Designing a Strategic Assessment
During the last 5 years I’ve been iteratively designing a strategic assessment for CEOs to use to gauge their current practices when it comes to strategy execution. You can read our published study on all the fantasticly interesting insights here. But this blog was more related to what Assessment is and why we built it.
Strategy execution is a complex process that requires a full understanding of an organization's capabilities, as well as the potential obstacles it might face.
Each company has distinct characteristics, shaped by its history, culture, and past experiences. These characteristics define its unique strengths and areas of vulnerability. In my decade-long journey in strategic implementation, I've observed that while the foundational principles of strategy are consistent, the specifics of execution vary significantly from one organization to another.
With this insight, my team and I dedicated ourselves to uncovering the underlying factors that determine successful strategy execution. Our objective was to identify the essential variables that significantly impact an organization's strategic outcomes and to distinguish them from factors that might seem important but have minimal impact. After an intensive two-year research period, we developed a predictive model capable of assessing a company's likelihood of strategic success. This model not only provides a diagnostic overview but also offers recommendations for areas of improvement and actionable steps for leadership.
We named this tool Assessment. It’s not a standard evaluation tool; Assessment is a refined system that emphasizes the most critical aspects of strategic success. It is designed to be a valuable resource for consultants, enabling them to engage effectively with an organization's top leadership. The goal of Assessment is to ensure that strategies developed are not only robust in theory but are also well-equipped for practical implementation and success.
For a CEO, achieving success in these areas is not only the primary duty of the role; it is also the path to creating lasting structural capital within the company that secures success for future strategies. The competencies assessed by our tool are directly linked with increased growth, profitability, and shareholder value, setting the top leaders apart from the rest.
While the primary focus of this page is on a specific method for strategy execution – encompassing a distinct thought process, breaking down goals into actionable steps, rigorous prioritization, and emphasizing effective communication – it's essential to recognize that strategy execution's real-world performance is influenced by various other factors.
The Assessment tool addresses these factors. Before we delve into crafting Most Important Goals (MIGs), Strategic Initiatives, and Key Activities, we make sure that the strategic foundation is solid. After all, building on unstable ground can jeopardize an entire structure.
I've identified six critical areas that significantly impact successful strategy execution, beyond the methodology discussed in this book:
1. Strategic Clarity & Priority
This perspective evaluates the CEOs ability to formulate and communicate a clear strategy. It focuses on how well the strategy is understood and embraced by the management team and assesses their ability to prioritize effectively within the strategic framework. We’re looking for a clear direction that's compelling and concentrated on critical priorities.
2. Ability to Change
This dimension measures the organization's adaptability and responsiveness to change. It explores how effectively the leadership can motivate and lead the organization through transformation, its ability to maintain momentum during change, and the commitment to embed lasting improvements. The intent is to foster an environment where change is embraced and executed efficiently.
3. Leadership
The Leadership dimension evaluates the quality and effectiveness of leadership throughout the organization. It assesses leaders' ability to drive and implement strategy, their urgency in responding to change, and their ability to foster accountability and performance culture. The focus is on cultivating strong, aligned leadership that propels the organization towards its goals.
4. Goal Structure
This area looks at how the organization breaks down its strategic goals into actionable, measurable plans. It examines the alignment and coherence of these plans across different levels of the organization, ensuring that strategies are not only well-articulated but also effectively translated into departmental actions and individual responsibilities.
5. Measurability
Measurability focuses on the organization's ability to track and measure progress towards its strategic goals. It assesses the systems and processes in place for monitoring performance and how well these indicators are communicated and understood across the organization. It's about creating a performance-focused culture where progress is measured, understood, and acted upon.
6. C-suite Conditions
This dimension is specifically concerned with the CEO's personal effectiveness in leading the organization's strategy. It assesses the CEO's allocation of time to strategic tasks, the clarity and quality of information available for making strategic decisions, and the CEO's overall satisfaction with strategic execution. It's about ensuring that the top leadership is well-equipped, informed, and actively engaged.
While the methodology provides a comprehensive roadmap for strategy, the Assessment fortifies this approach, ensuring that organizations set out on their strategic journey from a position of strength. Together, they optimize the likelihood of successful execution, creating a synergistic approach to strategy.
Insights from Assessment
Over the past two years, my team and I have conducted more than 300 Assessments across a diverse range of companies. These companies varied greatly in size, industry, and maturity, yet we found they had plenty in common.
Based on these Assessments, we built a comprehensive study, a blend of qualitative and quantitative analysis. Imagine it as a series of in-depth interviews with CEOs and their top team members. Each interview gave us a unique story, but when we put them all together, we got a clear picture of how businesses today are trying to carry out their strategies.
Let's explore some of the key insights we unearthed.
85% of CEOs strongly agreed with the statement "I have a clearly defined strategy." On the surface, this might suggest a high degree of strategic clarity. However, when we dug deeper, we found a different story. Their own management teams were ambiguous about the clarity in the strategy, and especially about the agreement within the priorities. This suggests a significant disconnect between the CEO's perception and the team’s reality. This insight from our own data is echoed by the previously cited MIT article titled ‘No one knows your strategy’, which revealed that only about 51% of the average management team agrees on the priorities within a strategy.
