The Great Big Strategy Challenge

Implementation
You have just returned from the final two day regional leadership meeting. The team has finalised the strategy and the Board have signed off on it. All that is left to do is to implement it.

The leadership team spent six months crafting and crystallizing the strategy with the assistance of a strategic consultancy firm. The importance of responding to the rapid change in their market that had just transpired due to overseas competition was the initial catalyst that propelled the team to revisit the old strategy. Now after six months of hard discussion, market, competitor, financial and customer analysis the leadership team is ready to roll the new strategy out. The hardest part is over, right. Wrong!

Today in business, leaders are habitually underestimating the challenge of strategy implementation and as such nine out of ten strategy implementations fail.

Far too many leaders can more easily recall an implementation that failed – whether it was strategy, technology or marketing. It is time to correct this by putting the spot light on implementation.

You can have the greatest strategy in the world but if you can not implement it then it is no more value than the paper it is written on.

One of the largest contributing factors to the high number of failed implementations is that when leaders return to their offices after creating their challenge, they are commonly left on their own to work out how to implement it. They must figure out how to inform the people in their division of the imminent changes; explain what needs to change and why; review the way the team is working and the current rewards and recognition to ensure it supports the new strategy; motivate their people; assess the current measures being used and report back to their peers. It is a multitude of activities that creates a maze that many leaders become lost in. What they need is a compass to guide them through this implementation maze.

The “Implementation Compassä” is a tool that provides you with the structure for your strategy to make it come alive. Instead of wandering aimlessly through the implementation maze it allows you to assess your implementation readiness and identify the key areas to tackle. It has been developed by Bridges Business Consultancy Int (the company I work for) after 5 years of research and testing with clients around the world.

1. The Implementation Compassä works for both small and large organizations
2. Allows you to assess your current status in preparing to implement.
3. The Compass guides leaders through the eight critical elements. The degree of importance of each component varies for each organization. For example, one organization may spend more time on measurement while another focuses more on communication.
4. The Compass helps your organization maintain momentum throughout its journey.

Below is a description of the eight elements of the Implementation Compass and key questions to consider before embarking on your implementation journey.

Eight Critical Components

1. People It is not leadership that implements strategy but people

Questions to consider: Do you have the right caliber of people? Do they have the competencies to execute the new strategy? Are they motivated to do so?

2. Biz Case The emotional and numerical rational for adopting the strategy

Questions to consider: Why is the strategy center stage? Do your staff members know what to do differently on the Monday morning after implementation is announced? Do they have the right tools and techniques to implement the strategy?

3. Communicate People can only adopt a strategy if they know about it and understand it

Questions to consider: Do all your staff know what the new strategy is and why it has been adopted? Is the strategy communicated in a way that it comes alive?

4. Measure “You must inspect what you expect.” Have the right measures in place

Questions to consider: Do you have the right measures for the new strategy? Are the measures being leveraged to guide the implementation?

5. Culture You must change the day-to-day activities of your staff members and have a culture that support and fosters change

Questions to consider: What needs to change in the fundamental way you are working so as to encourage the adoption of the new culture? Are we using the language of the new strategy?

6. Process There must be congruence between what you say you are going to do (strategy implementation) and what you are doing (the process)

Questions to consider: Do your processes support or hinder the new strategy? Where can you redesign the process so it is more supportive and effective?

7. Reinforce You must reinforce the expected behaviors so that they are continuously repeated
Questions to consider: When staff members step in to the unknown and demonstrate the new behaviors, are they recognized and rewarded? Does the reinforcement encourage them to continue to demonstrate the desired new behaviors?

8. Review The weakest of the eight points among leaders – you must constantly review to make sure the right actions are being taken to deliver the right results

Questions to consider: Do you know if the actions being taken are producing the right results? Do you know what has been learned from the implementation in the last 90 days? Do you know what you need to start doing differently from today?

Strategy Implementation: we got the people factor wrong!

Most of us are familiar with the expression, “People resist change”. No they don’t! This was just one of the startling results from five years of research we conducted in south-east Asia. We then considered that Asian values may be a contributing factor, so we compared our findings to other regions and discovered similar results.

For years we have happily gone along with the notion that when organizations are making large changes, most people resist. They could have a fear of losing responsibility or stepping into the unknown or trying new things and, as such, we have carved out strategy implementation based on these wrong assumptions.

