The tangible value of your strategy can only be realized when it’s translated into action by an organization that understands the priorities and goals of the business.
In a previous GrowthBit, I shared my perspectives on and approach to Formalizing a Winning Business Strategy. Today, I want to focus on the art and science of turning strategy into action, because this is an area where smart, capable companies often stumble.
Creating a strategy is essential, but it’s only the first step. It’s when a strategy is translated into specific actions, timelines and responsibilities that it enables an organization to deliver on key goals. Without this executional layer, the most brilliant, focused strategy will be challenging to be implemented and fall short of the desired impact.
When I work with our portfolio companies, I lead them through a multi-step process of translating strategy into action while building ownership for moving things forward:
Step 1: Translate and Elaborate the Strategy.
In many situations, strategies are defined in broad, directional terms and often lack deeper, clearer definition. For example, a strategy to “Expand Geographically” may be directionally sound but unable to execute until the next layer of questions are resolved. Questions like “Which geographies should we expand to (or avoid) and why?”, “Should we build, buy or partner our way into each specific market?” and “Should we expand in a particular sequence?” exemplify the type of thinking that requires further elaboration.
One technique I’ve found useful over the years is to ask 1) What does this mean? and 2) Why is this important? to draw out everyone’s thinking and to identify areas where additional analysis or thinking may be needed.
Step 2: Confirm Execution Priorities.
Once a strategy is more clearly defined, it is important to establish clear priorities. Typically, I challenge management teams to identify and align on three to five top level priorities within a desired timeframe (e.g,. calendar year, multi-year view, etc.). What are the three to five most important things that need to get done? How will this advance your strategy and competitive position? Sometimes leaders identify broad actions as priorities (e.g., “Expand new logo capture” or “Broaden our wealth management platform”) while in other cases, they identify key goals (e.g., “Increase Retention by __%” or “Drive ___% Margin Improvement”).
See the illustration below for an example.
I try not to get too hung up on whether broad actions or goals are being identified as priorities, as long as the leadership team is clear on what they mean and why they are important.
Step 3: Define Strategic Initiatives.
To make the strategy actionable, it needs to be broken into specific initiatives that individuals and/or teams can own and execute. Each initiative should have clear goals, accountabilities, milestones and timing expectations. For example, a technology business I work with has a goal to improve customer favor by 20% during the next 12 months and improving service delivery is critical to accomplishing this. They developed a customer excellence strategy and broke one of its key priorities into the following strategic initiatives:
Priority #2: Improve End-to-End Service Delivery
Initiative 2a: Implement service cloud by Q3 2018
Initiative 2b: Roll out full set of service standards and KPIs by Q4 2018
Initiative 2c: Redesign our customer success process by Q4 2018
There are a couple of simple templates or frameworks that can be used to help identify and plan key initiatives. An example “Action Plan” appears below. As you will see, it links a set of initiatives to an overarching priority in a simple planning template that everyone can use.
Step 4: Engage and Align the Organization.
When it comes to strategy execution, the most important success factor is the engagement and alignment of the organization. This begins with identifying clear and accountable owners and participants who will work on key initiatives and it translates further into the organization through the clarification of goals, the alignment of incentives and ongoing communication. This may or may not be a straightforward process depending upon the complexity of your business and the volume of initiatives underway. Great strategies and plans have failed due to lack of organizational ownership. To combat this, keep the “Q x A” equation in mind: the Quality of the strategy TIMES its Acceptance = the Effectiveness of the result. Paying ample attention to the “A” in the equation will payoff in terms of getting to the results you seek.
Step 5: Measure, Monitor and Adjust.
Once you’ve translated the strategy into a plan of action and rolled it out across the organization, the last step is to monitor your progress against the action plan.
This needs to be a separate activity from monthly financial reporting and annual reviews. Reporting financials monthly isn’t enough, because it doesn’t tell you what’s driving those financials. And while an annual review is an important way to gauge progress, a year is too long to wait. When you’re a fast-growing company, you can’t afford to get halfway through the year before realizing whether you are on or off track with critical strategic initiatives.
Two best practices have emerged across LLR portfolio companies. The first is to introduce regular monitoring and reporting of strategic initiatives through dedicated bi-weekly discussion among the leadership team along with basic “red/yellow/green” status reporting concurrent with monthly financial reporting. This ensures that priority initiatives stay visible while providing a regular forum for discussing progress and issues.
A second best practice is to more thoroughly review and evaluate strategic progress during an in-depth quarterly business review (QBR), which often precedes a quarterly board meeting. During these intensive reviews, managers convene to discuss facts regarding performance and initiative progress and to determine if course correction is needed. Some companies methodically review each strategic priority and the associated initiatives in terms of “what’s working and what’s not working,” after which adjustments are identified and initiated. By doing this on a regular basis, management can stay on top of important strategic efforts while making critical adjustments along the way.
Here’s the bottom line.
Setting strategy is critical to success, but it’s only half the battle. The tangible value of your strategy can only be realized when it’s translated into action by an organization that understands the priorities and goals of the business. Set priorities. Define key initiatives and assign them to specific individuals. Work on gaining broader buy-in. Then measure, monitor and adjust as needed. If you can maintain this discipline, you’re going to see incredible value from the strategy you worked so hard to create.