January is a critical month for many individuals and organizations. It is the month that many of us practice looking forward; as opposed to the previous month where we often pause and reflect back on what we have accomplished over the year. January is the season of new beginnings where we set our sights on thriving and achieving extraordinary results in the new year. In fact, most companies are meeting to discuss and set their strategic plan for the new year this month. It is an exciting season of hope and optimism.
While creating a winning strategy can feel daunting, the greatest challenge facing your business this year is likely your ability to turn that strategy into action. Research demonstrates that nearly 70% of corporate strategy fails due to poor strategy execution.
Strategy execution is such a big challenge for organizations because the people creating the strategic plan are often not directly involved in putting that strategy into practice. The reverse is also true — those who will execute strategy often don’t have a voice in designing, understanding, or clearly aligning to that strategy.
Inspire software has partnered with strategic experts and thought leaders in strategy and organizational development to offer several critical tips to help your organization make the most of its strategic plan this year.
Strategy Tip #1: Start with a Strategy Map
Best-selling business author Paul Niven suggests “One of the best ways to overcome the odds of successful strategy execution is to tell the story of future success using a strategy map of objectives.” Niven defines a strategy map as a one-page, graphical representation of what you need to do well in order to execute your strategy. An effective strategy map can help you and your executive team visualize what success will look like over the next year.
Strategy Tip #2: Create Objectives and Key Results From Your Strategy Map
The Strategy Map should comprise several of the most critical objectives your organization is facing in the next several months to one year.
Objectives are the “O” in OKRs (Objectives and Key Results), a popular goal-setting methodology used by some of the most successful companies in the 21st Century. Most corporate objectives span four critical areas of strategy: Financial, Customer, Process, and Learning. These are often referred to as The Balanced Scorecard approach to strategy. Each objective (a qualitative statement) should have a few critical key results (a quantitative measurement) that demonstrate when the objective has been achieved.
Strategy Tip #3: Don’t Set Too Many Goals or OKRs at a Time
Too many goals can bog a good strategy down and cause organizations and teams to chase things that don’t matter most to the most urgent needs of the moment. Pursuing too many objectives at one time can lead to poor organizational performance and contribute to burnout and low engagement in the people executing the strategy. There is a law of diminishing returns on investing in a greater number of annual corporate goals. Studies widely demonstrate that the greater number of goals an organization has, the less likely that organization is to meaningful progress on any of them. For this reason, organizations should not have more than two objectives in each of their critical areas of strategy. More than six company objectives in total could lead to strategy failure over the course of the year.
Strategy Tip #4: Align Goals or OKRs That Matter Most to Your Strategy
Once objectives are defined and key results for those objectives established it is critical to turn that strategy into action. To effectively execute strategy, organizations must align individual, team, and department goals that will help them work toward common desired outcomes incrementally. It’s critical that the strategy of the organization is not only clearly communicated, but also easily accessible to everyone pursuing goals or OKRs in the organization. An effective OKR or performance management software should have an easy-to-view and easy-to-align team and individual OKRs tool. This not only helps keep people moving in the same direction, but it also brings a deeper meaning and purpose to their work. That’s because employees will understand how their contribution is helping the greater good of the company and clients.
Strategy Tip #5: Don’t Set and Forget Your Goals and OKRs
“What you cannot do, after creating a Strategy Map, and critical OKRs associated with that map, is set them and forget them,” Paul Niven warns. “Regular check-ins on OKRs [or goals] are crucial to ensuring that your OKRs are driving execution.”
While the number of check-ins will vary, depending on the culture of your organization, having an effective check-in process is critical for your organization to execute strategy. Regular, meaningful check-ins on goals are critical to ensure that departments, units, teams, and individuals are not only making progress toward those OKRs on a regular basis but are optimally motivated to pursue the objectives that matter most.
Some organizations check in on OKRs once a month through department business reviews. Others have weekly or bi-weekly check-ins, especially between managers and direct reports. Some agile organizations even have “daily stand-ups” to quickly discuss progress, roadblocks, and the psychological needs of team members as they pursue goals.
No matter what cadence your organization uses to check in on goals, you should consider software solutions that allow you to check off progress while enabling and encouraging meaningful conversations, feedback, and recognition (CFRs) in order to effectively pursue OKRs. Don’t just invest in a technology solution that simply tracks numbers. Your solution should continually assess human performance as individuals and teams navigate the various phases they will experience in pursuit of a goal.
Strategy Tip #6: Understand Your Organization’s Leadership Process
There are typically two types of leaders in an organization: strategic leaders and operational leaders. Understanding that leadership happens in different contexts is the first step in creating a leadership process that practices leadership throughout the entire organization and ensures that the gap between strategic leadership is seamless with operational leadership.
Strategic Leadership defines what matters most to the organization. This organizational leadership context usually originates in the C-suite or an executive board of directors for an organization and provides the key relationships and metrics needed to ensure that all units align to one common strategy. Strategic leadership includes defining the vision and mission of the organization, as well as cultivating a culture that regularly pursues effective strategic objectives through metrics of key results.
Operational Leadership is responsible for how the strategy of the organization is achieved. This type of leadership is often practiced through business unit leaders or department vice presidents. While they may have some influence on the creation of strategy, they are primarily responsible for executing that strategy through processes, policies, and procedures that are vital to the success of the organization. They enable departments, managers, team leaders, and employees to understand how they specifically contribute to organizational success and achieve the overall strategy.
The gap between strategic leadership and operational leadership practices is perhaps one of the most significant internal business challenges that organizations have faced for decades. And now, in times of uncertainty and economic instability, the gap between strategy and executing strategy in an agile performance cadence can make or break an organization. Those organizations that lack an effective performance profit process will find it difficult to succeed.
Most organizations design and execute strategy with a two-step process. Strategic leaders create the strategic plan and then hand that plan off to operational leaders, who are tasked with implementing it. Without a definitive and effective execution process, like a continuous performance management system, disconnect with the vision, mission, values, and strategy of the organization can quickly occur. It is critical for organizations to create a common leadership language and philosophy that operates with core leadership practices, but across different contexts of leadership that keeps units, teams, and individuals continually focused on what matters most to the organization.
Bridging the Gap Between Strategy and Execution
The gap between strategic planning and strategy execution is the one practice that can determine a company’s success. Businesses need a solid strategic plan, but without the right OKRs and technology to support OKRs, teams won’t have the guidance they need to execute it effectively. What’s more, to help teams stay on target and highly engaged in the execution of strategy, operational leaders need to consider the benefits of a continuous performance approach to strategy execution in the 21st Century. This approach should be grounded in high-quality continuous conversations, feedback, and recognition for employees because they are the human beings actually turning your strategy into action!
Want to learn more? Download our e-book, “How Continuous Performance Management Leads To Profitability.”