An even more startling outcome from the survey is that nine out of 10 strategies fail to be implemented successfully. Could part of the reason be that our assumptions are wrong about how people react? Once again, we then discovered that similar research in other parts of the world came to the same conclusions.

The results of the survey and our own client work with governments, multinationals and local companies across four continents started us on a journey to find out why so many strategy implementations fail (see Figure 1) and how staff members respond to changes. We were again surprised by just how many people support or go along with organizational changes.


Figure 1: Top challenges faced in implementing strategy

Bridges Business Consultancy Int. (henceforth “Bridges”) surveyed businesses from various industries across south-east Asia over a five-year period about the challenges they face when implementing strategy, as part of the research that we carried out for our book: Brick to Bridges – Make Your Strategy Come Alive.

Ranking Challenge
1 Gaining support and action
2 Communicating the change
3 Overcoming resistance from staff
4 Support of senior management
5 Aligning processes
6 Tracking success of implementation
7 Changing rewards and recognition
8 Acquiring customer feedback
9 Implementing new technology
10 Acquiring budget

(© Bridges, 2005)

[End of Figure 1]


Dynamics of change: saboteurs, groupies and mavericks

The term “implementing strategy” translates to staff members as their having to change the way they work and/or do more work. They generally respond in one of three ways – indifference, resistance or support. Across the organization, the distribution of these responses falls into a bell curve.

On the left side of the curve is the 20 percent of staff members who resist change. These people tend to complain about anything and everything. They badmouth the implementation behind the leader’s back and complain that the money should be spent on bonuses instead of on lost causes like yet another management fad. Based on their characteristics, we call them “saboteurs”. If they win, the whole implementation fails.

The middle group of the bell curve, comprising 60 percent of the staff, sits on the fence. These people neither support the implementation nor oppose it. They come in at 9am and leave at 6pm. In between, they just do their work. They don’t volunteer for additional work, but they don’t actively resist change. Based on their characteristics, we call them “groupies”. They like the safety in numbers.

The final 20 percent are those who welcome the change, embrace it and willingly support it. They are the early adopters, and are drivers of the change. Based on their characteristics, we call them “mavericks”.

What we need to do differently

Previously, leaders led people through strategy implementation as if most were resisting. The successful strategy implementations that we studied recognized the three different groups, and knew where to focus their energy and how to lead each group.

Which group do we start with - saboteurs, groupies or mavericks? Take a moment to think about which group you have focussed on in the past. The right group to focus on is the 20 percent who welcome and support the change – the mavericks.

Why?

We know that implementing strategy is difficult. The odds are stacked against us before we even start. We need to make it as easy as possible for the organization concerned to succeed. The 20 percent who support the implementation will come on board more readily than the others. Many of them recognize the need for change without being told the reasons. They see the benefits and immediately start to take action.

By starting here, you will attain early wins that can be shared and celebrated with the rest of the organization. In addition, this group provides you with the feedback necessary for tweaking and improving the implementation.

While this positive group is adopting the implementation, it influences the middle group. Remember, those in the middle group sit on the fence and could fall either way. If they are influenced by the positive 20 percent, they will start to respond positively to the implementation. They are the followers. Although that middle 60 percent do not have the enthusiasm and drive to charge out of the starting gate, you can move them along at a steady pace in the right direction.

Once you have 80 percent of the organization moving in the right direction, you have created a critical mass and built up enough impetus for the strategy to start. But what happens to the remaining 20 percent, who resist the change?

About half of these (10 percent of the total staff) will resist but, if handled correctly, will eventually start to move in the right direction. They drag their feet and make a lot of noise, but ultimately fall into line. The remaining 10 percent, if you are lucky, will leave your organization and join your favorite competitor! Maybe they had the right competencies when they were hired, but today, they will slow you down and possibly cause trouble. Regard them as not being right for the job. It is time to say, “Thank you and goodbye!”

General Electric uses a similar approach to this bell curve, calling it the vitality curve. The vitality curve, also in the shape of a bell curve, identifies the top 20 percent of performers, the middle 70 percent and the bottom 10 percent. Every year, the bottom 10 percent is asked to leave.

