The Language of Strategy 2 Execution

Bringing Together Financial Measures, Strategy and Execution, Enterprise Architecture and Change Efforts: Targeted Outcomes to the Rescue!0
ronald.lamb posted in Challenges, Execution of Strategy, Getting Everyone on the Same Page, Improving S2E (Strategy to Execution), Measures of Success, Performance Improvement, Strategy, Uncategorized on January 24th, 2010

Lack of Coordinated Effort at the Enterprise Level

I’ve rarely been in a meeting where the following leaders have met to bring about a coordinated effort to synchronize their key performance or financial and operational measures: VP of Finance, Strategy (Enterprise and Business Unit), Operations and Enterprise Architecture. Their perspectives, responsibilities and ability to affect positive change are indispensible but rarely coordinated. It is time to explore the opportunity and the challenges to overcome.

My experience working or consulting to executives within multi-billion revenue organizations is that their enterprise and business unit strategies are so broad and complex that very few people grasp the whole, and few could explain how they integrate. Yet, these organizations explain to Wall Street in terms of revenues and profitability how all these operations work together.

Few people operate at the enterprise level, so this coordinated enterprise story of coordination between finance strategy, execution is usually pretty weak. Often the story is basically a financial one or the power points of various business unit executives pulled together.

Most people work in business units and have their own part of the total strategy to execute. They have to optimize their operations to reach their own financial and other measured goals, regardless of the level of clarity of the enterprise strategy. A common refrain from the top executives on downwards, is “I know what our part of the organization is working on, but I have only a remote understanding of what other groups are doing and how their efforts impact ours.” Add to that, is the fact that most financial measures for organizations are not well aligned to the operational efforts.

What You End Up With Is A Major Gap In Understanding of What Has To Change Operationally To Move The Dial On Enterprise Financial Measures

How then can a large organization create this connection between corporate financial measures and business unit operations?

Creating a Common Language for Strategy to Execution: Targeted Outcomes (Financial, Strategic, Operational, Behavioral etc.)

The one approach that has consistently worked is the decomposition of Targeted Outcomes. These targeted outcomes start as targeted financial outcomes at the highest strategic level. For example, Earnings per Share can be decomposed into the profitability targets for the major strategic focus areas of the business. These in turn can be decomposed into the targeted revenue and cost savings targets within the business units. It is at this stage that you can decompose financial outcomes into all the operational targeted outcomes that are necessary to achieve the financial measures.

Once you have the set of targeted operational outcomes identified, you can add measures to them. That is exactly the type of information that VP’s and Directors need within Business Units to identify the operational efforts, programs and projects that can achieve those higher level operational outcomes.

Once the operational outcomes and associated projects are identified, it becomes just a matter of standard enterprise architecture and project management practice to identify and communicate the areas of change and then the dependency between change projects anywhere within the organization.

This is by design a short point of view based on observation and bringing about successful change. The major take away is that bringing Financial Measures, Strategy and Execution together using Targeted Outcomes Decomposition and Enterprise Architecture can be done. The problem is more often, that these groups and their efforts are still carried out within silo’s.

No Common Governing or Meeting Platform to Bring Together the Right People for the Right Actions

It is the influential executive or bold director/ manager who can bring the right level of awareness to the problem and potential solution. It is tougher still to get the right people in the room to even agree to an enterprise solution.

I’ll be writing more about the promise and value of bring these together and with some suggestions on how to bring it about in the real world of competing agendas, and not enough time.

Challenges to Overcome in Coordinating Finance to Strategy to Execution Efforts at the Enterprise Level

Here are some of the challenges that need to be explored in building coordination in Finance, Strategy, Execution and Enterprise Architecture;

• How to inform each other of the opportunities that we each know exist if we coordinated efforts.
• How to overcome the silo’d way those groups operate.
• What to do, when there is no standing forum for these leaders to come together.
• How to set up a charter for this group, and the measures of success that they can newly influence, and
• How to measure and sustain success.

The Disconnect between Strategy and Execution2
ronald.lamb posted in Execution of Strategy, Failure Statistics, Improving S2E (Strategy to Execution), Relative Importance, Resource Management, The Language of Strategy to Execution, Uncategorized on June 6th, 2007

There is not enough focused effort to address the gap between strategy and execution. George Ambler’s blog The Practice of Leadership, has found a great survey on the Disconnect between Strategy and Execution. This is a must read for anyone who is looking beyond easy answers. The survey is by OnPoint Consulting and hits a home run in its observations. Most organizations have a strategy that is at least adequate, with some being clear and inspiring. Most organizations have an execution capability with capable people using standard or best practices. Still 49% of firms surveyed see the gap in their ability to execute sound strategies. Of this 49% of firms, 64% don’t have confidence in their ability to close the gap. OnPoint provide a list of eight factors that they feel provide this strategy to execution gap.

