatile and competitive business environment.
A focus on strategy execution has been shown to deliver a number of competitive advantages, including:
- Sustainable innovation: Effective execution of innovative plans ensures that breakthrough ideas/ innovations are consistently translated into tangible actions.
- Increased profitability: Successful strategy execution correlates with an increase in the classic drivers of shareholder wealth and profitability.
- Improved employee engagement: Employees are likely to feel more motivated and willing to embrace organisational change when a clear path — that benefits everyone — is set out and executed. A 2023 study published in The Academic Journal of Contemporary Commercial Research found that employee engagement is a bridge between strategy planning and execution.
- Achieving organisational goals: A Gartner study found that successful organisations were 1.6 times more likely to have clear strategies and expected business outcomes.
- Improved customer satisfaction: Effective strategy execution enables organisations to better meet the needs of their customers, improving customer satisfaction and loyalty.
Ready for a change in your organisation?
What matters in strategy execution?
Effective strategy execution needs to take the following aspects into consideration:
1. Organisational alignment
To ensure alignment between strategy, purpose and organisational capabilities, consider these two fundamental questions:
- How aligned is your strategic plan with your long-term purpose?
- How well is your strategy aligned with your organisational capabilities?
The optimal path to success depends on the alignment of the organisation’s purpose with its inherent capabilities. A 25-year study by the International Journal of Strategic Management found that a company’s profitability peaks when its strategic actions are aligned with its environment.
2. Flexible leadership
At this stage, the absence of effective leadership can lead to conflict due to conflicting priorities. This lack of alignment often occurs when employees perceive senior management as avoiding challenging issues, which can potentially impede the organization’s progress in executing its strategy. Striking a balance is crucial, and agile approaches can be a pathway to successful strategy execution.
3. Performance measurement
Performance measurement helps predict future actions and performance by analysing available historical data. Measuring the performance of business strategies can identify areas that need management attention. Understanding the trajectory in which an organisation is moving is first step towards correcting and improving performance.
Struggling with execution? Intervention is needed
Many organisations excel at strategy formulation, yet many of these same organisations get lost in the complexities of effective strategy execution. If you feel that your organisation’s current strategy is not delivering growth or efficiency you are looking for, it is time for an expert intervention.
With over 25 years’ experience in implementing strategy projects for our clients in a wide range of industries, our methodology can help analyse the opportunities in your existing strategy and work with you to design and implement a practical program with initiatives that will drive value.
What sets Renoir Group apart is our experience in taking projects to full adoption using our behavioural and cultural change methodologies.
We need help to redefine our organisation’s strategy