Why many strategies fail and how you can implement them successfully - with the Kaplan and Norton approach
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At Beyond E-Commerce, we once worked with a leading retail group. The company had developed a well thought-out strategy with a renowned strategy consultancy. The analysis was in-depth, the recommendations were innovative and the growth potential was enormous. But success failed to materialize. The strategy disappeared into a drawer and the hoped-for changes failed to materialize. What had happened?
This example is not an isolated case. Many companies invest a lot in developing strategies but fail to implement them. In this article, we highlight the most common mistakes in strategy execution and show how the Kaplan and Norton approach can help overcome these hurdles.
What is successful strategy implementation?
Definition and meaning
Strategy execution is the process by which a company puts a strategic plan into action to achieve specific goals. It is the art of getting things done and is an important aspect of strategy work. Strategy execution is the most difficult aspect of strategy work for most companies because it requires the organization to align with the strategy. Successful strategy execution means that everyone in the organization understands the vision and goals and actively works to achieve them. Without effective implementation, even the best strategy remains just a theoretical construct.
The problems with strategy implementation
Strategy execution can be hindered by various issues such as unclear accountabilities, the inability to effectively communicate objectives to teams and individuals, the lack of clear priorities and inadequate performance metrics. Unclear accountabilities often result in tasks not getting done because no one knows exactly who is responsible for what. If goals are not clearly communicated, employees do not know what they are supposed to be working towards. Lack of prioritization can lead to wasted resources because it's not clear which tasks are most important. Insufficient performance metrics make it difficult to measure progress and make necessary adjustments. It is important to identify and resolve these issues to ensure successful strategy implementation.
Typical myths when attempting strategy execution
Although there are numerous guidelines for strategy development, there is often a lack of practical advice for implementation. This gap leads to major challenges. Common misconceptions and myths contribute to strategies not working.
Myth 1: Implementation means alignment
Many believe that it is enough to cascade objectives and measure progress. But the biggest hurdle often lies in horizontal collaboration between departments. Studies show that managers miss their targets more often because they don't get enough support from other departments, not because of poor performance from their own teams.
Myth 2: Strategies are a matter for the management floor
The management level sets the strategic direction, but strategy execution takes place at all levels. Instructions from the top are not enough. An environment within the company that promotes initiative and cross-departmental collaboration is crucial. The best results are achieved when employees support and actively shape the strategy. However, employees must also have the necessary skills to successfully implement the strategy.
Myth 3: A lot of communication leads to understanding
Company management (top management) often measures the effectiveness of its communication by the number of town hall meetings, e-mails or presentations. But quantity does not guarantee understanding. Communication alone does not build skills. Too many details or changing messages are confusing. It is more important to convey clear core messages and ensure that everyone really understands them.
Myth 4: A performance culture drives implementation
A strong performance culture is often propagated, but rarely practiced. If employees are mainly rewarded for short-term success, long-term strategic goals and their execution are pushed into the background. A true culture of strategy execution requires a clear commitment to the strategic goals, the plan, a willingness to take risks and the ability to learn from mistakes.
Myth 5: Implementation takes place from the top down
Leadership support is important, but successful implementation requires all levels. Decentralized decision-making, agile teams and empowered employees are key components. Employees on the ground know the details and challenges best and can make valuable contributions.
The road to success: The strategy implementation process according to Kaplan and Norton
To close the gap between strategy and implementation, Robert S. Kaplan and David P. Norton offer a structured approach. Their management system consists of five phases that combine strategic and operational elements. They also present specific management tools such as the balanced scorecard or strategy maps, which can serve as a step-by-step guide for company management and employees.
Phase 1: Develop strategy
The foundation stone is laid:
Define mission, vision and values: Clear statements about the purpose of the company, the vision for the future and the principles provide orientation.
Conduct a strategic analysis: An analysis of internal and external factors helps to understand the competitive position and identify opportunities and risks.
Formulate a strategy: Based on the analysis, concrete goals and directions are defined.
The pillar of strategy formulation
Strategy formulation is the first pillar of successful implementation. It is crucial to carefully develop the strategy and ensure that it is feasible. This is achieved by identifying and reviewing strategic assumptions.
The strategy and strategy communication should define clear objectives and roles for the executing employees. This is achieved by focusing on vertical coordination between corporate headquarters and business units as well as horizontal coordination between all departments and functions.
The strategy must also be tailored to the needs of the company and be in line with its vision and goals. Management tools such as the balanced scorecard or SWOT analysis can help with implementation.
Overall, careful strategy formulation forms the basis for "strategy implementation".
Phase 2: Translate strategy
The strategy is made understandable and practicable:
Define strategic goals and topics: The strategy is broken down into specific objectives that are linked to each other.
Define key figures and target values: Measurable indicators make it possible to track progress and evaluate success. Objectives and key results (OKR) are particularly helpful here in order to set clear, measurable goals and monitor progress.
Plan strategic initiatives: Concrete projects and measures are defined in order to achieve the goals.
Phase 3: Plan operational implementation
Strategic plans are translated into actions:
Identify process improvements: Important processes are analyzed and optimized.
Create sales and marketing plans: Strategies for approaching the market are developed.
Plan resources: Necessary resources such as personnel and budget are provided. These steps are crucial to the successful implementation of the strategy.
Phase 4: Monitoring and learning
Continuous monitoring is crucial:
Regular strategy reviews: Progress is reviewed and adjustments are made.
Monitor operational key figures: Daily business and strategic goals are coordinated, e.g. via the Average Order Value (AOV).
Establish learning processes: Insights from strategy implementation improve processes and strategies. Tool tip: After Action Review
Phase 5: Test and adapt strategy
Flexibility is important, as conditions can change:
Analyze profitability: Check whether the strategy is delivering the expected financial results.
Review strategic assumptions: Ensure that the basic assumptions are still valid.
Adapt and develop strategy: Openness to new developments and willingness to adapt. A clear and well-thought-out implementation plan is crucial here in order to ultimately put the strategy into practice.
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The best strategy is of little use if it is not implemented. As our example shows, even brilliant plans fail without successful implementation. The myths of strategy implementation illustrate common misconceptions. Kaplan and Norton's approach offers a practical way to avoid these pitfalls.
At Beyond E-Commerce, we know that success lies in implementation. We help companies not only to develop their strategies, but also to implement them effectively. It's about involving everyone, setting clear goals and responding flexibly to change. This is how a good strategy becomes a tangible success (see PRACTICE for our consulting services for strategy execution).