I sometimes wish that I could describe just eight things for organizations to change that would close the gap between strategy and execution. What I have decided is that there is another way to look at the strategy to execution gap. It is based on the fact that no organization has enough resources to achieve all their targeted outcomes. Just addressing eight things isn’t always enough. This is a great list and well worthwhile tracking. I’d like to suggest creating a tighter link between specific targeted business outcomes and execution success. What that means is that you have to understand what your targeted outcomes are, the relative importance between them and then apply your resources towards achieving them. Together these begin to create a strategy to execution roadmap. You can then identify those areas of execution risk that need to be managed. This is where you can apply resources to increase the certainty of success.

If you had all the resources you needed to close the strategy to execution gap, you would be moving along a path towards CERTAINTY of success. I believe that no organization will ever have enough resources to achieve certainty. What you have to look for is that point along the path that gives you a sufficient level of certainty for the resources you can afford to commit. To build cross organizational commitment to the success, you can create a visual model of what initiatives you are funding, the resource that are committed that take you along that path. You increase buy-in if you can make these targeted cross organizational outcomes and initiatives visible to all the participants.

If you choose to call your execution starting point “HOPE”, then you have the start of a strategy to execution roadmap. A good model for this is to think of moving your organization along a line from Hope of success to Certainty.

I use the word Hope, because it adequately describes most organization’s execution method. What I mean is that few people own all the resources necessary to achieve any important targeted outcome. You have to rely on other parts of the organization to provide resources to achieve success. Current management processes don’t provide you with sufficient control over all resources needed to achieve key outcomes. You have to Hope that other parts of the organization will meet their commitments to provide committed resources.

Even after resources are committed, you don’t have adequate insight into other parts of the organization’s conflicting demands and priorities. You don’t often have sufficient warning to know when another part of the organization will fail to meet their commitments. As the survey shows, expectations aren’t met at least 49% of the time. (Most other surveys I’ve seen suggest well above 65% of strategic programs fail to meet CxO (CEO, CFO, COO etc.) expectations.

The solution is to find those outcomes and initiatives that will move the certainty of success for targeted outcomes sufficiently along the path towards certainty. For some critical business outcomes that will be very far along the path to certainty. In other cases, your organizational and gut-level experience will tell you that you have a good chance of success given past history. For those outcomes and initiatives, the addition of initiatives to ensure success can be lower.

The great part is that you can balance the need for higher levels of certainty for the most important outcomes against a lower level for less important outcomes. This way you can apply your resources to the most critical outcomes. You can go a long way in building commitment to success by creating this visual line of sight between initiatives that are designed increase success and the targeted outcomes that achieve business value.

Congratulations to George Ambler for finding this great survey and highlighting its value. It’s a must read.

Blogging Trials and Tribulations0
ronald.lamb posted in Uncategorized on August 3rd, 2006

You may have seen that I’ve had the odd day without a new posting. Getting a Blog going is tougher than I thought.

The Trial:
One of the first things I did when I started was to add a little tool to the site that would tell me how many people were visiting, from where and what they looked at. Well, this wonderful tool was showing that I was the only one looking at my site. I knew that wasn’t quite true from people who sent me emails congratulating me on getting it going. Why the missing postings? I’ve been using up my “Blog time” on fixing problems like this. Since it didn’t appear that many people were visiting, I thought I’d use the time to solve some of these problems.

The Tribulation:
I was wrong. I just got the applications going that tells me who is visiting. Within the first five minutes it showed 9 people were looking at the site. A little math and that says that more than just a few people at least think that the title of the Blog is interesting. It also says that I can’t take a day or two to work on problems at the expense of content.

Regarding the content, the only way I know if it’s interesting is if you leave a comment. Right now you have to click on the posting title. It’s not very convenient and I will fix it. For those of you who prefer to read off-line, I am now adding .pdf hardcopies of postings to download and read later.

So welcome and again let me know what part of the Language of Strategy 2 Execution Blog is interesting to you.

Ron

p.s. My thanks to my friend Mike Werner of Bikes in the Fast Lane – Motorcycle News. Apart from sharing his passion for motorcycles, his site is wonderful for anyone contemplating a visit to Normandy France. His blog has lots of suggestions that only locals would know about. He has been great in sharing his long time Blogging experience.