After a few years, we identified a fourth group, who were initially hidden. Based on their characteristics we call them “double agents”. They initially resist, but can become mavericks. (See Figure 2)

Why is there the notion that people resist change? Because of all the groups, saboteurs make the most noise and, as a result, create the largest impression.


Figure 2: How to identify each group

Groupies
Groupies believe there is safety in numbers and, as such, are passive even though the change is an opportunity for them. Groupies are the backbone of any organization. They do the day-to-day work that has to be done.

Saboteurs
Saboteurs are out to sabotage the implementation. To identify saboteurs in your organization, ask “Who is likely to respond actively but to see the change as a threat?” If the saboteurs win, the organization loses.

Double agents
After observing many teams tackle the challenges of implementation, Bridges came to recognize another group who, over time, demonstrated different characteristics. The double agents are hidden among the saboteurs, which is why they were not initially identified. Initially, double agents appear to oppose the implementation. They stand back to see if this strategy is just another management fad or if it will last. When they see that it is succeeding, however, they switch from opposing it to being strong supporters. Only by their own free will can double agents cross over and become supporters. This happens once they see the desired actions taking place. To identify double agents in your organization, ask “Who is likely to respond actively and see the change as a threat, but is open to persuasion?” Double agents can be convinced only through actions, not words.

Mavericks
Mavericks willingly and enthusiastically support the implementation. To identify mavericks in your organization, ask: “Who is likely to respond actively to the force of change and see it as an opportunity?” A secondary question you can ask to identify Mavericks is: “If your boss told you to fire 80 percent of your staff, whom would you keep?” In most organizations, leaders do not recognize and reward mavericks enough.

[End of Figure 2]


How do you effectively lead each of the groups?

Mavericks need to be supported and rewarded for their contributions. A leader shows the mavericks what needs to be done and then steps back and lets them get on with it. When the results are achieved, the leaders say “thank you”, and reward the people who made the implementation happen.

Groupies must be driven and encouraged. Groupies, remember, sit on the fence and can fall either way. Therefore it is important that a leader walks among the groupies, driving them forward and encouraging them to get involved.

Saboteurs must be handled carefully and effectively. To reinforce a key message, do not let saboteurs become the focal point of your leadership efforts.

Double agents have to be persuaded and convinced. An individual, no matter how charismatic, cannot lead them. They will only come on board when they see the right actions taking effect and are convinced that the organization has crossed the point where it will not turn back.

Here is a simple way to remember the effective leadership style for leading each of the groups. It involves the three leadership styles:

1. Lead from the front. To lead saboteurs through an implementation, you must be in control and hands-on. Be aware of what they are doing and how they are doing it. This means leading them from the front, in the direction you want them to go rather than the direction they want to go.

2. Lead from the middle. With groupies, you must get in among them. They will naturally follow, so you do not need to be at the front. But you must be among them to guide them gently in the right direction, show them what to do and encourage them along the way.

3. Lead from behind. With mavericks and double agents, it is best to lead from behind. The mavericks simply need to be shown what and why. Then they will embrace the change. Your role is to support and recognize them for adopting the change and new behaviors. Double agents cannot be pushed or challenged. Rather, they must be left to come around on their own terms, with some gentle direction from behind. By communicating the actions already taken and the results achieved, they will not go amiss.


Box-out quotes

“We were again surprised by just how many people support or go along with organizational changes.”

“By starting with the mavericks, you will attain early wins that can be shared and celebrated with the rest of the organization. In addition, this group provides you with the feedback necessary for tweaking and improving the implementation.”

Robin Speculand is the CEO of Bridges Business Consultancy Int, which specializes in making strategy come alive.

He is a specialist in implementing strategy and author of Bricks to Bridges – Making Your Strategy Come Alive and Turning It On – Sure-Fire Business Stories to Ignite, Excite and Entertain. Bricks To Bridges can be purchased through Gazelle Book Services Ltd, Tel 01524 68765 Fax 01524 63232 and is available on Amazon.

