Importance of Strategy Execution & Challenges
- Yossi Elmaliach, CPA
- Dec 26, 2023
- 12 min read
Strategy execution is the process of putting a strategy into action. It is the process of translating a plan into reality. Strategy execution is essential for any organization that wants to achieve its goals.
However, strategy execution is not always easy. There are many challenges that organizations face when trying to execute their strategies.
Some of the most common challenges of strategy execution include:
Lack of alignment: Sometimes, there is a lack of alignment between the strategy and the organization’s operations. This can happen when the strategy is not communicated effectively to employees or when there is a lack of understanding of the strategy at all levels of the organization.
Lack of resources: Sometimes, organizations do not have the resources they need to execute their strategies. This can be due to financial constraints or to a lack of skilled employees.
Lack of commitment: Sometimes, employees are not committed to executing the strategy. This can happen when they do not understand the strategy or when they do not believe that it is achievable.
Change management: Strategy execution often requires change. This can be difficult for organizations, as change can be disruptive and uncomfortable.
External factors: Sometimes, external factors can make it difficult to execute a strategy. This can include things like economic downturns, regulation changes, or the introduction of new technologies.
Despite these challenges, organizations need to focus on strategy execution. By overcoming these challenges, organizations can increase their chances of achieving their goals.
Here are some tips for overcoming the challenges of strategy execution:
Communicate the strategy effectively: Make sure that everyone in the organization understands the strategy and their role in executing it.
Provide the resources needed: Make sure that the organization has the resources it needs to execute the strategy, including financial resources, skilled employees, and technology.
Get everyone committed. Make sure that everyone in the organization is committed to executing the strategy. This can be done by communicating the benefits of the strategy and by providing incentives for employees to achieve their goals.
Manage change effectively: Change management is an important part of strategy execution. Make sure that the organization has a plan for managing change and that employees are supported through the change process.
Be flexible: Be prepared to adapt the strategy as needed. The external environment is constantly changing, so it is important to adapt the strategy to meet the organization’s changing needs.
By following these tips, organizations can overcome the challenges of strategy execution and increase their chances of achieving their goals.
What is execution critical to the success of business strategy? – The Importance and Challenges of Strategy Execution.
Imagine you are the CEO of a well-established company.
For years, your strategy has been to produce high-quality appliances at lower prices than competitors. You have done exceptionally well, with your strategy leading to consistent growth throughout the years. However, recently you have realized that many young people prefer handmade furniture over manufactured products.
After consulting with industry insiders and analyzing trends in production costs, you conclude that it would be beneficial for your organization to shift its strategy toward becoming the premier supplier of inexpensive handmade furniture.
What is strategy?
Accordingly, strategy could be defined as “a plan or policy designed to achieve one’s goal.”
There are three main components of strategy –
competitive advantage,
superior performance, and
sustainability
Competitive advantage is achieved when strategy brings about a better result than competitors’ strategy. Excellent performance refers to a strategy that outperforms competitors’, while a strategy that cannot be sustained will not last over time.
Thus far, you have used low prices for manufacturing appliances as part of your strategy. This may also include marketing discounts and coupons to encourage consumers to buy your products. However, this strategy has had its drawbacks.
Although you did outsell competitors on product value initially, your price was so low that it attracted numerous budget buyers who only needed the cheapest equipment available.
These customers do not typically purchase appliances again once they break down. Your strategy has also reduced the quality of your products as you try to cut costs as much as possible. You must consider how this change will impact each strategy component to shift strategy.
What is strategy execution?
Managers use policies and procedures to turn plans into actions in strategy execution, which makes a company’s strategy operational. Corporate culture and the strategy itself frequently have an impact on these procedures.
A company needs to have clear objectives to execute its strategy. Without relevant purposes, employees may be unclear on what they should be doing or why their department exists.
This can cause multiple problems, including employees not understanding their role in the overall plan, lack of motivation due to difficulty completing strategy, lack of strategy documentation, being ignored or not implemented correctly, and unclear company strategy to employees.
