3 SECRETS OF SUCCESSFUL STRATEGY EXECUTION

Paul Docherty Founder and Executive Director, i-nexus

KEY TOPICS

1 2 3 4

Why is Strategy Execution the #1 CEO Priority?

Why is Strategy Execution Difficult? What Are the 3 Secrets to Executing Well? 1. Stay Focused Reinforce The Right Behaviors 2. Close the Loop View Planning/Execution as an Integrated Process 3. Follow-up Relentlessly Leverage Strategy Execution Software Summary/Key Take-aways

5
6 7

Copyright i-nexus 2013. All rights reserved.

GOOD STRATEGY IS NOT ENOUGH

Good Strategy x Good Execution = Superior Results

Good execution is the critical determinant of superior results

You can beat expectations with good execution of a mediocre strategy But...

You can miss expectations with poor execution of a brilliant strategy

WHILST MANY ORGANISATIONS CRAFT GREAT STRATEGIES, FEW EXCUTE WELL

70% of companies believe they select the right business strategy, but fail to execute it due to short-comings in their management system Accenture Report only 11% of companies employ a fully fledged strategic control system Ashridge Strategic Management Centre In the majority of cases we estimate 70% - the problem isnt bad strategy but bad execution Fortune Magazine ex-e-cu-tion (ek si kyoo shun), n 1. The missing link. 2. The main reason companies fall short of their promises. 3. The gap between what a companys leaders want to achieve and the ability of their organisations to deliver it Larry Bossidy and Ram Charan, Execution: The discipline of getting things done

over 66% companies with over $500M in revenue set targets that exceeded 9% real growth, yet less than one company in ten achieved this level of success. Chris Zook, Havard Business Review

90% of organisations fail to execute their strategy David Norton, Balanced Scorecard Report

THE CEO PERSPECTIVE i-nexus Solves a Big Problem

Execution is the #1 CEO Priority

What do CEOs care most about? Profit Growth? Key Execution Problems CEO Perspective

Poorly Communicated Strategy Unclear Accountability Poorly Defined Roles/Responsibilities Inadequate Execution and Performance Monitoring

Revenue Growth? Customer Satisfaction? Quality?

THERE AREApproaches SEVERAL UNDERLYING CHALLENGES Current and Tools Simply Dont Work...

PerformanceRearview Mirror Reporting Underlying Challenges: Problem Process

Senior Management Goals

Goal Cascade Process

Ensuring Alignment and Accountability Maintaining Focus in the Whirlwind 10% Problem Operational Looking Ahead Not Behind Operational
Management Review

Management Goals/Action Plans

Urgent vs. Important Problem

Execution

Some interesting numbers... Help shine a light on the THE EVIDENCE BACKSUP THESE HYPOTHESES root causes of poor execution...
<15% of companies routinely track how they perform over how they thought they were going to perform Marakon Associates/Economist Intelligence Unit 95% Employees dont understand their companies strategy Kaplan and Norton, Harvard Business Report <27% employees have access to their companys strategic plan Kaplan and Norton, Harvard Business Report 86% of executive teams spend less than one hour a month reviewing strategy Kaplan and Norton, Harvard Business Report 70% of organisations do not link middle management incentives to strategy Kaplan and Norton, Harvard Business Report

STRATEGY EXECUTION - WHAT HAPPENS IN REALITY

The Off-site Strategy Day
Grow Sales of New Product Customer Focus Invest in China Improve employee satisfaction

The Ivory Tower Exercise

Poorly Defined Goals .ppt deck Unclear Accountabilities
Divisional President

The Ad Hoc Cascade
Functional Heads

Give me your numbers...

Way too much! Cut by 25%!

Its close enough for Military work...

Departmental Heads
Project Project Project

The Budget Dance

Funding Constraints
I need to include some contingency... If I dont include it Ill lose it...

Middle Managers

Projects

Employees

VALUE OF AN EFFECTIVE EXECUTION SYSTEM IMPACT OF THE DANAHER BUSINESS SYSTEM

3 SECRETS TO SUCCESSFUL EXECUTION

1. STAY FOCUSED
FOCUS ON 1-3 BREAKTHROUGH/WILDLY IMPORTANT GOALS ONLY
Actively decide what not to do, not just what to do Ensure there is absolute goal clarity make sure the finish line is clear Ensure every employee understands what winning means

2.

CLOSE THE LOOP

LOOK FORWARD, NOT JUST BACKWARD, ON AN REGULAR BASIS
View planning and execution as an integrated process Define the leading measures that predict achievement of the goals Set targets based on expected impact of actions and review progress periodically Continually test assumptions and act quickly if hypothesis is wrong

3.

FOLLOW-UP RELENTLESSLY
USE STRATEGY EXECUTION SOFTWARE TO DRIVE RELENTLESS FOLLOW-UP
Ensure every employee can easily see, understand and update their progress against the plan Leverage automated exception reporting to reinforce monthly heartbeat Create focus on action by taking the heavy lifting out of preparing for execution reviews Create accountability for results through clarity and transparency

STAY FOCUSED THE CONFLICTING FORCES

The Whirlwind
or The Day Job

Goals
New Activities

URGENT

IMPORTANT

STAY FOCUSED AVOID THE URGENT NOT IMPORTANT TRAP

70%
URGENT
URGENT NOT IMPORTANT
HIGH

10%
URGENT AND IMPORTANT

NOT URGENT NOT IMPORTANT

IMPORTANT NOT URGENT

LOW

15%
LOW HIGH

5% IMPORTANT

STAY FOCUSED CREATING CLARITY AND FOCUS

Less Structure More Structure

FranklinCovey 4DX
Wildly Important Goals

Kaplan & Norton BSC

Strategy Maps/BSC

Hoshin Kanri
Planning Tables/X-matrices 2-3 Breakthrough Objectives

1-2 WIGs
From X to Y by When
LAGGING MEASURE

LEADING MEASURE

LEADING MEASURE

CLOSETHE LOOP CHANGE VS. RUN THE BUSINESS

CLOSE THE LOOP WHATS THE REAL QUESTION?