Before founding Bridges, he was Asia Pacific Regional Vice President for Citigroup. He has lived and worked in the UK, US and Australia, and has operated in Asia since 1989. He holds an MBA from the National University of Singapore. Robin is the founder and president of Business Roundtable for Innovative Management, a Singapore-based management think tank and a founding member of Asia Speakers Association. He can be contacted at: bridges@bridgesconsultancy.com or via Bridges Business Consultancy Int website: http://www.bridgesconsultancy.com/
or by phone at (65) 6886 0123

One Million Pound Investment

http://www.bridgesconsultancy.com/newsroom/articles/One%20Million%20Pound%20Investment.pdf

Living Organizational Values: The Bridges Value Inculcation Model”

http://www.bridgesconsultancy.com/newsroom/articles/Living_organizational_values.pdf

Strategy Implementation

Nine out of ten strategies fail to be implemented successfully.

We are starting to understand the very important lesson that implementing strategy is harder than creating the right strategy from the study of success and failures of previous strategy implementations.

When we triumph over implementation it can become a blue ocean strategy – that is a competitive differentiator and while there are many tools and techniques for crafting strategy there are very few for implementing it. Rosabeth Moss Kanter put it very eloquently when she said: “Ethical standards and our ability to groom future leaders inevitably decline. That’s why execution, or “making it happen,” is so important. Execution is the un-idea; it means having the mental and organizational flexibility to put new business models into practice, even if they counter what you’re currently doing. That ability is central to running a organization right now. So rather than chasing another new management fad, or expecting still another “magic bullet” to come along, organizations should focus on execution to effectively use the organizational tools we already have.”

To further support Rosabeth Moss Kanter comment, consider the fact from Barons that only 15% of the 974 programs reviewed in Fiscal 2005 were rated effective.

In addition, from 1917 to 1987 only 39 of the original Forbes 100 survived and only two outperformed the market, GE and Eastman Kodak.

Many strategies are expected to deliver growth. This creates even more issues due to the “Growth Paradox”. As businesses grow they create new and larger challenges which again emphasizes the need to be good at strategy implementation.

It is time to switch the focus from just crafting strategy to crafting and implementing it. If for no other reason, it is estimated that U.S. managers spend more than $10 billion annually on strategic analysis and strategy formulation. If 90% fail then that is a waste of $9 billion.
Strategy implementation is a relative new field that’s genesis was the high failure rate and lack of a framework. The field is about 10 years old and the research on the subject is just being gathered. There has been various research:

1. Kaplan and Norton, the originators of the Balance Scorecard, published also that 90% of organizations fail to execute their strategies successfully.

2. In a study of 200 organizations in the Times 1000, 80% of directors said they had the right strategies but only 14% thought they were implementing them well, no doubt linked to the finding that despite 97% of directors having a ’strategic vision’, only 33% reported achieving ’significant strategic success’. (Source: Why do only one third of UK organizations achieve strategic success?)

3. Harvard Business School teaches that at least 70% of all change initiatives fail.

4. A long term study by Newcastle University, (1973 – 1989) showed that business success is governed more by how well strategies are implemented than how good the strategy is to begin with.

5. The Economist Intelligence Unit reported that organizations realize only around 60% of their strategy’s potential value because of failures in planning and execution.

With the pendulum now swinging away from leader’s main responsibility of crafting the strategy to the recognition that they are also responsible also for its implementation and that can be even harder, there is a fast growing global interest in the field.

Strategy implementation is defined as the actions an organization takes today to deliver the strategy, tomorrow. The key word is “action”. People in an organization are always taking action.

The critical question is, “Is it the right action?” Are the actions that their staff members are taking today driving the implementation forward? We know staff members are always busy and frequently have more work than they have hours in the day but strategy implementation is the collective individual actions taken every minute of every day by every staff member. If there are not enough of the right actions being taken then the strategy is heading for the graveyard.

“One of top management’s biggest blind spots is the failure to recognize that any significant shift in strategy requires changes in day-to-day activities throughout the organization. Small shifts may require only minor changes. Significant shifts require significant changes-from subtle to sweeping-that can only be successful if implemented systematically. And people at all levels can either help or hinder the transition.”

Executing Your Strategy, Morgan, Levitt & Malek

Leader’s also have a fundamental responsibility to create the right conditions in the organizations. They must, for example, encourage the right people; clearly communicate the strategy objectives, create the Key Performance Indicators (KPIs); align the culture to the implementation; redesign processes, change the way staff members are reinforced to encourage the right behaviors and actions for the new strategy to be implemented and then review the strategy implementation every two weeks. This can be an overwhelming list but if it was easy to deliver the promises of a new strategy then nine out of ten implementations would not fail. And the pass mark is when the leaders deliver at least 50% of the objectives of the new strategy.

