CEO World: How to Bring the Strategic Plan to Life

Strategic implementation is a crucial challenge for many organizations, and statistics underscore the magnitude of this problem.

According to the Balanced Scorecard Institute, only 10% of organizations successfully execute their strategies effectively. This low success rate is due to various factors, including a lack of alignment and communication within the company.

Harvard Business Review reports that 70% of strategy implementation failures are due to poor execution rather than poor strategy formulation.

This indicates that organizations can have solid strategies but fail to carry them out due to issues such as lack of leadership commitment, inadequate resource allocation, and the absence of an effective monitoring system.

A study by Bridges Business Consultancy supports this issue, revealing that 90% of companies fail to execute their strategies successfully, primarily due to a lack of alignment and communication.

These statistics highlight the importance of addressing the challenges of strategic execution with improved approaches, such as aligning objectives, adequately training employees, and using efficient management tools.

In summary, although many organizations develop promising strategies, implementation remains a significant obstacle, underscoring the need to improve execution practices to achieve strategic success.

The Challenge: CEO Leadership

Increasingly, companies are professionalizing and making various efforts to plan short- and long-term strategies that will lead to business sustainability.

And they are getting better at it. In fact, according to McKinsey, 90% of strategies that fail were well-designed.

The question is: Why do they fail?

Why Do Organizations Fail in Strategic Implementation?

Organizations often fail in strategic execution for several fundamental reasons, according to various studies. Here are five of the most prominent:

1?? Lack of Alignment and Communication: Harvard Business Review indicates that one of the main reasons for failure in execution is the lack of alignment between strategic objectives and daily activities. People don't buy into it, so they don't prioritize it, continuing with their usual day-to-day routines.

2?? Deficiency in Leadership: Ineffective leadership is a critical obstacle. The Bridges Business Consultancy study highlights that a lack of commitment and support from senior management can demotivate employees and hinder effective strategy implementation. If the functional leader doesn't buy into it, how can they sell it?

3?? Inadequate Resource Allocation: According to the Balanced Scorecard Institute, many organizations do not adequately allocate the necessary resources for strategy execution. This includes not only financial resources but also the time, talent, and technology needed to carry out strategic initiatives. It's logical. The owner of resource allocation is misaligned.

4?? Lack of a Monitoring and Evaluation System: Without an adequate system to monitor progress and evaluate performance, organizations cannot know if they are on the right track. This is crucial for making necessary adjustments in time and ensuring that the strategy is implemented effectively.

5?? Resistance to Change: Resistance to change within the organization is another significant factor. Often, employees cling to established practices and processes and are reluctant to adopt new strategies.

These reasons highlight the complexity of strategic execution and the need for a comprehensive approach that includes strong leadership, clear communication, adequate resources, robust monitoring systems, and effective change management.

?? But if we read carefully, we will notice a common thread. Lack of Acceptance: Both from Leaders and Downstream.

The fundamental factor for success in strategic implementation is not so much about the Quality of the Solutions (in an overwhelming number of cases, people, leaders, and companies know what they need to do to succeed), but about the Acceptance of that Change.

5 Things the CEO Must Do to Ensure Strategic Success

If the central problem of strategic effectiveness is the lack of acceptance, the CEO must focus their efforts on achieving it.

I know, that's not the 'sexy' part of the process.

The sexy part is where the CEOs and their Team of Big Brains design innovative solutions and create spectacular plans. I also enjoy that the most! Thinking and designing!

CEOs are strategists.

But it’s not enough.

The truly profitable effort lies in the exercise of Strategic Alignment. At Galway, we use a methodology that covers 5 fundamental points.

1?? Leadership and Clarity: The first effort is to clearly land the most impactful strategic objectives (no more than 4 or 5), but above all, a very powerful definition of why these objectives and why their high priority.

In Simon Sinek's words, "people don't buy the What (the KPI), they buy the Why." A first exercise will be to design the sense of urgency.

And be careful because "maximizing shareholder value" can be a powerful reason if you are a shareholder, but for the rest of the employees, it might not be enough. A tip: Fear is a strong motivator for action, but well-being and improvement are even stronger. You need both.

2?? Triggering the Sense of Urgency: The house is on fire. If we don’t get moving, we lose everything. The sense of urgency is first triggered by explaining the potential consequences of NOT achieving what we want to achieve.

What do we have to lose? That’s the key.

And again, not just organizationally, but individually. If the organization fails, you could lose your ability to enjoy life as you want, your relative financial freedom, or your ability to provide security for your loved ones.

Each person values their needs differently. The key is to connect with those fears associated with people's real needs.

Be careful! This is not manipulation. This is being transparent: "There is a high cost of failure for all of us, which is why I need you on board and focused. Do you agree?"

3?? Designing a Shared Vision of Success: This stage is analogous to the previous one. It’s not about what could be lost but "what do I stand to gain if we achieve success." This is a powerful motivator for most people. Once again, there are different triggers that will be more effective depending on the person: status, income, recognition, freedom, quality of life, security for the family.

In order to sell a change project or a mission to people, we must consider the above.

4?? The How is Up to the Team: Many leaders and CEOs, in particular, make the same mistake. They don’t stick to the what and why but take a step further and design the how and try to impose it. Whether due to ego or any other reason, getting into people's work - the how - is a leadership mistake.

The moment the CEO imposes a solution, it becomes THEIR solution, not the team’s, thus reducing the likelihood of ownership, as is obvious.

We’ve already said that in 90% of cases, strategies are well-designed, and that’s because in an overwhelming number of cases, functional managers and leaders know how to do their job.

So if you’re looking for ownership, let people do their job. Stay out of the Way. As Marshall Goldsmith says: "Resist your desire to add (your) value where it’s not needed." In this case, you’ve already added value by giving a clear direction.

5?? Accountability: It’s not about being the police or the schoolteacher who checks the homework. Come on! They are professionals!

What needs to be promoted are spaces for accountability.

This is a total paradigm shift. It’s not about functional leaders passively waiting for the CEO to ask and tell them what to do. It’s the opposite... The CEO creates a space where functional leaders are proactively accountable to the rest of the executive team on how they are contributing from their roles to the results set by the Company (what and why).

The functional leader reports what they did, what they achieved, and what they will do the next week or fortnight.

Logically, they can receive advice, but what will be done is their proposal and responsibility. Just as it is to ask for help to overcome obstacles.

In "The Five Dysfunctions of a Team," Patrick Lencioni talks about how these practices are fundamental to building trust and collaboration in teams.

In Conclusion

After Strategy comes Tactics.

The CEO's role is to create the necessary conditions for their functional teams to massively move to the execution of what is a priority to achieve the strategic objectives.

And the fundamental key is Acceptance.

The leadership team must buy into the strategic project.

Finally, the same logic must be applied downstream in each functional ecosystem.

Esteban Bedoya is a Consultant and Coach in Operational Excellence, Leadership, and High Performance with over 15 years of experience helping CEOs and HR Directors improve EBITDA, Increase Productivity, Strengthen Leadership, and Build Cultures of Excellence within their organizations.

He worked as a Human Management Executive and Strategic Planning in multinational companies and is a Partner and General Director of Galway.

?? LinkedIn: https://www.dhirubhai.net/in/estebanbedoyach/

?? Email: [email protected]