Context - A Key Success Factor for Strategy Execution
Developing a corporate strategy became a key component of management practice during the 1970s and 1980s: a study published in 1979 found that at that time 60% of organisations had ‘long range plans of some sort’; by the early 1990s the equivalent figure in similar surveys was almost 100%.
However from the early 1980s on, evidence was mounting to show that simply having a strategy was not enough - simply stating strategic goals did not result in them being achieved. Rather it was becoming clear that in order to achieve strategic success, organisations needed to be investing time and energy in developing new management skills and processes specifically to support strategy implementation.
From the 1980s on, it was becoming clear that successful strategy execution required the development within organisations of additional structured management processes. Organisations already had management processes in place for repeated operational tasks (e.g. running the factory), and for financial control, but that these were less common activities such as strategy development and implementation which were undertaken on an irregular basis.
A study reported in 1990 by Michael Goold and John Quinn (two early pioneers in the field) found that in the late 1980s fewer than 40 of the 250 largest companies in the UK had any mechanisms in place to control the development and implementation of corporate strategy.
Early researchers also noted the need for these new management processes to dovetail with existing ones - particularly the budget.
In a landmark paper published in 1979, Jacques Horovitz proposed four key attributes for a strategic control.
- What are the three of four fundamental hypotheses on which my strategy(ies) is (are) based?
- What are the three or four critical factors for success for my firm
- What are my key distinctive(s) competence(s)?
- What are my key priorities and performance results?
Horovitz’s concepts were taken up and expanded upon during the 1980s, informing critical contributions by Lawrence Hrebriniak in 1984 and by Michael Goold and John Quinn in 1990. The work of these authors in turn informed the development in the late 1980s of the Balanced Scorecard - a performance management framework that has evolved since to become the leading framework for supporting strategy implementation activity.
Many alternative management frameworks have emerged to deliver Horovitz’s key strategic control steps, including 2GC’s ACME framework (which itself is built upon work to find the common elements of seven popular strategic control frameworks), and without doubt these new strategic control frameworks have significantly improved the ability of organisations to implement and execute strategy. But it is also true that these new frameworks have not had universal success - it is clear that for many organisations the approaches that have worked elsewhere do not work so well for them.
We think that for many organisations one factor holding them back is what we call their strategic context: for example, recognising that a retailing organisation faces quite different organisational challenges to a power generation company, and so each needs to put in place a strategic control solution that suits their management capacity, their internal culture, the time horizons of their investor community, and the turbulence of their main market place. It is a factor that is often overlooked in the discussions of frameworks (where for the economy in communication, usually “one size fits all” is assumed) but can be critical to their success.
The Strategy Context Grid
The Strategy Context Grid helps separate you to work out the best way to manage strategy implementation (see image below).
The grid shows that organisations who operate in stable environments (markets, competitor behaviour etc.) and deliver goods and services that are pursuing strategic goals that can be easily and reliably monitored, implementation of a mainstream strategy execution / strategy implementation framework should benefit the organisation - but only if it is actually used to control the strategy implementation work.
- For organisations where the strategic goals are straightforward, but the strategic context is turbulent, implement your strategy execution framework in a tolerant way that uses missed targets as learning points rather than causes for concern - the work being monitored may have been done perfectly, but the context itself might have shifted before the work was complete.
- For organisations where the strategic context is settled, but the strategic goals are ones that are hard to measure and monitor reliably, implement your strategy execution framework as an advisory tool - an aid to management understanding but not as a tool to drive decision making: the information provided will need to be filtered and interpreted by managers before it is acted upon.
- For organisations with complex hard to measure goals in a turbulent environment it is not clear that a strategy implementation framework will help. In such circumstances, use the concepts embedded in strategy implementation frameworks to inspire better management decisions.
We recognise that working out what the best approach to use to manage strategy implementation activities in your organisation is not easy. So to help we offer a variety of things:
- The 2GC website’s resources area has a broad collection of white papers, case studies, FAQ answers and other materials to help you better understand key strategy implementation tools such as the Balanced Scorecard and 2GC’s ACME framework. To help you get started we’ve linked to some key areas in the button bar below.
- Come on a 2GC training event - we hold them regularly all around the world - to hear more about these topics and to have the chance to talk to a 2GC expert about how they might be applied in your organisation.
- Contact 2GC directly via our website and ask us to get in touch with you - we are always happy to discuss strategy implementation issues.