The leaders must identify what needs to be done and where to put the organization’s focus.

Although it is not unheard of for two organizations to have the same strategy, for example number one in the industry or differentiate through customer service or leading product, each organization’s implementation of the strategy is unique and the leader must first identify what needs to be done and then lead staff members to perform the required behaviors and actions.
The leader’s role is to translate the strategy in to daily actions that staff members can take.
Strategy implementation is not the same as change management.

Change management is a systematic approach to dealing with change, both from the perspective of an organization and on the individual level. It is applied as the solution for running out a new sales program as it is for strategy. Strategy implementation is a specific approach which drives the right actions today to deliver tomorrow’s strategy. The challenge is for leaders to stop doing what doesn’t work.

Change management is flawed as a methodology for implementing strategy as the research is revealing. If we keep doing the same thing then no wonder we keep failing and the strategy fails! It is time to change the way we think about change. We must go beyond change management as we know it and focus on implementation.

Consider that 30 years ago management was about control and change management was designed as command and control. But business has dramatically changed. We have moved to empowerment and a teaming methodology. Many leaders use change management out of ignorance, as they are not aware of an alternative and end up taking the wrong the actions.
After crafting the strategy for the organization’s future the leader’s role is to ensure that staff members are set up for success in its implementation by being guided by the leadership on what actions to take. The problem on many occasions is that even the leaders do not know what the right actions to take are. In addition leaders often have the wrong mindset. Leaders often underestimate the implementation challenge and what is involved. They believe that once they have created a new strategy, the hardest part is over. Not true. The hardest part – implementation – is just beginning.

In the 10 per cent of organizations that successfully implement their strategies the leaders double the effort compared to what they had spent crafting it. In some cases, leaders are cognizant that implementation requires extra effort. In reality, however, very few are able to free up valuable time and resources to do justice to the implementation process. In other cases, leaders become so caught up in managing the day-to-day business that they lose sight of their goal to implement the new strategy and as such are taking the wrong actions.

The research in the field of strategy implementation started to become part of the mainstream awareness in 1999 when Fortune Magazine ran a front page on “Why CEO’s Fail”. The article, which has since been quoted on numerous occasions, explained that “organizations fail to successfully implement strategy not because of bad strategy but because of bad execution”. This was one of the first times the field of implementation (execution and implementation are interchangeable), had received major exposure. In 2002 Ram Charan followed up the article by co-authoring with Larry Bossidy Execution: The Discipline of Getting Things Done, Crown Business, 2002. The book made execution a common word in business conversations. Since its publications there has been a greater focus on the topic by leaders and a handful of books and articles have followed on the same topic.

There is, however, still a vast gap of knowledge, techniques and tools in the field.

For much of the last 40 years the focus in business has been how to create the right strategy and quite rightly. It is the leader’s responsibility to create strategy, it is what they are paid the big bucks for and it is critical to the success of the organization that they get it right. A plethora of tools and techniques have been created to assist in the strategy formulation. Hundreds and even thousands of books have been written on the topic and in every city, consultants are standing by to offer leaders their support and wisdom. As a result we have improved at understanding strategy and how to create it. Although it is worth noting that even strategy is still being developed. Consider the simple fact that we do not have a globally common definition for the word “strategy”.

There is a change in the wind. In the last ten years we have started to ask, “What happens after we create the strategy and why are there so many failed strategy implementations?” These questions are just starting to be asked because we are just discovering from the research that so many strategy implementations fail.

Instinctively most leaders know that implementation is tough and can recall at least one corporate wide implementation; they participated in, that failed. It is, however, only in the last few years that strategy implementation has started to become a recognized field in its own right. We are starting to understand that implementation fails not because we have the wrong strategy, in most cases, but because the challenge of implementing the strategy is tougher than most CEOs and leaders anticipate and they underestimate the whole challenge.

Professor Joseph Bowler of Business Administration at Harvard Business School http://harvardbusiness.org/ recently said, “One of the criticisms we would have of some of our colleagues who have studied strategy (and some consultants who advice on strategy) is that they assume that once you design strategy it gets executed. They don’t look inside the process and realize that it’s much more complicated.”

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