Strategy ExecutionMasterminds

Strategy Execution & Performance Management

■ What is strategy and why is it imperative for your success? ■ What are the success factors for strategy execution? ■ What is crucial for strategy operationalization? ■ What is the role of strategy leaders? ■ What are the benefits for strategy leaders?

Horváth & Partners 2015

A strategy defines the ambition of an organization (what do we want to achieve?) and a way to realize this ambition (how do we want to get there?). It reflects the most important decisions for an organization (what are the right things to do) and usually the even more important decisions on ‘what not to do’.

“The essence of strategy is in the activities – choosing to perform activities differently or to perform different activities than rivals.”Michael Porter, 1997

In other words, a strategy serves as a guideline or a plan for organizations what they are planning to do in the future. However, it is not just a fixed plan to be executed; it provides a framework to make flexible but conscious decisions in line with the overall strategy during execution.

“Strategy is a pattern in a stream of decisions (later changed to actions).” Henry Mintzberg, 1971

A strategy should give answers on how to react to a changing environment (e.g. macro and micro economical conditions such as development of the oil price, birth rate/age of population). As there are usually more possible scenarios on how to react to these changing environments, it requires clear focus and distinct priorities.

A strategy also includes different components such as vision and mission statement, strategic choices, business model, strategic objectives, targets, strategic performance indicators and strategic initiatives. A newly introduced strategy always implies change as it reflects new ambition levels and a reaction to changing conditions.

„Increasingly, however, strategy is being seen also as a practice: strategy is something people do.“Donald C. Hambrick, 2004

This modern interpretation of strategy indicates that a strategy is not just something abstract, it is the daily work of people that needs to be organized, and structured.

What is strategy?

Checklist: What are the success factors for strategy execution?

A strategy shall ...

■ ensure the long term success of an organization ■ enable the organization to reach its underlying, fundamental objectives articulated

as vision and mission (like a masterplan) ■ direct the performance of an organization into the right direction ■ coordinate the activities of individuals in a stringent way ■ serve as a communication instrument to align people („what is the plan“) ■ be the basis for investment decisions (resource allocation) ■ align the interests of different stakeholder into one consistent concept ■ give meaning to the engagement of individuals

Why is strategy imperative for your success?

■ Does the top management support the strategy? ■ Are all leaders committed to the strategy? ■ Do all employees know and understand the strategy? ■ Are all employees qualified to support strategy execution? ■ Do all employees have an incentive to support strategy execution? ■ Do leadership guidelines (e.g. leadership principles, promotion criteria)

support effective strategic leadership?

People readiness

Organizational readiness

■ Are the organizational structures suitable for the strategy? ■ Are budgets and resources aligned to the strategy? ■ Is there a strategy unit supporting strategy execution and implementation,

such as an Office of Strategy Management? ■ Are the responsibilities for strategy execution clearly defined?

Process readiness

■ Is the strategy properly operationalized into manageable strategic initiatives/actions? ■ Is the strategy integrated into the operational planning? ■ Is the strategic performance regularly being reviewed, e.g. on a quarterly basis? ■ Are all strategy relevant processes fully aligned to the strategy

(e.g. HR, IT, communication processes)?

Level of strategiesThey exist, are required and serve specific purposes (e.g. corporate strategy, sector strategy, department strategy, IT strategy, HR strategy)

Strategic decisionEach leader of an organizational unit has to make strategic decisions on how to run his unit (e.g. activities, competences, processes, organizational structure)

Coordinated strategic direction and focused allocation of resources

What is crucial for strategy operationalization?

STRATEGYCorporate

Level

Next Level OPERATIONS

Bott

om-u

p ex

ecut

ion

Top-dow

n cascading

Performance ownershipEach leader is ultimately responsible for the performance of his department which includes operational and strategic performance

Linking strategy to operationOnly by translating strategies from the corporate level (e.g. minister, board) to departmental levels (e.g. deputies, directors), they are executable

Vertical alignmentThe upper level always represents the strategic framework for the next level (expectations, guidelines)

Horizontal alignmentAll units of an organization are required to align their activities (e.g. to ensure that IT requirements from all units can be integrated into the IT strategy)

“Unless commitment is made, there are only promises and hopes; but no plans.”Peter F. Drucker

What is the role of strategy leaders?

1st leadership role: Create awareness for the strategy ■ Promote the strategy (“story of strategy”) ■ Make strategy tangible (“from strategy to action”) ■ Specify strategic measures (“what gets measured, gets done”)

Knowing & motivation

2nd leadership role: Enable the organization to execute the strategy ■ Ensure development of required capabilities (quantity and quality) ■ Assign budgets based on the strategy

Skills & competences

3rd leadership role: Be a role model in managing strategy ■ Discuss and explain the strategy regularly on all levels ■ Make and explain decisions based on the strategy ■ Relate operations and processes on all levels to the strategy ■ Actively manage and monitor strategy execution

Role model & culture

4th leadership role: Establish structures to enforce binding character of the strategy ■ Foster integrated, strategy driven processes ■ Establish strategic performance reporting, continuous monitoring and review of strategy

execution

Structure & processes

“A great leader attracts great people and knows how to hold them together“Johann Wolfgang von Goethe

What are the benefits for strategic leaders?

■ Achieve your targets continuously ■ Get your things done more efficiently ■ Make significant contribution to strategy execution

Success

■ Define the way forward and guide your team towards it ■ Become an accepted role model in leadership

Orientation

■ Create a motivating and target oriented work environment ■ Ensure fairness in rewarding people ■ Create commitment of all employees to your strategy

Motivation

■ Judge your team’s performance based on transparent and objective criteria ■ Set ambitious but achievable targets ■ Be honest and transparent on strategy execution progress and its success

Performance

Horváth & Partner Middle East GmbHP.O. Box 46400Abu DhabiUnited Arab Emirates

Tel: +971 2 656 5981abudhabi@horvath-partners.com

Dr. Tim WolfHead of Strategy

TWolf@horvath-partners.com

Tobias KernPartner

TKern@horvath-partners.com

Horváth & Partners – Management ConsultantsHorváth & Partners are independent, international management consultants with over 600 highly quali-fied employees. Founded in 1981 and headquartered in Stuttgart, Germany, we have offices at locations in Germany, Austria, Hungary, Romania, Saudi Arabia, Switzerland and the United Arab Emirates. Moreover, Horváth & Partners are a proud member of the “Cordence Worldwide” global management consulting partnership, which strengthens our ability to undertake consulting projects in important economic regions of the world with the highest professional expertise and precise knowledge of local circumstances.

Our core competences lie in the fields of Corporate Per-formance Management and Performance Optimization – both for the entire company and for the business and functional areas of Strategy, Organization, Sales, Opera-tions, Controlling, Finance and IT. Horváth & Partners stand for project results which create sustainable benefit, which is why we accompany our clients through the entire process from developing the business concept through to anchoring via integration into processes and systems.

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