In last month's column, we explored the three capabilities that contribute to making companies successful at executing their strategy. These capabilities are visibility, leverage and responsiveness. Visibility is seeing what is coming to know if and when change is needed. Leverage is knowing what actions will most effectively drive a desired outcome. Responsiveness is acting quickly and efficiently to achieve results. These three attributes are the core capabilities of market-leading companies. These attributes are "states of being" that allow companies to drive superior results via the intentional and consistent execution of their strategy.
In this column, I will review the structural elements that can be put in place to develop these three capabilities. My research finds that these capabilities are the outcome of a set of well-conceived processes and practices. That is, any company can decide to be successful at executing its strategy! As a matter of fact, any company can compare itself to a strategy execution maturity model to gauge its readiness to continually execute its strategy.
To better articulate my point, let's take a quick detour to consider Fortune's Best Companies to Work For 2006. In taking a look behind the scenes, we find that the survey is conducted by the Great Place to Work Institute, Inc. They state, "A great place to work is one in which you trust the people you work for, have pride in what you do and enjoy the people you work with." In their survey, they explore four dimensions in the workplace: credibility, respect, fairness and pride/camaraderie. These dimensions or qualities of the workplace are measured qualitatively through employee surveys and assessed via a review of underlying practices and processes. Therefore, the qualities of a great place to work are understood to be the outcome of a set of intentional practices and structures that the management team has intentionally put in place at these companies.
In this same way, we will outline the processes and infrastructure that lead to the qualities of visibility, leverage and responsiveness - the core capabilities that enable the successful execution of strategy.
Figure 1: Infrastructure for Successful Strategy Execution
Visibility, leverage and responsiveness are the outcome of a series of core strategy execution management processes: process mapping, operational analytics and resource allocation. These three processes are held together and coordinated by a fourth process called strategy management. Together, these four processes work to enable a highly adaptable and responsive organization that can deliver against its stated strategic intent. Finally, in addition to these four core strategy execution processes, organizations need to maintain intangible assets in the areas of IT and human capital. The readiness of both of these intangible assets is critical to the successful execution of strategy.
Core Processes of Strategy Execution
Strategy management is the articulation and measurement of strategy throughout a corporation. It is supported by the development of strategy maps that articulate the stated strategy of the corporation and that cascade throughout the organization to show the linkages and alignment to strategy by each line of business and department.1 Subsequently, balanced scorecards are created from the various objectives stated within the strategy maps to measure progress against the stated strategic objectives.2 Lastly, a portfolio of strategic initiatives is enacted to close the performance gap in any delinquent areas of strategy execution. The orchestration and integration of these elements has come to be identified with the new role of the office of strategy management.3
Process mapping is the articulation of the set of activities that, when effectively integrated, produce value for a customer or partner of the corporation. The development of process maps tell the story of how the business really works. This backdrop of a clearly defined model of the business is imperative to the development of a common dialog for business decision-making.
Business analytics is the decomposition and linkage of strategy objectives to operational processes. These linkages are the keys to understanding the operational leverage points to enacting strategy and to the successful measurement of leading indicators of future performance. Business analytics is a control and improvement loop that is required to drive performance in the direction of the strategic intent. The full understanding of the strategic leverage of key processes is critical to strategy execution.
Resource allocation is the integrated planning and funding effort to appropriately allocate resources across the organization. Resource allocation enables key strategic themes to be amply funded and assures the maximum productivity of each incremental resource that is expended. The resource allocation process is vital to funding long-term differentiation while also enabling a fast and pointed use of resources against current imperatives.
This set of four critical strategy execution processes is the foundation for developing insight, founding decisions and taking action against the key objectives required to successfully execute strategy. Together, these processes provide the backbone and produce the rhythm for the execution of strategy.
- Kaplan and Norton. "The Balanced Scorecard, Measures that Drive Performance." HBR OnPoint Enhanced Edition, 1 February 2000.
- Kaplan and Norton. "Having Trouble with your Strategy? Then Map It." HBR OnPoint, 1 October 2000.
- Kaplan and Norton. "The Office of Strategy Management." Harvard Business Review, 1 October 2005.
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