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Strategy Formulation Without Execution Is But A Wish

by Mario Bognanno on October 18, 2019

The upcoming blog series will include step by step suggestions for BSC development, implementation, and execution taken from the whitepaper, “The Balanced Scorecard Refresh – Lessons from 25+ Years in the Field,” authored by Mario Bognanno, Ryan Englund, and Randy Russell This blog series will culminate in the release of the whitepaper and live webinar: What I Wish I knew Before I Started My Balanced Scorecard Program. 

The field of strategy design and execution is a vast topic, so it is important to define these terms to establish a common point of reference. A useful definition of strategy, provided by Jan Rivkin (Harvard Business School), is that strategy is “... an integrated set of choices that position a firm, in an industry, to earn superior returns over the long run.” Rivkin’s definition applies not just to firms in the private sector but includes not-for-profit and governmental organizations as well. For such organizations strategy “... positions an organization to provide superior services to its clients and stakeholders at reasonable costs over the long run.”1

Dr. David Norton provides another definition of strategy. “Strategy is a plan that takes you from where you are today to someplace you have never been before—strategy is change.” For Norton strategy consists of a set of coordinated actions that enable the organization to achieve a strategic vision that is measurable and time-based. A classic example of such a vision is the aspiration expressed by President John Kennedy in 1963 when he said, “I believe that this nation should commit itself to achieving the goal, before the decade is out, of landing a man on the moon and returning him safely to the earth.”2

Register for our next webinar on this topic! 

Strategy consists of well-articulated ends, ways, and means. The ends are the results of the strategy when executed. The ways are the resources and tools employed to execute the strategy. And the means define how the resources are used to execute the strategy. This strategy plan is set in a future context (typically three to five years hence) and constitutes a working approximation of how to complete and deliver products and/or services in the face of competition. Because a strategic destination—or vision—is a best guess about the future, strategy should be understood as a hypothesis that, once articulated, must be monitored and possibly adjusted as internal and/or external conditions change. For those organizations that use the Balanced Scorecard approach to executing strategy, strategy plans are often reviewed and, if needed, adjusted in quarterly strategy review meetings. While the long-term vision remains the same, actions and resources are adjusted to provide greater organizational agility in reaching the strategic vision.

Strategy formulation that doesn’t include a plan for execution is nothing more than an optimistic wish. A strategic plan, without the ability to implement the plan, makes the wish impossible to achieve. Based on the authors’ research and hands-on implementation experience with hundreds of organizations over the past 25 years (and around the world) they conclude that strategy execution requires consensus and commitment by the people who formulate and implement the plan.

Experience supports the idea that strategy is typically directed from the top of the organization; but it is always executed from the bottom up. Top management sets the long-term goal, seeks buy-in, and allocates resources. Work teams understand their roles within the context of strategy, identify the actions to reach the goal, report on results, and propose improvements to their action plans as results are monitored and analyzed. A well-designed strategy combined with the Balanced Scorecard approach to execution can be used to communicate the strategic vision from the leadership team out to all employees.

This conversation and alignment between leadership and all employees is challenging, and it an area where social media (applied internally for employee collaboration) can help.

Far too often organizations do not commit the necessary attention and resources to strategy implementation.Research shows that organizations that do not address the barriers to strategy implementation are those that fail to achieve the strategy outcomes they seek. These barriers can take two different forms.

1. The Communication Barrier: The people needed to implement the strategy don’t know the plan; if they don’t know the plan how can they help? Also, important, members of the work force do not know how they can contribute to the strategy in their day-to-day jobs. They may have the best intentions but will not be successful because of different interpretations of what the goals are. Effective communication of strategic goals is critical to achieving success.

2. The Resource Barrier: The resource barrier exists when strategy is not supported with strategically relevant financial, managerial, and human resources. When the strategy is not funded, when people are not assigned strategic priorities, and when managers and supervisors don’t discuss the strategy and its implications, it sends the message that the strategy is not important. The resource barrier arises whenever strategic action is under or improperly resourced.

Thousands of organizations around the world have become familiar with the Balanced Scorecard since Drs. Kaplan and Norton publicized this framework in 1992.  The recommendations in this upcoming blog series are based on the authors’ experience with hundreds of such organizations during this time.  During the past ten years, the authors have been using these insights to guide the efforts of organizations they have worked with directly either in consulting, training, or coaching roles.  Now you too will be able to benefit from this refreshed approach.

1 Rivkin, Jan W. "Where Do Great Strategies Come From?" Boston: Harvard Business School Publishing Class Lecture, 2004. Electronic.
2 JFK, Man on the Moon Speech, Joint Session of Congress, May 25, 1961

 

Topics: Business Strategy Strategic Planning Strategy Management

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