Do you work with strategy execution?
Then you have probably experienced that one or more barriers in the organisation make it difficult to reach goals and execute strategies.
Organisational barriers are causing an average of 40 - 60% of the economic value of planned strategies, not to be realised. Unfortunately, in many cases, the barriers are ignored or hidden away deep inside the organisational structure of the company. This leads to barriers often being hard to detect, which allows them time to develop and spread throughout the structure, which can actively counter strategy realisation.
In order to do something about it, one must start by identifying which barriers are present in each organisation.
In a research project conducted in collaboration with Copenhagen Business School in Denmark, and more than 100 companies, STRATEGOS found the following seven barriers across several industries, are the most common causes of strategic execution barriers:
Lack of understanding of the strategy
The strategy is not developed with execution in mind
Inadequate leadership skills
The strategy is not implemented into everyday work culture
Lack of time and resources
Inappropriate involvement
Lack of consensus
The seven barriers are interrelated. Read about them below:
Barrier NO. 1: Lack of understanding of the strategy
It is of great importance that everyone in the organisation understands the strategy. Not only what the strategy is about, but also why a specific course is chosen. Many companies fail to understand the strategy, partly because it is often too abstract. Unless the messages in the strategic initiatives are simple and easy to understand for all contributors, it is difficult for the individual manager and staff to interpret the initiatives and translate them into real action.
Furthermore, the importance of translating understanding into meaning is often underestimated. It is important that the individual employee finds that the strategy seems sensible and fits well with the situation and the challenges and opportunities that the employee experiences in his or her everyday work life. Meaning is one of the most important drivers of success in strategy execution. Meaning often arises only when one understands the rationale behind.
BARRIER NO. 2: THE STRATEGY IS NOT DEVELOPED WITH EXECUTION IN MIND
It is crucial that the different focus areas of the strategy can be expanded and broken down into specific tasks or initiatives. It creates clarity within the organisation when the individual employee not only knows and understands the strategy, but also knows what the strategy really does for him or her in everyday worklife.
The individual middle manager / employee must therefore know what he / she needs to do to succeed with the strategy in his / her area. Our experience and research shows that two-way communication and dialogue are on average 4 - 7 times more effective than one-way communication.
BARRIER NO. 3: INADEQUATE LEADERSHIP SKILLS
Leaders must take responsibility for ensuring the strategy's life and development within an organisation, and they must have the tools to do so. Unfortunately, it is too often seen that the competencies do not meet the ambitions. In many companies, there is an implicit expectation that as a leader you should be able to execute on what has been agreed in the strategy, including motivating your employees and maintaining momentum in execution over several years. Our research and experience show that this is often not the case. Quick, easy solutions, where leaders, for example, attain tools available in connection with the launch of a new strategy, are rarely sufficient.
Therefore, targeted competence development must be supplemented, where, for example, you learn to use new roles, agile and dynamic methods, new meeting standards and new follow-up routines.
BARRIER NO. 4: THE STRATEGY IS NOT IMPLEMENTED INTO EVERYDAY WORK CULTURE
In many companies, strategy is a topic that is addressed at a strategy meeting on a fairly irregular basis. For example, once a month. The problem here is that the strategy does not live and breathe in the employee’s everyday work life and does not adequately form the basis for the decisions that affect every day of the customers' experience of the company's value creation. In view of the changing environment and customer needs, it is crucial to work hard to make the organisation dynamic and adaptable as new trends or needs emerge constantly and the economic landscape is constantly on the move.
We see a clear trend emerging in the data that the upper echelons of management can no longer have a monopoly over all decisions regarding new strategy, which therefore makes it necessary to work to empower, inform and listen to every area and function of the business, and give the individual teams in the organisation a mandate to make decisions that benefit the customers' experience of value.
BARRIER NO. 5: LACK OF TIME AND RESOURCES
Ambitious leaders will almost always lack time and resources. Sometimes it is possible to add extra resources, but otherwise it is crucial to prioritise and allocate resources you do have to an extent that matches market developments. Resource allocation and budgeting should therefore be flexible in order to make the company more adaptable. Fixed annual budgets are therefore not the way forward for more and more companies. In addition, if the individual teams are made accountable and motivated to follow the strategy, they can help to prioritise resources more efficiently.
BARRIER NO. 6: INCIDENTAL INVOLVEMENT
When working with strategy, one often hears the phrase "involvement creates ownership". This is only partially true, because involvement can have both a positive and a negative impact of the strategy. If, for example, you are involved without fully understanding the expectations, you run a risk of not meeting those expectations. Involvement of all employees can also easily run off the track if top management does not adequately manage and explain. This can happen, for example, if the top management chooses to involve the other managers and employees for the purpose of creating ownership whilst already coming into discussions and meetings with pre-made decisions and expectations. Thus, the involvement does not become authentic, and in that case, involvement can do more harm than good.
BARRIER NO. 7: Lack of consensus
An important prerequisite for succeeding in a strategy is that there is consensus in management. If this is not the case, it is quickly felt within the whole organisation, and then there is a tendency to await a final decision. It hampers the progress of strategic execution because employees are constantly awaiting clarification from management whilst also tending to feel micro-managed. The consequence of a lack of consensus can also be that important decisions are postponed again and again, that the necessary resources are not allocated in time, and that obstacles in relation to the execution of the strategy are not eliminated.
The lack of consensus can also lead managers to sub-optimise in their own specific area, which is often detrimental to the execution of the company's strategy. Therefore, a management team should be behaviourally and communicatively aligned with what is announced in the organisation’s strategy.
HOW SHOULD THE BARRIERS BE MANAGED?
These strategic executional barriers are examples of how some mechanisms lie and lurk “below the surface” and how they influence and hinder the progress of execution and thus the opportunity to realise the strategy. Therefore, something must be done about them in time! Before launching a new strategy or strategic initiative in the organisation, we recommend working actively to identify then remove these barriers that exist in the company's particular culture. This makes it possible to prevent highly motivated executives and employees from going head to head in executing the strategy. In doing so, the company avoids losing up to 40 - 60% of the economic value of the strategy agreed upon.