It is known that most strategic plans fail to deliver. Some of the time it is because the strategy itself is not a good one, but more often than not the reason is a bit more banal - most of the time it appears that strategic plans are simply not implemented.
In this feature we draw on research findings and our experience to consider why is it that strategic plans fail to be effectively implemented, and what can be done about this.
“Simply knowing what to do is not enough; in the final analysis success is judged in terms of actual rather than intended results. Choice and action determine actual results, and each is incomplete without the other.”
It is known that most strategic plans fail to deliver. Some of the time it is because the strategy itself is not a good one, but more often than not the reason is a bit more banal - most of the time it appears that strategic plans are simply not implemented. Neither outcome is useful. Recent research findings contain insights concerning how both can be avoided.
We will have a look at the issue of whether a strategy is appropriate in another of these articles (to get notified of its publication, sign up for our regular news updates, or follow 2GC via one of the social media systems); in this note we are going to focus on the second issue - why is it that strategic plans fail to be effectively implemented, and what can be done about this?
What is a strategy?
An organisation’s strategy describes how its senior managers want it to change, and reflects how the senior managers envisage they will meet their obligations to the organisation’s key stakeholders - for example achieving earnings forecasts previously made to shareholders, or delivering the required levels of public service at the lowest cost to the taxpayer.
The changes embodied in the strategy may be driven by the pursuit of opportunities for the organisation to improve the delivery of existing products or services, or to begin to deliver new products or services. They may be driven by the need for the organisation to respond to external events, such as changes in the political or regulatory environment, or the behaviour of competing organisations. Or they may be driven by the need for the organisation to better meet the existing or anticipated expectations of its key stakeholders.
Once the required changes have been determined, the strategy is simply the plan for making these changes over time. If it is developed by people mindful of the organisation’s capabilities, one would expect the strategic plan to be appropriate and straightforward to implement; but as we noted earlier, evidence suggests that in most organisations the strategic plan fails on one or both of these counts.
Why do strategic plans fail?
An article by Julian Birkinshaw - Professor of Strategy and Entrepreneurship at London Business School - for the Business Strategy Review identifies some of the reasons strategy implementation fails. In ‘Tracking the enemies of agility’ he observes that organisations may continue to implement a strategy even when key parts of the organisation find out that they are no longer appropriate. To quote the article:
“Where they struggled was in converting awareness into action. The necessary knowledge about what to do existed, but the company lacked the capacity to move on it in a decisive and committed way.”
Prof. Birkinshaw identifies inflexible management processes (that are slow to respond to new information) and ineffective internal communications (when issues are identified, they are not effectively communicated to the strategy leadership) as being two of the root causes of the observed inability of an organisation to respond. But what can be done to address these issues?
What is the answer?
2GC’s work over the last 15 years has focused on helping organisations become better at managing the implementation of strategic plans: throughout that time we have worked with organisations large and small across five continents, from the commercial, public and NGO sectors, and across a broad range of industries. During this work we have evolved a variety of frameworks that are helpful to understand what is going on within an organisation when it attempts to implement a strategy: it is only by developing this understanding that you can usefully advise on how an organisation might improve. One of these 2GC frameworks offers some useful insights about what an organisation can do to address these issues.
The 2GC framework describes steps within a management activity called the strategic control process, the mechanism managers use to trigger and then control the implementation of a strategy. The 2GC framework is named ACME - an acronym of the four steps it contains:
- Articulate - The first step: a strategy can only be implemented if it can first be written down in a form that others will understand. Although this seems like a ridiculously simple statement, 2GC frequently finds that it is either not done or completed with so little detail as to provide little or no direction. Ideally statements in strategic documents should be very clear on the intent and hoped for outcomes as well as its effects on the organisation and how the required changes will be made.
- Communicate - The second step: once the strategy has been articulated clearly it needs to be shared with the people in the organisation who will carry it out, and their thoughts and feedback incorporated. This process helps to validate the strategy, and also provides tangible confirmation that those who will execute the strategy understand clearly what is required - two steps that in our experience are often missing.
- Monitor - The third step: if implementation is to be assured, the senior managers need to be able to track the progress being made, and confirm that the strategy continues to remain relevant and appropriate. For this they need relevant and timely reports on the activities being carried out, and their impact on the organisation’s performance: in other words best-practice strategic performance measurement information.
- Engage - The final step: if the first three steps are completed, and an anomaly is identified somewhere along the way, then someone responsible has to take action to correct it. At 2GC we are no longer surprised to find that within an organisation the ‘doing something’ is actually very hard - management structures and management processes get in the way, and poor or mis-targeted accountability models make doing something ‘nobodies job’. This step is all about ensuring that as part of the strategy implementation process, care is taken to ensure that when issues are identified there are mechanisms available to fix them quickly and effectively.
Applying the 2GC ACME Framework
The 2GC ACME Framework is illustrated below.
By applying 2GC’s ACME framework, an organisation can go a long way to fixing the two issues identified as being root causes of poor strategy implementation:
- Issue 1 - inflexible management processes. The ACME framework, particularly the Communicate and Engage steps, causes an organisation to have to think carefully about how it will ensure an effective response is made to issues when they happen. As part of this consideration, situations where inflexible management structures or management processes will present obstacles to an effective response, can be identified.
- Issue 2 - ineffective internal communications. While working through ACME an organisation becomes clear on what its strategy is, how the strategy will be implemented, and distributes this knowledge through the organisation. The validation activity that occurs during the Communicate step triggers a two-way dialogue between organisational units that quickly identifies implementation or core strategy issues of the type Prof. Birkinshaw is concerned about - and also creates the mechanism for further such communication to occur later in the implementation.
The 2GC ACME framework provides a useful support to the strategy implementation process - but is just one of a broader set of interventions that organisations use to become more effective in this area. We’ll be covering more of these tools in later articles in this series. To be kept informed of their publication, sign up to our regular newsletter.
If you have questions about the points in this article, or would like more information on 2GC’s methods and frameworks, please get in touch!