Strategy Implementation: Getting It Done

By Peter Strupp

A unique business model coupled with a well crafted competitive strategy can do wonders for value delivered to clients, employees and shareholders. But if the implementation of the strategy is poor then the benefits of the strategy are weak or non-existent. Strategy Implementation received a lot of attention in 2002 with the publication of Execution: the Discipline of Getting Things Done by Larry Bossidy & Ram Charan. However this mentality towards execution often sought to belittle the role of strategy and was still pretty ambiguous on what is needed day to day to get things done. Lets be clear. An organizations strategy, culture and structure need to be in close alignment with each other for effective implementation to take place. In addition the talent you procure for your strategy needs to function within an organization designed to impact results. New talent only works when the organizational design and culture are there to support it. In the 1980s John Martin wanted to transform the Taco Bell restaurant chain in the United States into a low cost fast food provider while maintaining a high quality of food and service. Among other things to implement his strategy, he let go many of the uneducated, low paid restaurant managers and replaced them with highly educated highly paid professionals who had the power to innovate both on service system improvements as well as creating new sales channels (such as selling to office cafeterias, universities, etc.). He gave bonuses based on EBIT improvements and replaced three layers of middle manager bureaucracy with a new Marketing Manager position which had 30 restaurant managers as direct reports. However as you can see the talent is not enough. Can you imagine the results if the new restaurant managers who were given a mandate for innovation had to contend with the three layers of bureaucracy? It would not have worked. Organizational design and new leadership behaviors need to be in place as well. The alignment of strategy and structure is a pretty basic principle. What tends to be the big problem with strategy implementation is the lack of competency by Senior Executive Teams in terms of utilizing a portfolio project management (PPM) system. The fundamental objective of PPM is too determine the optimal mix and sequencing of proposed projects to best achieve the organizations overall goals. Often an organizational audit will show that a companys portfolio of projects have little correlation to building shareholder value. There is no proper criteria in selecting projects and there is a lot of subjective political influence from people who have not thought through the consequences of initiating the project in the first place. Many times projects are process focused instead of results focused.

Here are some key steps that a senior team needs to implement to ensure large projects are successfully aligned to strategy: First, for the large projects, there should be a clear criteria for how a project will be considered. Why should we initiate this project? Are there alternatives to ways to accomplish the same goals? Is there a clear decision making criteria in place? Projects of a certain size obviously should have Senior Team sign off. Note: A good resource on decision analysis is the book Smart Choices: A Practical Guide to Making Better Decisions (paperback) published in 2002 by John Hammond et al. Second what hurdle rate criteria is needed to accept a project. Key project criteria should connect to one of the four results: 1) An increases in revenue (on a risk adjusted basis) , 2) lower operating costs 3) Employees, as a result of the initiative, are more effective (on an absolute basis and relative to the competition) or 4) The project frees up assets for investment at higher returns to capital. All projects should have a strong correlation to one of these four result areas. Is there a clear Net Present Value criteria or does the proverbial hockey stick number get by the team without careful scrutiny. It should be noted that some managers object to trying to measure financial results in intangible assets project based investments such as organizational culture improvements or human capital strategy initiatives. They however can certainly be measured on a NPV/ROI basis in terms of quality improvement, increased customer repurchase rates, employee output, cost reduction and time savings. Most managers simply do not bother to do it. Actually these intangible non-capitalized investments tend to have considerably higher NPV returns then fixed asset investments. Third, the senior leadership team needs to be clear on the organizations project capacity. Every organization has its own bandwidth. There is special sensitivity to the amount of people hours, focus and money needed to support the portfolio of initiatives. When a project no longer makes sense, it is properly terminated to free up the resources for higher value adding projects. Fourth, the culture and organizational design needed to support the project(s) is in place. This include clear roles, an understanding that the talent in the project often rotates with new members (there should be a Plan B if highly skilled members leaves the project), that work flows are designed to support the project initiatives. There is also a proper information flow and any obstacles to the project are met head on. An Executive Committee Sponsor should be dedicated to each large project. The best situation would be to have a centralized project clearing resource for project monitoring and control. However a Project Management Office should not be a substitute for executive leadership of the portfolio of projects.

Fifth, accountable organizations are high transparent on their goals. Large project status reports could be obviously posted on an asp system such as Base Camp (www.basecamphq.com) or an internal intranet for key stakeholders to see any time they need to. The senior leadership team should regularly articulate to the rest of the organization the status of the large operating projects and how they are aligned to both the purpose and strategy of the organization. If the projects are running into roadblocks the senior team should have the intellectual honestly to communicate the problems or shortfalls in order to help solve the issues rather than sweeping them under the carpet. Getting the right things done on time and under budget should be considered a fundamental competency for most organizations. Unfortunately the rational way to view project management through the lens of strategy implementation is still very poor in many organizations. Project management and strategy still seem to not integrate properly. It is the key requirement of senior leaders to create a robust project initiative culture with a very hands on approach to looking at the portfolio and how they effect business and financial results. Otherwise there is a tremendous waste of time and money. If the opportunity cost is factored, in the price for lack of progress can be astronomical.