Goals
Translate Business Goals into Executable Initiatives and Create Clear Accountability for Delivery

1.
2. 3.

Are we on track?
If we are not on Insight track are we doing something about it? In aggregate, will the
Measure and Forecast the Impact of Those Initiatives on Indicators Performance
CLOSED-LOOP actionsSTRATEGY underway EXECUTION CYCLE

Action

get us where we want to go?

Impact

Drive and Review Execution of The Resulting Initiatives Initiatives

CLOSETHE LOOP HOSHIN AS BEST PRACTICE

1. Establish Vision 2. Objectives

Develop 3-5 Year Breakthrough Develop Annual Deploy Annual

Hoshin Process in Concept

3. Objectives

Catch-ball Planning

4. Objectives
P D C A

5. Implement Annual Objectives

6. Monthly Review
7. Annual Review

Reflection

CLOSETHE LOOP HOSHIN BOWLING CHARTS/ COUNTERMEASURES

Are we likely to hit the future targets?

Bowling Chart

If not, why not? Whats the root cause and what can we do about it short and long term?

Countermeasure Plan

RELENTLESS FOLLOW-UP ESTABLISHING AN EXECUTION HEART BEAT

Monthly Business Monthly Business Execution Review Execution Meeting Review Meeting
Instigate actions to maintain momentum / lift performance Make sure its right Add commentary and identify local actions

Update previous months actuals

M T W Week 4 Month 1 T F M T W Week 1 T F M T W Week 2 Month 2 T F M T W Week 3 T F M T W Week 4 T F

RELENTLESS FOLLOW-UP - EXISTING PROCESSES AND TOOLS MAKE FOLLOW-UP CHALLENGING.

(Re)Define Strategic Goals
Key Goals for 20XX

Review and Analyse Performance

BI Tools/ Spreadsheets
Presentation Decks/ Spreadsheets Spreadsheets / Documents

Cascade Goals/ Develop Plans

ERP System Project Management Tools/ Spreadsheets/E-mail

HR/Talent Management System

Run the Operation Execute the Actions

i-solutions Global Ltd. 2007

Set Personal Objectives/ Develop Action Plans

RELENTLESS FOLLOW-UP A NEW BREED OF CLOUD-BASED Solving this problem disrupts three big software STRATEGY EXECUTIONmarkets... SOFTWARE IS EMERGING
Size: $2.2Bn/CAGR 15% (Bersin) The fundamental problem with traditional Business Execution software is Primary Buyer: HR performance management software is that emerging as the answer to two questions EMPLOYEE Management and Automation it fails to close the loop it helps you - how are we as an organisation going to PERFORMANCE of Employee Goal Cascade identify the action to take but doesnt help do that? And how does it specifically Process MANAGEMENT you understand if the action you have apply to me? Business Execution Talent Management taken has had any effect. Translate Business Goals into software brings together people, projects Martin Butler, CEO, Butler Research Executable Actions and Createand corporate performance into a single system. Clear Accountability for Delivery Bruce Richardson, Chief Research Officer, AMR Research

Insight Size: $1.9Bn/CAGR 28% (Gartner) Primary Buyer: Finance Tracking and Forecasting of Financial Performance Tracking of Key Performance Indicators Measure and

Action
STRATEGY EXECUTION SOFTWARE Size: $1.1Bn/CAGR 9% (IDC) Primary Buyer: Operations Planning and Execution of Projects and Programs Optimisation of Project Portfolios

Forecast the Impact of Those CORPORATE Actions on PERFORMANCE Performance MANAGEMENT

Impact

Drive and Review Execution of Those PROJECT Actions PORTFOLIO MANAGEMENT

RELENTLESS FOLLOW-UP A NEW BREED OF CLOUD-BASED STRATEGY EXECUTION SOFTWARE IS EMERGING

Strategy Execution Software helps you to:

1. 2. 3. 4. Translate business goals into executable actions; Tie in the people who need to execute those actions; Drive and monitor execution of those actions; Understand if the actions are actually moving, or are likely to move, the dials that measure achievement of business goals.
STRATEGY EXECUTION SOFTWARE

RELENTLESS FOLLOW-UP THE RIGHT STRATEGY EXECUTION SOFTWARE CAN ACTIVELY DRIVE FOLLOW-UP

Reminder Time to Focus on the Important!

Are My Team On Track?

What Actions Are We Taking and Are We Doing Enough?

Where Do We Need to Focus Our Attention?

SUMMARY KEY POINTS

1 2 3 4

Strategy Execution is the #1 CXO Priority

Current Fragmented Approach Makes Strategy Execution Difficult Success is Function of Right Behaviors, Right Process and Right Tool Focus Requires Tough Choices, Catch-ball and Absolute Clarity The Key is to Look Forward, Not Backward and Course-correct Early Strategy Execution Software Makes Follow-up a Realistic Proposition Stay Focused, Close the Loop and Follow-up Relentlessly!

5
6 7

Copyright i-nexus 2013. All rights reserved.

COMPANIES USING HOSHIN TODAY

ANY QUESTIONS?

Paul Docherty paul.docherty@i-nexus.com Skype: pauldocherty +44 (0) 7985 117784 For a copy of the slides please contact: richard.valentine@i-nexus.com

Patrick Pecorilli ppecorilli@virtual-process.com Skype: patrick.pecorilli +1 514-816-0618