Is Strategy Execution Worth the Effort?
If you are a regular reader of our newsletter it will not be breaking news that execution management is critical in realizing the objectives of your strategy. However, Execution management is a capability and like any skill requires time and investment to master. Therefore, it is not unusual for business owners and CEOs to ask and/or wonder, is the impact from execution management worth the effort? Consequently we are always excited when we can share research that targets the power of execution management.
A global survey on implementation was conducted by McKinsey and Company early this year in which they questioned executives (over 2,000) about their experience with major change efforts (e.g., Strategy Execution). Executives were asked how their organizations approached large-scale changes, and what execution capabilities they have (or don’t have). McKinsey focused on seven core capabilities they identified as critical to successful execution. Good implementers, those with top quartile implementation capabilities, achieved significantly better scores than poor implementers. Here are key survey results for good implementers:
- Higher success rate – they are 4.7 times more likely to achieve most or all of their change effort objectives.
- Capture more value – They are 2.0 times more likely to sustain (after 2 years) the impact targeted opportunities.
- Improved Financial Performance – Report 30% higher scores on selected financial performance indices.
In aggregate, good implementers outscored poor executors by an average 1.8 times across all seven implementation capabilities. Three noteworthy capabilities were highlighted by McKinsey to demonstrate the practices of good implementers, and these capabilities will be familiar to our AlbuonStrategy audience (see links):
- Ownership and Commitment – The key to success is the leader’s commitment to change. Leaders need to devote the necessary time and energy to support change. They need to walk-the-talk and model the right behaviors to support the change.
- Prioritization and Planning – Leaders should consistently focus the organization on key priorities and the the execution of those priorities. Effective communication is a requirement up, down and across the organization on the what and why of execution efforts, while regularly reviewing the how of individual and group efforts to achieve the company’s priorities.
- Performance Management – Leaders need to have practices and tools in place to ensure individual accountability for goals and targets that are tied to key objectives. Holding regular progress discussions will help maintain momentum, motivation and avoid surprises. Effective use key performance indicators (KPIs) by leaders to monitor and respond to the impact of change efforts on organizational performance are essential.
The Survey confirmed that the effort in developing a strategy execution competency will provide a great return on investment for your organization. Being good implementers can give companies a sustainable advantage that is insulated from external forces. Many of our clients have recognized the value of strategy execution management as a competency and made it a strategic objective for their organization. If you are currently developing your execution management capabilities, keep moving forward. If you are not, you are missing an opportunity to improve the long-term performance of your organization.
We are always interested in your thoughts and comments, so please e-mail us about your experiences. We’d like to hear from you.