THE STRATEGY EXECUTION MODEL
At Strat.exe we are convinced that the true challenge of today’s organisations lies more in the Execution than in the Definition of their Strategy. Public and private companies usually struggle more when it comes to executing their plan, than when it comes to developing their strategy. A lack of internal discipline, capabilities, skills and processes for execution often explains this difficulty.
We have developed a model based on the Strategy Execution and Balanced Scorecard methodologies created by Drs. Norton and Kaplan, from Harvard University, and on our large experience on the field. This model covers from the definition of the strategy to its transformation into results. It is the reference in which we base our offering to help our clients:
1. STRATEGY DEFINITION
We start by helping our clients to define from within their strategy, involving from the beginning the key executors of the strategy.
Strategy Definition consists in defining the “strategic direction” of an organisation, making decisions on allocating the right resources to pursue this aspiration. In order to determine the direction of the organisation, it is necessary to understand its current position and the possible ways through which it can pursue a particular course of action.
The main steps include:
When developing strategies, the analysis of the organisation and its environment, as it is at the moment and how it may develop in the future, is important. The analysis has to be executed at an internal as well as an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organizations. The study of the environment may include or not intense data research and analysis.
Define possible environmental scenarios prior to formulating specific strategies for long-term planning. This thinking process increases the flexibility of strategies and the awareness of how strategies should change in case the environment changes.
- – Mission: defines why does the Organisation exist? What is its fundamental purpose?
- – Vision: Is an idealisation of what the Organisation wants to be in the future. It describes in what direction does the organisation wants to go, but does not specify time frame or quantify results.
- – Aspiration: define in a specific and quantified way, where the organisation wants to be at the end of their Strategic Plan.
- – Strategic Journey Coordinates: define your 4-7 measures that will let you know how far away you are from your strategic destination.
- – Change agenda: highlight the main transformational gaps that is facing Strategic
- – Themes: they are the paths or avenues through which organisations needs to go in order to achieve their Strategic Aspiration. The development of these Strategic Themes require a high degree of strategic content generally by a team of experts (internal and/or external). Some examples of Strategic Themes are: Operational Excellence, Growth, Innovation, etc.
2. STRATEGY TRANSLATION
After defining the strategy, organisations must translate it into robust and clear strategy translation framework (known as “Balanced Scorecard framework”). This is the core know-how and expertise of Stratexe.
This framework is composed by three elements:
- The “Strategy Map” which contains, in one single plage, the key strategic objectives of the organisation,
- The “Strategic Scorecard” or “Balanced Scorecard” with few but relevant “measures” or “indicators”, in order to track the degree of achievement of each objective, and
- The “Strategic Action Plan” or “Strategic initiatives” that the organisation must define, prioritise and implement to close the gap between the current situation and the expected end goal. It is also very important to align this portfolio of Strategic initiatives with the budget (“Stratex”).
The Strategy Map provides a simple way for representing the strategy to be implemented.
It describes in one single page the key transformational objectives that the organisation will have to achieve in order to fulfil its Strategic Aspiration.
Those strategic objectives are grouped into 4 balanced perspectives that are linked through a cause-effect relationship. These perspectives are:
1) Financial perspective: this perspective shows the financial outcomes that the strategy should achieve. In public sector, this perspective is often transformed into a “social perspective”.
2) Client’s perspective: this perspective highlights the perception that we want to achieve as output of our value proposition. In public sector, this perspective can be merged with the “social perspective”.
3) Processes perspective: This perspective focus on the key internal processes that will be the input to generate the value proposition.
4) Enablers perspective: This perspective prioritises the key strategic enablers that the organisation needs as input to sustain its internal processes.
This powerful tool results key for strategic vision, translation, alignment, communication and monitoring
The Strategy Map is the starting point for another important strategy execution tool: the “Strategic Scorecard”, or “Balanced scorecard” (as mentioned by Professors Norton and Kaplan, creators of the strategy execution framework).
Its elaboration consists in defining, for each objective of the map, the few, relevant and accurate measures (or indicadors, metrics, KPI) that will help to measure the degree of achievement of the objectives.
This “Strategic Scorecard” or “Balanced scorecard” has to support the strategic decisions process (vs. Operational Scorecard which focus more on the day-to-day decision making process), helping to understand if the company is actually being strategically transformed or not.