For strategy execution to be successful, managers must have the ability to communicate strategy effectively throughout the organization. This is done through selling strategy in meetings and communicating via memos. It is also crucial that subordinates understand their role in strategy execution and what they should do to achieve success.
Superior Performance- The Importance and Challenges of Strategy Execution
Employees will be motivated and know what they need to do for superior performance. Strategy implementation will only occur if employees are willing and able to complete the strategy.
Thus, strategy execution can motivate employees by giving them a goal (“we want this product to outsell our competitors”) and a strategy to accomplish that goal (“we will lower prices to increase sales”).
Employees will have increased job security due to strategy. If a strategy is executed correctly, employees have a large part. They help in its success.
Sustainability- The Importance and Challenges of Strategy Execution
The factors listed above can influence strategy sustainability. If strategy execution becomes difficult, it may not last over time. For example, if strategy implementation throughout an organization is complex because of a lack of motivation among managers or subordinates, strategy can become less successful. This reduces strategy sustainability and could cause the company’s future growth plans to fail.
The shift strategy can be analyzed through strategy execution. When a strategy is implemented, it should be done to benefit the company and its employees. Employees should also see strategy as something positive rather than detrimental to their work. Implementing a strategy for better strategy sustainability can increase the chances of a strategy being met or exceeded.
For example, the appliance company may lower prices even more if sales are not growing because budget buyers make up nearly one-third of sales. This strategy would then create an opportunity for higher-quality appliances to enter the market and compete against this industry leader.
A company cannot rely on one solid strategy alone because competitors’ strategies constantly change over time. New competitors who have never been seen before based on strategy alone can come out of the blue and take over a market. Thus, strategy must change alongside competitors’ strategies to continue success in a changing market.
To conclude, strategy is essential for business; however, it must also execute strategy to meet or exceed strategy expectations. This strategy execution process occurs through policies and procedures among managers and employees in the organization.
If strategy is not operationalized throughout an organization, it cannot last long-term or achieve desired results. Therefore, managers must take time when making a strategy to convey the message effectively and ensure subordinates understand their role in strategy implementation. When done successfully, companies will experience employee motivation, strategy sustainability, and better strategic outcomes.
Execution is essential in strategy. This is because strategy without implementation has no value, and impaired performance can harm the company or organization implementing it.
There are many factors involved in making a strategy work effectively. This paper will focus on two of the strategies themselves and their execution.
Strategy refers to how a company plans to succeed in the business world, focusing on staying competitive to maintain or increase market share.
The strategy involves three components:
The first component focuses on what product lines or services the company should offer; it ensures that resources focus on product lines with higher industry growth potential.
The second component consists of assembling the strategy team- a team is built to use individual abilities to improve strategy execution.
The third strategy component focuses on strategy implementation and evaluation.
Execution is all about how a company’s strategy is executed or implemented.
Strategy execution has five stages just like strategy formulation:
Stage 1- Vision Setting;
Stage 2- Resource Alignment;
Stage 3- Goals Setting;
Stage 4 – Measurement and Control; and
Stage 5- Strategy Renewal. Each stage requires systematic and strategic planning for strategy execution to be effective.
Execution is essential when there are strategy barriers. When an organization has strategy barriers, it will not be executed effectively because it is difficult or impossible for employees to do what needs to be done. There are three strategy barriers: environmental and internal strategy and business strategy.
The environmental strategy includes forces that affect the company’s ability to create and deliver products and services in a particular industry. Some examples of these factors include trade restrictions imposed by other countries, changing tax policies by governments worldwide, etc.
Internal strategy barriers are strategy obstacles that come from within the company. These strategy barriers include negative strategy behaviors, such as employees acting in their best interests rather than thinking of the strategy.
Business strategy refers to the strategy barriers that result from factors outside of an organization’s control. Some examples of these factors include changes in consumer preferences or economic conditions.
Conclusion: What is the importance of execution in the success of a business strategy?
Strategy is important because it influences how a business is run and can lead to success. Strategy formulation involves assembling a team to help create strategies that will address opportunities and threats in the market. It also requires strategy planning, which ensures that strategy execution is effective.
