5 main pitfalls in strategy execution
Experienced leaders call strategy execution a combination of knowledge, skills, art, and leadership. It is true with no doubt. When we would like to execute our strategy, we need to start and learn during the execution. Consultants can help us a lot but they only show the direction and facilitate the action. The final decision in many aspects is on us.
1. Definition of strategy
Does everyone have the same understanding of the word? There are many C-level people unable to define strategy in a simple way for their teams. If you have time, we suggest you to read these two short articles on our weblog and explain to your team members what you mean by the word clearly: I'm confused, what is strategy? & Don't disturb me, too busy with my strategy!
2. Strategy is not a "do or die" plan
We cannot stick to what we plan for 100%. Usually, there is high volatility in our business atmosphere and smart leaders try to keep the long-term direction but create more options while they are moving forward.
Hyundai Motor Group has many subsidiaries such as Hyundai Engineering & Construction or Hyundai Steel or Hyundai Glovis (logistics).
When it comes to revenue-generating strategies, the company creates many options and based on the market situation, volatility and business performance their executives decide on different plans and options. You can learn more about them here.
The same story with Google products and services. Google+ was never so successful as Facebook but Google never stopped developing their portfolio. By creating alternatives and options we make our journey safer.
3. Lack of firsthand information and data analysis
Strategy planning and execution are dependent on understanding the business atmosphere and also analyzing data from different angles.
Statistical analysis and the way we calculate results may lead or mislead us if we don't understand how to collect data, analyze data and interpret data.
You can click here to understand the differences between mean and median and also how they may mislead us if we do not understand what we need exactly from data.
There are many other examples that we can speak about when it comes to data misinterpretation.
4. Lack of communication and authority
Communication is not only informing others about what is happening! It is respecting others, sharing information to engage people and giving credit to the team for achieving a result. If we don't authorize our managers and team members, we can not expect them to be responsible for delays, bad results, and problems!
5. Measuring progress and reasonable cascading
Good KPIs can tell us many stories about our business. You can figure out more in our article 7 reasons why KPIs systems fail.
When it comes to cascading, please don't forget that we cascade strategy and not KPIs! This is one of the most common problems when it comes to strategy execution!
Let's go through an example: Imagine that you would like to reduce production costs in an international company with 5 production plants in 5 different countries. The main plan or direction is reducing "production cost" but the execution is very different from region to region. While in some countries you may search for cheaper raw materials since that is the first effective action, in other regions, you cannot do the same and you may start from improving your processes or focusing on lean production. These two examples simply show us how we can assign different KPIs while we are keeping the same direction in different regions.
So, never cascade KPIs but cascade the strategy.
These are, of course, the basics, but if you wish to know more, write us on firstname.lastname@example.org
what seems to be the problem and we will be happy to help you to enjoy your journey : )