Board Affairs

The five barriers to strategy execution

Strategic planning is easy. It is a commodity. Anyone can write a document and label it ‘strategic plan.’ The real art lies in execution. Many people have great ideas that if they put any one of the ideas into action, they would be rich. The fact that we have a few successful people, it means the art of strategy execution is missing.
One time, while reviewing a strategic plan for an organization, it had very ambitious plans and ‘pillars’ of their strategy, with clear budgets. But when it came to financing, they indicated a funding gap of over 40%!

They had made a plan with a funding gap of over 40%!
Can you imagine? And the board and all top management team had signed and committed to implementing such a strategy. That is a pure case of planning to fail.
Rule number one is to acknowledge that resources are scarce. So, you must plan to optimize the available scarce resources. You cannot plan to do things outside the available resources. Though, you must set your business in such a way that any opportunity could be tapped into given your available resources. Never put in your strategic plan an intervention for which you don’t have resources to finance. That is why the strategy execution fails.

  1. Research shows that only 10% of the organizations execute their strategy effectively due to five key barriers,
  2. Vision barrier due to poor communication – only 5% of the workforce understands the strategy. Walk around people in the company on their workstations and ask them about their vision, you will be surprised by the response. They will start raising their heads to try to read the vision off the chart! Yet they should have learned it by heart.
  3. People barrier due to misaligned incentives – only 25% of the managers have incentives linked to strategy. Many companies talk about teamwork. In reality, they have a bunch of individuals working in a group called a ‘team’. The staff incentives are not aligned to reward strategic priorities and effective communication. When these are missing, people will not execute the strategy.
  4. Management barrier due to poor priorities, 85% of the executive teams spend less than 1 hour per month discussing strategy. Look at a copy of the company’s meeting agenda, the major issue that will be conspicuously missing is ‘strategy and scorecard’. When management sideline such a critical issue like strategy, execution fails.
  5. Resource barrier due to failure to finance the strategy– 50% of the organizations fails to link budgets to strategy. Yes, you read right. Many companies never provide resources to do the interventions they plan to do.
  6. Structure barrier due to misaligned structure. Whenever I undertake a strategy execution audit, I find that some of the priorities that were set do not have a specific person that was assigned to champion them, and where the person exists, there are no clear performance areas.

The above five barriers must be overcome otherwise, strategy execution will fail. The barriers affect growth. Strategy execution is more important than the plan. Great leadership must address the above issues.

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For example, many organizations have a lean structure which makes execution very difficult. I have worked with some companies where the board members are more in number than the executive team! For barrier number two, the EXCO must put in place an incentive and consequence management strategy in respect of star performers.
There are companies where management just changes the figures in the reports. You find 80% of the reports have the same words as the last years’ report – this time only the numbers are changed. And then the board calls management to come and present and then the minute of the board reads “the board thanked the management for a well-prepared report.” The board’s role is to focus on the recommendations in the report – to approve or decline. Any report without clear recommendations is not good and should not be discussed nor accepted UNLESS the report is clearly indicated as informational.

Any report that is informational, is indicated accordingly on the cover. And during the Chairperson’s presentation, they update the members about it. If any member has an issue to raise about the information, they can. Otherwise, informational reports by the executive do not have to be discussed and should not appear on the agenda!

In the end, “make sure your strategy is implemented. Make sure you monitor the strategy. Make sure your strategic document is a living document in the sense that members own it. And you use the strategic plan to inform your agenda.”

To learn more about what makes an effective board member, visit www.mustaphamugisa.com and buy the book, “7 Tools of An Effective Board Member.”

Copyright Mustapha B Mugisa, 2019. All rights reserved.

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