Execution is essential because strategy needs to be executed to have value, not just strategy formulation. Strategy barriers need to be addressed for the strategy to work effectively.
Why Do Strategies Fail? – The Importance and Challenges of Strategy Execution
One of the most common complaints from executives of companies large and small is that their strategic plans are being broken in execution. According to a survey, an overwhelming 74 percent of executives are not confident that their company’s transformation strategy will succeed.
A recent study by Forbes Insights (FD) of 163 CEOs collaborated with the Association of Strategic Planning Councils, a public relations firm, found that one-third of corporate strategies never reach their goal.
A poor match between the strategy and the core competencies of the organization. Those involved in developing the strategy of what they need to do to succeed lack understanding.
Business owners should know how to select, prioritize, edit and delete. Too many objectives and contradictory requirements can create a situation in which there is no priority. Poor decision-making skills and strategies because people in the organization cannot recognize that strategy failure is the source.
Whether you are developing a new industry or want to help customers, you let your team and company know in any situation. Plan regular strategy meetings with your team and stick to them. Help employees see what they want and feel as part of the new strategy.
Successful strategy formulation and implementation begin with the top management’s solid and clear strategic vision. A strategic plan should focus on and encompass a manageable, clearly defined number of objectives, objectives, and programs. Adequate resources should be available to achieve the plan’s goals.
Implementing a holistic planning process that builds a realistic business direction for the future and uses effective communication channels between teams increases the chances of success in implementing your overall business strategy.
Studies show that effective communication methods enable project teams and organizations to enhance the quality and scope of business benefits and success.
Planning a comprehensive, detailed, and crystal-clear project scope for team members, stakeholders, and the entire organization will lay the foundation for the project’s success.
Despite the apparent importance of good planning and execution, few leaders focus on the processes and leadership types that can best translate strategy into results. There is little strategy literature to help companies correct their policy implementation, isolate the causes of friction, and take mitigating and corrective action.
Existing strategies often lack a deep connection with the realities of business operations, the need to discuss ideas and the resulting trade-offs must be reconciled with skills. Incongruence can lead organizations to adopt a fragmented approach to strategy development (for example, five strategic decisions to consider, stakeholders to share and conquer, and decisions to evolve).
Incoherent policies can also emanate from management teams based on beliefs that do not align with external and internal realities, leading to shortsighted perceptions, erroneous conclusions, and misguided decisions.
Strategy is approached as an entire process involving executives and expects the rest of the team to implement the strategy. Effective strategies are not planned until they are completed, and implementation begins. This existing policy approach lacks the connection with the people who will implement the strategy.
As they ponder a new strategy, leaders must think about what needs to change so their organization can pursue new goals. Before adopting the strategy, they must carefully weigh workloads, priorities, and qualifications. There are many obstacles to successfully implementing the strategy, but these obstacles can be overcome through a plan and a step-by-step approach.
It is not just about ensuring that managers at all levels have clear accountability and authority over their strategy implementation; it is also about how managers understand their role as human resources managers.
Managers must overcome resistance to change, involve potential adversaries in decision-making, take their interests seriously, and communicate the new strategy and its benefits to existing organizational cultures that could present obstacles to its implementation.
The resulting cynicism in the strategic planning process within an organization can only lead to a lack of accountability and continued clarity about corporate strategy.
While Hrebiniak believes that strategies succeed when integrated into the organization, Mankins and his colleagues argue that everyday concerns overshadow management teams’ “agendas and that management processes are the only way to draw leaders” attention to the organization’s progress.
In addition, most managers today refer to projects adapted from operational activities or one-off change management processes to implement a different strategy. If plans are not communicated to employees, they do not understand their role and how they can contribute to implementing the corporate strategy.
Suppose the leaders of established companies take a holistic perspective on strategy. In that case, they will find out which business models offer the most attractive opportunities and how they can create more value.
A solution is a holistic approach to developing a strategy that includes a coordinated selection of business models, competitive positions, and an implementation process that adapts to the changing environment and skills required to win in the long term.