To bridge this chasm, I looked for a clear way to measure strategic clarity. I found that focusing on Strategic Initiatives, which outline how goals will be achieved, was the answer. By checking how much of a company's growth is covered by these initiatives, we get a clear picture of strategic quality. Simply put, if top leaders can pinpoint where growth will come from, the strategy is clearer. However, our Assessment data showed that companies could only account for 32% of their planned growth. This shows that many overestimate how clear their strategy really is.
Only 53% of CEOs are happy with how their management teams focus on key areas. While these managers are good at handling daily tasks and improving their operational score-cards, they often stumble when it comes to making the big strategic changes needed for future success. This challenge is made even harder by a general reluctance to change and a sense of complacency, leading companies to stick to what they know.
The root of the issue might well be the unclear strategy. If the strategy isn't clear, how can managers prioritize effectively? The dissatisfaction CEOs feel towards their teams might actually reflect back on their own overconfidence and reluctance to acknowledge where the real problem lies. Instead of seeing the lack of urgency as the main issue, it might just be a sign of a deeper problem: an unclear strategy.
The importance of aligning time and effort with strategic priorities is underscored by a study on Managing Initiative Overload, by Bain & Company3. The study revealed a startling imbalance:
"80% of a leader's time is allocated to priorities that account for less than 20% of the company's value."
This finding highlights the critical need for leaders to reassess and realign their so that their efforts are directed towards initiatives that truly drive value for the company.
The insights we've shared culminate in a sobering conclusion, one that is not unique to our study but is echoed in many other research pieces and is a well-documented observation in the field of strategic management: only 20% of strategic initiatives deliver their intended financial impact on time[i]. This statistic, while daunting, underscores the critical importance of strategic clarity, unity, and effective execution in achieving business success.
As a side note, if you, as a CEO, are considering conducting a strategic assessment for your company, please feel free to reach out using the contact details provided at the end of this book. The Assessment is free of charge as part of our research investment. Please note that it is available only to CEOs of companies with 500 or more employees, in line with our study's scope and objectives.
Ownership, Self-Awareness, and Communication
Navigating the complex terrain of strategic execution requires a keen understanding of three pivotal insights. These insights, gleaned from years of experience and countless assessments, are the guiding principles that illuminate the path to success.
Firstly, as leaders, you are the custodians of your company's strategic direction. The level of clarity and precision you bring to this role directly influences the outcomes. It's a straightforward equation: vague direction leads to vague results. Owning the strategy is crucial. You must be clear, concise, and personally invested in your strategic initiatives.
The essence of the matter extends beyond merely accepting the role of a strategic custodian. The real test of ownership comes in how you prioritize your time and attention. It's not enough to simply set the strategy and expect others to carry it out. You need to be actively involved, leading by example, demonstrating through your actions that the strategy really matters. This means dedicating your time, being present and engaged, and standing shoulder-to-shoulder with your team as you navigate the path towards your goals.
Secondly, the pitfall of self-overestimation is a common stumbling block among leaders. It's easy to assume that your strategic vision is crystal clear when you're the one who's spent countless hours crafting it. However, this clarity might not translate to your team as effectively as you think. This is where the importance of self-awareness comes into play. It's not enough to simply communicate your strategy; you must also be aware of how it's being perceived and understood. This means being open to feedback, willing to adjust your communication style, and acknowledging that what seems clear to you may be a foggy concept to others. It's about bridging the gap between your understanding and your team's perception.
Lastly, let's consider the vital role of communication. Without clear, consistent, and effective communication, your strategy risks remaining an abstract concept, disconnected from the day-to-day operations of your organization.
However, communication is often overlooked or treated as a one-off event. The reality is that it's an ongoing process, requiring continuous effort and attention. It's not just about delivering a polished PowerPoint presentation filled with buzzwords and then considering the job done.
We're now going to tie these three insights together and look at a crucial aspect of strategic execution: defining sub-initiatives. This is where the rubber meets the road, where Most Important Goals and Strategic Initiatives are transformed into actionable steps, and where the abstract becomes concrete.
[i] This reference brings together insights from a variety of research, each pointing to similar trends in strategy execution. Here is a selection of some of the key studies that support these findings:
· Gleeson, Brent. "1 Reason Why Most Change Management Efforts Fail" Forbes, July 25, 2017. https://www.forbes.com/sites/brentgleeson/2017/07/25/1-reason-why-most-change-management-efforts-fail/
· Kotter, John. "What Happens When the Strategy Consultants Leave?" Forbes, January 4, 2012. https://www.forbes.com/sites/johnkotter/2012/01/04/what-happens-when-the-strategy-consultants-leave/
· Beer, Michael, and Nitin Nohria. "Cracking the Code of Change" Harvard Business Review, May-June 2000. https://hbr.org/2000/05/cracking-the-code-of-change
· Bain & Company. "Bending the Cost Curve" Bain & Company, 2019. https://www.bain.com/insights/bending-the-cost-curve/.
· Gartner. "The Five Pillars of Strategy Execution" Gartner, 2016. https://www.gartner.com/smarterwithgartner/the-five-pillars-of-strategy-execution
