There a chronic disconnect in companies between strategy formulation and strategy execution. The goals companies set for themselves often bear little resemblance to the results they actually achieve. Seven out of eight companies in a global sample of 1,854 large companies failed to achieve profitable growth, even though more than 90 percent claimed to have detailed strategic plans with numerical growth targets according to an article published by the Harvard Business School.
The root cause of the disconnect between strategy and actual performance is that most companies do not have a strategy execution process. Most companies have some form of strategic plan, but they have no coherent approach to manage the execution of those plans. (In our experience, many companies claim to have a strategy – but often all they have done is an exercise in financial goal setting. That is not strategy.) Many key management processes remain disconnected from strategy, for example:
- 60% of companies do not link their strategic priorities to their budget. If budgets are not aligned to strategy, this leads to a disconnect between what needs to be implemented, and the funding and resources required to do so.
- 2 out of 3 HR and IT departments develop plans that are not linked to the company’s overall strategy.
- 70% of middle managers and more than 90% of front-line employees have compensation that is not linked to the strategy.
- Most devastatingly, 95% of employees do not understand their company’s strategy. (How are they supposed to execute a plan it if they don’t understand it?)
Many companies don’t have a consistent way to describe their strategy, other than in a large strategic planning binder. Instead, what companies need to do is find a clear and simple way to translate their strategy into operational actions that everyone in the company can understand. More importantly when a strategy is developed you need to ensure that they tie directly back to brand/business objectives and that you can measure each tactic to your strategy and brand/business objectives.
Disconnect between strategy and execution in the digital channel
A lot of brands are throwing money at at digital channel and social media but it’s estimated that as much as 75% of those programs will fail because marketers failed to tie back their digital marketing to their objectives. In you look deeper you will also find things like a failure to understand the resources needed to ensure success and failure to align influencers within the company as to the metrics of success.
In challenging economic conditions, the difference between surviving and thriving comes down to business performance. Organizations that can optimize their performance increase their ability to spotlight opportunities, mitigate risk, and quickly and flexibly adjust to changing market demands.
Consumer marketing has changed more in the last two years than the previous 20 years. Digital marketing is becoming more and more important while “mass” channels are becoming less and less relevant. Be prepared to fail but be prepared to leverage digital marketing and learn from your mistakes. The risks of doing nothing are too great to continue to try and build a strategy without looking at what is needed to execute it for results.
Related articles
- What Are You Expecting To Get Out Of Your Strategic Planning Process In 2012? (vistage.com)
- Management with Metrics: Understanding the Balanced Scorecard (dartonequation.com)
- Integrating Business Unit Strategies Into a Synchronized Corporate Strategic Plan (vistage.com)
- Overcoming cynicism to strategic planning (thecrispianadvantage.com)
Creative, passionate and highly qualified digital marketing professional with over 15 years of distinguished performance in consumer packaged goods and healthcare online marketing. Broad-based background encompasses exceptional business skills and a commitment to brand marketing objectives within highly competitive and rapidly changing marketplaces. Proactive manager, team builder, teacher and marketing strategist with the proven ability to win over key organizational influencers. Recognized for developing ground breaking customer focused marketing initiatives with the proven ability to face challenges head-on and execute sound marketing decisions.
Great piece. Certainly calls for the need for education, aligning incentives, and better hiring/retaining strategic pros who have different skills. I agree 100%. Senior leadership must, of course, buy-in and sponsor such efforts like OSM, who, in turn, will be expected to show measurable improvement resulting from thier effort.
I definitely agree with Ken. It all needs to be supported from the Senior Leadership of your organization. Like Ken mentioned, if you put forth the time and money to train and educate your staff initially, you shouldn’t suffer from problems with defining your organization’s values or culture down the road. It’s a lot cheaper to do it the right way the first time!
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