Ongoing experiments, operational adjustments, and investment in underlying capabilities guide implementation methods. For your company, the result is a successful strategic plan that bears fruit.
Closing The Gap Between Strategy And Execution – The Importance and Challenges of Strategy Execution
Software systems and platforms that ensure that intelligent work is done within an organization are designed from the ground up to help create a strategy and execution culture that is accountable to the team.
Software is critical for CEOs to implement their growth strategy by ensuring that every employee in each department works as a single team, ensuring alignment and accountability.
Executives who are good at execution create operational plans coordinated at the departmental level, expect and promote excellence, hold people responsible for the results, make high-quality decisions, ensure that the right people are talking at the right time about the right things, and facilitate personal change.
A few companies have closed the gap between their strategy and its implementation. The most successful companies, often called coherent enterprises, can bridge this gap by using the unique skills that distinguish them from their peers.
To bridge the gap between strategy and implementation, your team must remain focused from start to finish and committed to the planning process. They must draw up a coherent strategic plan and stand on one side to do this. The CEO must make it through the company to close the gap between strategy and execution.
The best way to implement the strategy is to view it as more than just a direction or a plan. A business strategy should be on your decision list and drive your execution. When your business strategy is clear, it helps to identify it clearly to ensure smooth implementation.
A recent survey of more than 400 global CEOs found that implementing policies is their greatest challenge ahead of innovation, geopolitical instability, and peak growth. Given the hype surrounding a clear and convincing vision and realistic strategy, managers can’t conduct a good strategic planning process and form a team of intelligent, experienced professionals.
Under the agreement to prioritize a portfolio of projects and identify, develop and implement a strategy, managers will have a platform to evaluate and measure the implementation of the strategy.
As a result of formulating a clear strategy, many projects result from execution, which leads to successful implementation. Successful implementation of approved projects leads to indicators to determine whether the strategy has been successfully implemented.
Strategic planning is never linear, which makes execution more difficult. Bringing strategy into the loop is a practice that managers at all levels of the organization should master, leading to a discussion that reflects the four most important steps: making sense, making decisions, making things happen, and making revisions.
Policy planning must define how planning and implementation teams work To take this to the next level. Strategy implementation teams must fulfill several vital roles and build employees with proven skills in multiple areas.
When a strategy is implemented, the broad involvement of employees at all levels of the organization is required. The corporate plan must be anchored in the minds of all employees, not just the management team, to build a robust and responsible culture. It goes beyond socializing – you need input on strategy and plan before starting.
Unfortunately, most companies focus on execution rather than strategy. If a company cannot achieve 90% of its strategic objectives as defined in its annual plan, the CEO has a problem with strategic implementation. This is precisely why slow, strategically managed business growth guarantees silos and execution gaps.
A brilliant strategy, a blockbuster product, or breakthrough technology can put you on the competitive map, but solid execution will keep you there. If you have the right strategy, maximize your revenue and minimize costs. But if you follow the wrong strategy, it will cost you time and money.
Last year, a Gartner survey of strategy leaders showed that slow implementation of the strategy was the biggest challenge, with insufficient visibility and control, a short-term fire-fighting mentality, and employee fatigue during change.
Many executives do not document a three- to five-year business strategy, and CEOs do not produce updates or share the latest iterations. Almost 80% of managers said their own companies do not sufficiently understand their overall design.
The Importance and challenges of strategy execution – Conclusion
In conclusion, strategy execution can be a daunting task due to various challenges that may arise. It requires a clear plan, effective communication, and the right allocation of resources. Moreover, it demands the cooperation of everyone involved and the ability to adapt to unexpected circumstances.
However, the benefits of a successful strategy execution are immeasurable. It can increase productivity, better customer satisfaction, and a stronger competitive advantage. Therefore, despite the challenges of strategy execution, it should be approached with a positive mindset, determination, and a willingness to learn from mistakes and find solutions.
Contact FINPRO if you need assistance with the topics mentioned above.
Yossi Elmaliah, Co-Founder of FinPro, House of Finance.
+357 999 44 061
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