Despite the vast time and energy investments that go into corporate strategy development, many companies can’t show significant growth in the bottom line for their effort.
Research suggests that companies, on average, deliver only 63% of the financial performance their strategies promise. It seems that leadership is missing a crucial cog in overall organisational performance: the significance of executional excellence in strategy.
Leaders should translate the strategy into the everyday
One definition of executional excellence is ‘a phenomenon of bringing an act to successful accomplishment and surpassing previous levels of doing so.’ Another description outlines executional excellence as ‘predictably getting the right things done in the best possible way.’
In a PWC strategy and execution survey, 55% of directors expressed concern that their company lacked the proper focus on strategy execution. Additionally, the research found that, in many of the surveyed companies, the ‘strategies often just aren’t implementable and aren’t designed to win.’
In reaching business goals, the right strategy is only half the story. Strategy, employee output and organisational design need to be linked for true business execution excellence. The most recent research points to the talent pool as the decisive indicator of executional success. Employee behaviours and practical tactics as the nuts and bolts of strategy execution excellence.
Thus, preparing a company for strategy execution excellence requires a detailed understanding of the business’s people. A research team at Strategy&, which includes the author of Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap, say that execution excellence can only come to fruition if leaders can ‘translate the strategic into the everyday.’
Deloitte also says that failures in translating and adapting a strategy into employees’ outputs may impede a company’s efforts to executional excellence. Moreover, leaders need to transform the strategy into explicit implementation guidelines and choices.
Deloitte cautions leaders that translation problems will arise if strategic ambitions are interpreted as tacit knowledge (‘I know it when I see it’-mentality). If managers don’t make their clarification precise, their team will likely find itself forced to interpret the meaning on their own.
Instead, leaders ought to purposefully put in the effort to explicitly transform the strategy into the Business Execution Plan, which acts as an organisational roadmap. From the execution plan, Organisational Key Performance Indicators (KPIs) are born.
Align Personal Key Performance Indicators (KPIs) with organisational objectives
KPIs link business vision to individual action. Excellent leaders drive KPIs to cascade from level to level in an organisation.
Using the Business Execution Plan roadmap, divisional leaders must construct individual performance plans with unique goals. These measurable outcomes are conveyed in the form of Personal Key Performance Indicators.
When leaders set goals and Personal KPIs with individual team members, they should be aligned with the team’s overall strategy, which, in turn, aligns with the overall strategy of the business.
Defining an employee’s set of goals with the organisational KPI ensures that participants’ daily activities are well-aligned with the objectives of the organisation. SAP says that employees who clearly understand their individual goals – and how they relate to the broader purposes of the company – naturally become more engaged with their work.
Leaders of companies who fruitfully reach executional excellence understand that their successes are linked to their ability to communicate clearly while tracking and managing goals. They freely share information with their workforce and link reward systems with both individual and team performance.
Although communicating goals is a critical link between employee performance and organisational success, leaders should take the rise of the social enterprise into account.
Leading the social enterprise: KPIs that people genuinely care about
Deloitte describes a social enterprise as an organisation whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network.
The 2019 Deloitte Human Capital Trends Report for South Africa puts leading the social enterprise squarely in the spotlight.
The report cites the talent pool as one of the organisation’s most critical stakeholders. It underlines 5 human principles for designing the social enterprise, which are:
- Purpose and Meaning
- Ethics and Fairness
- Growth and Passion
- Collaboration and Personal Relationships
- Transparency and Openness
All 5 principles mentioned apply to personal KPI development, but two especially stand out in this matter: Purpose and Meaning as well as Growth and Passion.
- The principle of Purpose and Meaning speaks to giving individuals a sense of purpose at work, moving beyond profit to a focus on all stakeholders, including the workforce and the community.
- The principle of Growth and Passion addresses constructing the organisational mission to nurture passion and a sense of personal growth; allowing people to create and add their own personal touch.
Businesses are being challenged to adopt a human focus, personalising the workforce experience while rethinking the hierarchical structure. Deloitte cautions leaders not to follow a top-down approach when developing team members’ Personal KPIs.
KPIs need to line up with an employee’s purpose. And, says professor and author Dan Cable, purpose needs to be personal. Without taking ownership of their outputs, employees will run out of steam. Conversely, when each person adopts their KPIs as part of who they authentically are, they cannot not achieve success.
Professor Nicholas Pearce, author of The Purpose Path: A Guide to Pursuing Your Authentic Life’s Work, calls this approach to leading “connecting our souls with our roles.”
A human-centric approach to KPIs and goal setting is an underleveraged tool to close the gap between strategy and execution. Luminary leaders know that successful execution stems from a myriad of skills from various team members that synergise uniquely.
Articulating KPIs in human terms not only helps the company focus on how to develop the right talent, but it also allows individuals to appreciate how their roles and personal passions slot into the overall strategy.
Deloitte, 2020. Strategy execution: What could possibly go wrong? Retrieved from https://www2.deloitte.com/us/en/pages/finance/articles/cfo-insights-solving-for-execution-risk.html
Deloitte, 2019. Leading the social enterprise: Reinvent with a human focus. 2019 Deloitte Human Capital Trends Report for South Africa. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/za/Documents/human-capital/za_2019%20HCtrends_report_May%202019.pdf
Dan Cable, 2019. Helping Your Team Feel the Purpose in Their Work. Retrieved from https://hbr.org/2019/10/helping-your-team-feel-the-purpose-in-their-work
Donald Sull, Rebecca Homkes & Charles Sull, Why Strategy Execution Unravels—and What to Do About It. Retrieved from https://hbr.org/2015/03/why-strategy-execution-unravelsand-what-to-do-about-it
Eagle’s Flight, 2012. The Importance of Executional Excellence in Strategy. Retrieved from https://www.eaglesflight.com/blog/bid/133198/executional-excellence
Ken Favaro, 2017. Defining Strategy, Implementation, and Execution. Retrieved from https://hbr.org/2015/03/defining-strategy-implementation-and-execution
Michael Mankins & Richard Steele, 2005. Turning Great Strategy into Great Performance. Retrieved from https://hbr.org/2005/07/turning-great-strategy-into-great-performance
Mindtools, 2019. Performance Management and KPIs: Linking Activities to Vision and Strategy. Retrieved from https://www.mindtools.com/pages/article/newTMM_87.htm
Nicholas Pearce, 2019. Why People — and Companies — Need Purpose. Retrieved from https://hbr.org/podcast/2019/04/why-people-and-companies-need-purpose
Paul Leinwand & Joachim Rotering, 2017. How to Excel at Both Strategy and Execution. Retrieved from https://hbr.org/2017/11/how-to-excel-at-both-strategy-and-execution
Peter Bregman, 2017. Execution Is a People Problem, Not a Strategy Problem. Retrieved from https://hbr.org/2017/01/execution-is-a-people-problem-not-a-strategy-problem
SAP, 2020. Business Execution Excellence: Challenges and Solutions. Retrieved from https://www.sap.com/africa/insights/hr/business-execution-excellence-challenges-and-solutions.html
Thinkers50, 2020. Beyond Strategy: Lessons Of Execution Excellence. Retrieved from https://thinkers50.com/blog/beyond-strategy-lessons-execution-excellence/