Barriers to strategy execution.

 Email Article |  Twitter |  Facebook |  digg it |   delicious |   StumbleUpon |   LinkedIn |  reddit 

Recent studies have shown that organizations that have gone through the effort of developing a written strategy fail miserable at execution. According to Paul Niven in his book “The balanced Scorecard:

• Only 10% of organizations execute their strategy
• Only 25% of managers and executives have incentives linked to strategy
• 85% of executive teams spend less than 1 hour per month on strategy
• 60% of organizations don’t link budgets to strategy

Those are pretty dismal facts about commitment and results as they pertain to strategy execution. Why are companies so poor in doing what they say they want to do?

According to an article in the Sloan Management Review in the summer of 2000 most of it has to do with leadership. The Sloan report listed Six Strategy Killers”.

1. Ineffective senior management teams
2. Top down management style
3. Unclear strategy and conflicting priorities
4. Poor vertical communication
5. Poor coordination across boundaries
6. Inadequate leadership skills down the line

These are all related to leadership and vision of senior management. In over 35 years experience as a CEO and business coach if I had to pick one of the strategy killers it would be unclear strategy and conflicting priorities.

I’ve worked with numerous companies developing a vision and a strategic plan to achieve that vision. In most every case the executive team knows that change is needed and indeed inevitable. They develop a strategy to put their organization in the best possible position to be proactive to the anticipated change, and then they freeze. Day-to-day priorities set in and they lose focus on why the plan was developed.

Developing a strategic plan is a worthwhile effort but the work doesn’t end there it’s just beginning. If all internal processes and management incentives are not aligned with plan achievement the real message is business as usual.

Senior management must take the lead in driving change and that lead needs to be in visible as well as compensatory forms. If we look at the statistics above they simply isn’t happening.

The real question is why isn’t it happening 90% of the time. I believe it has to do with short term incentives linked to quarterly and annual financial performance. It all sounds great when a company plans to invest in technology or human resources to strengthen their market presence in the next five years, but when it comes to spending money that impacts now, for something that may or may not happen later, it just doesn’t compute.

They often rationalize the problem hasn’t happened yet; we’ll have time to deal with it later. Of course by the time later comes they are scrambling trying to make a five year plan happen in one year.

Long term strategy implementation takes strong leadership, a clear vision, and absolute accountability for results. If you accept these as fact, you have to accept that these attributed are in short supply in all but 10% of organizations in the United States. 

Article first published as <a href='http://technorati.com/business/article/barriers-to-strategy-execution/'>Barriers to strategy execution.</a> on Technorati.

Top ten mistakes small business owners make

 Email Article |  Twitter |  Facebook |  digg it |   delicious |   StumbleUpon |   LinkedIn |  reddit 

I’ve been a business owner, a mid-sized business CEO, and now I’m a business coach. I’ve had thirty-five years experience in my own businesses and with those of clients. I have recognized patterns regarding the top mistakes business owners and CEO’s make. It actually inspired me to write a book a year or so ago.

Here is my top 10 list in no particular order of frequency.

1. Failure to plan. Of the businesses I’ve seen over the past 35 years that are experiencing problems , the vast majority don’t have a documented plan. If you don’t have a plan, and documented goals what is the baseline for making decisions? The answer is, of course, there isn’t any and they spend time and money chasing diversions that look good at the time. Create a vision, communicate it, and base decisions on whether it takes you closer or further from where you want to end up.
2. Lack of financial skills. I don’t mean the ability to read an earnings statement or a balance sheet, but the skills to analyze the numbers and understand what the trends are. It’s amazing to me how little top managers understand about what their numbers are telling them. Numbers are nothing more than a scorecard, you need to look at trends and averages to understand performance. If you look at the score of a baseball game what does it tell you? Your team won or lost. The real data is in the box scores and statistics over the season.
3. Lack of execution, another word for procrastination. If it’s important get it done, make a decision, do the hard ones first. Someone once told me “bad news doesn’t get better with age”.
4. Lack of accountability for themselves and employees. I call this the “they” factor. “They” don’t care, don’t get it. Don’t produce whatever. Top management too often fails to realize that they are responsible for “they”.
5. Failure to deal decisively with the obvious. I am still amazed how long some top managers will continue to do the same things with the same results and not recognize that they need to do something different. Humans tend to ignore the unpleasant. Unfortunately it doesn’t change the facts. As Einstein said, the definition of insanity is “doing the same thing over and over and expecting different results”.
6. Lack of data. Many companies use the P & L as their only data to manage their company. They don’t have a dashboard of key metrics to analyze trends and identify root causes of problems as well as opportunities. When you see it on the P & L it’s too late, it’s already happened.
7. No clear USP. A business owner or CEO should be able to clearly articulate the answer to one simple question, “With all the goods and services available to my customer, why should they buy from me”?
8. Poor marketing and branding. Many don’t understand clearly the roles of marketing and sales. Marketing is education. Helping your customer understand why your product or service is the best value for them. Sales is facilitation, helping them purchase your product or service quickly painlessly and efficiently.
9. Insufficient capital. From startups to existing businesses this is nearly always a problem. Things always take longer, cost more, and are more difficult than our optimistic projections. Some of this is driven by the fact that if you deliver pessimistic projections you don’t get the funding you need, but inflating results just delays the inevitable. You have to go back to the well and it’s always more expensive the second time.

10. Underestimate the commitment. Many top managers and owners come from large companies with extensive support functions. Moving to a small business is an eye opener. More often than not you are the support staff. Hours, stress, risk all should be clearly understood and agreed upon by all stakeholders.

Running an organization as an owner or CEO is something that few of us ever get to do, it can be exhilarating, it can also be very stressful and risky. The key is knowing and admitting what you don’t know and getting help from trusted experts before you need it.