We often see companies failing to execute their strategy. According to a study carried out by the Project Management Institute (PMI) in partnership with The Economist magazine's intelligence unit, 587 senior global executives were interviewed in 2013 and of these, 88% said that it is important to deliver results based on the strategic plan. However, the same executives acknowledged that in the three years prior to the survey, 44% of the strategic plans they had outlined had not been successful. Why is this? Here are some reasons why!
Fragmented management processes
Organizations that are successful in executing their strategy have a common practice of aligning their management processes. There is no point in keeping processes fragmented in their areas without general commitment. We often see that global strategies are not communicated by corporate management to the rest of the company and, therefore, the units don't understand how to work together to achieve integration and synergy. Furthermore, without communication, the areas create their individual strategies which are not necessarily congruent with each other.
In order to guarantee the unity of strategic management, it is important to create a Strategic Management Office, whose function is to lead the company to achieve its main objective. Have you noticed that almost every company has a finance, marketing, human resources, information technology, etc. department, but very few have an area to manage strategy? Even if all the employees and line managers are responsible for carrying out the planning, there needs to be a central direction, coordinating all the movements.
Misuse of the BSC
Many companies see the Balanced Scorecard as a project to be led by a cross-functional team and, at the end of the creation of performance indicators, the project leader becomes the "keeper of the indicators", as if he were the Vice President of the Balanced Scorecard in the company. They monitor the indicators, generate reports and serve as the organization's BSC consultant. And for most companies, the BSC project ends at that point. A new monitoring system is created, but there is no initiative to change processes or implement improvements. In this way, the full potential of the BSC for continuous improvement is not utilized.
The difference between successful companies is that they are concerned with modifying key management processes with the aim of actually executing the strategy.
According to the executives heard in the PMI survey, the main barrier to implementing strategies is a lack of change management skills (45%).
The disorganization of information
When a company has many performance indicators to manage and several business units, it ends up having difficulties monitoring the execution of targets and projects due to bureaucratization and unreliable data. There are too many sources of information to process in different spreadsheets, which ends up making the process more difficult. Therefore, investing in a complete to systematize data feeding and automate the generation of reports, allows the Strategy Office team to focus its efforts on continuous improvements, identifying deviations, proposing innovations and making adjustments to planning to guide the company towards success.
See also "5 reasons to avoid using spreadsheets in management"
Text inspired by the Working Paper: KAPLAN, Robert S and NORTON, David P. "Creating the Office of Strategy Management". HAVARD BUSINESS SCHOOL. April 2015 Available at: http://www.hbs.edu/faculty/Publication%20Files/05-071.pdf
