Sunday, October 21, 2018

Strategy Execution as a Decision-Making Process

Strategy Execution as a Decision-Making Process
In my last article, I wrote about what strategy is, and what not. And although strategy is important, it is pretty much worthless without execution. So what is strategy execution?

Strategy Execution as a Process

The most notable book to date on strategy execution is “Execution: The Discipline of Getting Things Done”, by Larry Bossidy and Ram Charan. Bossidy, a retired CEO, and Charan, a renowned management consultant, make the case for execution as a discipline or “systematic way of exposing reality and acting on it.”  They explain that “the heart of execution lies in three core processes":

1)  People
2)  Strategy
3)  Operations

They explain the processes and descriptions managers use to successfully drive business results.

Strategy Execution as a System

The information presented in the aforementioned book is certainly useful, but the authors don’t fully explain how an organization can implement their three core processes to achieve strategy success. There have been significant advancements in this area since Execution was published in 2002.  In 2008, Harvard Business School Professor Robert S. Kaplan and his Palladium Group colleague David P. Norton wrote "The Execution Premium: Linking Strategy to Operations for Competitive Advantage". In it they present their management system, which houses six sequential stages intended to help organizations capture what they call an “execution premium”—a measurable increase in value derived from successful strategy execution. They outline six stages in this system:

1) Develop the strategy
2) Plan the strategy
3) Align the organization
4) Plan operations
5) Monitor and learn
6) Test and adapt

Through detailed subactivities—26 in total— Kaplan and Norton explain how organizations have successfully executed strategy via application of their management system.

Strategy Execution as a Decision-Making Process 

Both of the models outlined above are important and anyone serious about the practice of strategy execution should be familiar with them. But both are not focusing what is the most important in my opinion. The one definition that sofar resonates most with me is the one of Jeroen de Flander. His explanation of strategy execution starts with a famous Mintzberg quote.

“Strategy is a pattern in a stream of decisions.” - Henry Mintzberg            

First, there’s the overall decision—the big choice—that guides all other decisions. To make a big choice, we need to decide who we focus on—our target client segment—and we need to decide how we offer unique value to the customers in our chosen segment. That’s basic business strategy stuff.

But by formulating it this way, it helps us to better understand the second part, the day-to-day decisions—the small choices—that get us closer to the finish line. When these small choices are in line with the big choice, you get a Mintzberg Pattern. So if strategy is a decision pattern, strategy execution is enabling people to create a decision pattern. In other words:

“Strategy execution is helping people make small choices in line with a big choice.” - Jeroen Flanders

This notion requires a big shift in the way we typically think about execution. Looking at strategy execution, we should imagine a decision tree rather than an action plan. Decisions patterns are at the core of successful strategy journeys, not to-do lists.

To improve the strategy implementation quality, we should shift our energy from asking people to make action plans to help them make better decisions.

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