Once organisations know which are their strategic objectives and how to measure the achievement to those objectives, the next step consists in developing the strategic action plan (or set of strategic initiatives) that will close the gap between today’s baseline and their expected performance.
This transformational action-plan is crucial to ensure the achievement of the strategy plan. The selection and prioritisation of those key initiatives will determine the ability of the organisation in transforming its strategy plan into reality.
Each one of these initiatives has to be defined into detail, specifying the scope, start-date & end-date (it is not business as usual), budget, team involved and its dedication, milestones, deliverables, sponsors and following up process.
In the same way organisations define their “Opex” (Operational Expenditure) in order to finance and execute their day-to-day business, they have to define their “Stratex” (Strategic Expenditure) in order to fund and prioritise their strategic action plan.
All of the financing needed for the strategic initiatives portfolio must be on the budget, since in case of misalignment the initiatives won’t be executed.
3. STRATEGY CASCADING AND ALIGNMENT
Stratexe also help its clients to deploy the strategy execution tools from the top to the bottom, by cascading the strategic objectives (strategy map), measures (balanced scorecard) and initiatives (strategic projects) into the different Business and Support Units.
This alignment filters down to individual level through the use of Personal Scorecards and Strategy Communication Plans to better understand what the individual’s contribution to the Strategy is. Stratexe has developed a unique “Personal Scorecard Model”, making everybody rowing in the same strategic direction.
The strategy map cascading consists in aligning the strategic objectives of the organisation to its different business and support units, ensuring that the entire organisation is “walking in the same way” and that every unit is correctly aligned with the overall organisation strategy.
The strategy map cascading accompanies with balanced scorecard (strategic measures) cascading, in order to ensure that the key indicators and targets are used as drivers through all the organisation. This scorecard cascading will highly facilitate its correct monitoring.
In parallel to objectives and measures alignment, it makes sense for the organisation to cascade its action plan into the different business and support units.
“You define the Strategy from the top. But you execute it from the bottom”.
That is why it is so important to clearly explain the strategy and to motivate the key employees and stakeholders around it.
The strategy communication is a difficult exercise where targets, timing, messages and tools must be perfectly coordinated. And the strategy map, that everybody can easily understand, is the keystone and the main communication support of this phase, but it has to be complemented with “communication sessions”, “table games”, “team building”, …
Stratexe develops out-of-the-box and powerful strategy communication tools for its clients.
The last step of this alignment, but not the least, consists in aligning incentives, evaluation and remuneration of employees respect to their contribution (both subjective effort and objective results) to the strategy. ExCo members, second level management and key employees on the field not only need to understand the strategy (communication phase), but they have to participate in the organisational transformation. The personal scorecard allows this mind-switch and ensures that the cluster of their actions is pushing this new strategy.
Stratexe has developed a unique Personal scorecard model in order maximise alignment and contribution to the strategy.
4. STRATEGY MANAGEMENT
Finally we create a Strategy Management Process for our clients that will facilitate the internal discipline for the execution of their strategic initiatives and achievement of their strategic objectives, by continuous monitoring in Strategy Review Meetings.
This execution of the strategy in the day to day implies:
- Establish a dedicated unit that will orchestrate Strategy Definition and Execution: the “Office of Strategy Management”
- Develop a monitoring process (frequency, roles, templates, etc.) that will allow the organisation to report on the degree of achievement of the strategy and to run efficient “Strategy Review Meetings”
- Manage the execution of the portfolio of transformational initiatives
- Select and implement the IT tools required to monitor the whole strategy execution process
Establish a dedicated unit that will orchestrate Strategy Definition and Execution. This Unit will couple the Units responsible for Strategic Planning with those performing the activities required to implement the Strategy – such as budgets, communicating the Strategy, designing compensation systems that reward strategic performance.
Develop a monitoring process (frequency, roles, templates, etc.) that will allow you to report the degree of achievement of your strategy and to prepare the Strategy Review Meetings.
The strategic portfolio defined and prioritised contains the essence of the transformational changes that the organisations will have to implement in order to achieve its strategic targets. The objective is to manage the execution of those Initiatives in the day-to-day through the use of Project Management tools.
IT tools facilitate the Monitoring process. We help our clients to select the most appropriate IT tool for their needs, size and level of complexity.