Close the Strategy Execution Gap by Fixing Your Strategy Design Process
In my quest to close the strategy execution gap, I, as a strategy design and execution practitioner, applied what I learnt from my MBA and executive programs and what I read about it in leading management journals. Subsequently, as a consultant, I shared my learning with clients as I facilitated them to design and implement strategy. However, closing the strategy execution gap remained elusive. A decade ago, when I incorporated Stacey Barr’s PuMP performance measure approach into the strategy design and execution approach, I discovered that all the strategy design processes I had used before had serious gaps that more or less guaranteed that strategy execution would fail.
Regardless of the approach used to design strategy, the process will always include analysis, choosing focus areas or setting priorities, formulating goals with measures and targets for change, and finally, the initiatives and actions that will bring the desired change or transformation in that order.
The PuMP Performance Measure Blueprint is a proper performance measurement process created by a measurement practitioner, not a business academic, to solve real measurement struggles. Integrating it with a strategy design process improves goal setting, measure selection, interpreting signals from measures, and initiative formulation steps.
The Goalsetting Gap
A strategy needs to be broad enough to cover all the areas of a business or organisation, while execution needs clarity and specificity or granularity. And therein is a dilemma. The common practice in strategy is to formulate broad goals to improve performance across a wide range of areas and get everyone to see something in them they can contribute to. Goals like these result in the use of weasely or vague language, which in turn makes it difficult for people to understand and measure strategy.
On the other hand, strategy execution requires clear goals that everyone can understand so that they can determine how they will contribute to them and those goals to be specific enough to clearly describe the results, outcomes, impacts or qualities that an organisation wants to improve or be better at. However, where goals are too specific, they tend to describe the processes, actions, or tasks to be done in order to produce the outputs that will have those results, outcomes, impacts or qualities that are needed.
Great goals focus on a single result or outcome or impact or quality to be improved. They are worded so that everyone correctly understands them, and we can meaningfully measure them. Incorporating the Result Mapping step of PuMP into the goal-setting step of your strategy design process will allow you to formulate great goals. For example, a common goal in most strategies is to “improve knowledge and skills”. Using Result Mapping tools in PuMP, this goal could be articulated better as follows:
“There is no gap between our people’s skills and the skills required of their positions.”
The Measure Selection Gap
True performance measurement is when we are quantifying direct evidence of the results we are trying to improve through our strategy. Brainstorming, using KPI libraries or industry measures, does not lead to selecting measures that are evidence of the results being pursued. The Designing Meaningful Measures step of PuMP is a logical procedure for finding the most relevant and feasible measures for each goal in the strategy.
One great thing about bringing this step into your strategy design process is that the conversation you have to design a good measure is a great check on how meaningful your goals are and how well they are written. Another great thing about bringing measure design into your strategy design is that when you know what measures you need to focus on, the strategic initiatives are also easier to choose.
The Performance Signals Gap
Having measures isn’t enough. We must use them to give us feedback on what performance is doing, and this requires us to set baseline performance levels and targets that will be subsequently used to look for signals of improvement or deterioration in performance over time. However, the most common methods used for setting baselines and targets are flawed mainly due to the use of limited data such as the year-to-date measure value, same period last year measure value or budget.
The Interpreting Signals from Measures step in PuMP makes use of special graphs that help establish the true baseline performance that forms the basis for setting realistic targets. These graphs, which clearly show signals of shifts or changes in performance over time, make the true signals of change in performance easier to see, statistically valid, and incredibly useful for producing insight. Integrating this step into the strategy design process ensures that we are deliberate, from the onset, on the signals we want to see from each measure and the action to take in response to the signals.
Initiative Formulation Gap
Ultimately the desired results, outcomes, impacts or qualities of our strategy are delivered by the activities carried out by the organisation. Therefore, removing constraints in the activities, either by eliminating some, creating new ones or strengthening some, is the sure way of reaching desired performance levels.
The Reaching Performance Targets step of PuMP makes use of process improvement as the basis for reaching performance targets. It puts performance analysis information to use to either create new change initiatives or tweak existing change initiatives to find the best leverage to reach the desired results. Integrating this step into the strategy design process ensures that strategy is linked with operations and that we get the highest ROI when the initiatives are implemented.
Get Strategy Design Right to Have a Better Chance of Succeeding in Your Strategy Execution!
From my experience, most organisations don’t have a process design or flowchart for their strategy design process. And where it exists, the sequencing of the steps in the process is not logical, or it has gaps, especially in the last 3 steps – goal formulation, measures design and target setting, and initiative and action development. These gaps contribute, to a large extent, to execution failure.
Whereas PuMP is not a strategy design tool, integrating some PuMP steps into your strategy design process will improve the process and its outputs. However, your organisation needs a strategy design process that works well before PuMP can do its best work for you.
Join us in our upcoming PuMP KPI training to learn more about the PuMP Performance Measure Blueprint.