The gap between strategy coming from the boardroom and actual execution is still too wide.
The only three causes of the gap are Fear, Habits and Ignorance.
- We are not inclusive in our planning because we fear being vulnerable, or that we may be challenged, or misunderstood.
- We forget that every worthwhile decision causes a change. We aren't yet good at change, because we aren't yet good at changing our habits.
- We don't really understand how to get from strategy planning to actual execution, because they are done by different people who don’t communicate effectively with each other.
To get desired outcomes or results from boardroom decisions we need to:
- Include the leaders of the implementation and execution teams, those who pass on strategy implementation requirements, and the direct leaders of the people doing the actual work. Otherwise we play Chinese whispers. With expert external facilitators and correct technology the participant numbers can easily be increased.
- Have a thorough consistent clear and timely communication plan to ensure there is a seamless flow between strategy and execution.
- Ensure that the people are well prepared and supported during the changes needed, to ensure the new becomes habitual.
- Be outcomes/results focused rather than prescribed actions focused.
With clarity and agreement between the thinkers and the doers the outcomes have the best chance of being achieved.
A Case Study
The board of the civil engineering company had determined that the company needed to expand its service offering to the mining sector after two decades in the residential and commercial property infrastructure development.
They had the CEO join them in the strategy planning session which took place in late December.
It was determined that they would prepare the company over the following six months and commence marketing and tendering in the new financial year.
By the following December they had not succeeded in winning any tenders and their marketing efforts had scored a zero return on investment.
The only activity was a small private gold mine development that the CEO had secured from his network. The project completed at a little more than break even.
In reviewing the situation, the board was motivated to bring in an external facilitator, mainly because the company was now experiencing internal tensions over the new strategy.
The facilitator advised the board to include the key implementers and key line leaders of the workforce. Some of the directors resisted saying it wasn’t necessary to have them. The chairwoman vetoed their resistance. The c-level executives, the corporate implementers, business development lead and the workforce superintendents all attended.
The review revealed the following issues:
- The business development team was not confident about the workforce capability – there was little exchange of information about readiness and competence. This had stunted their marketing efforts.
- The workforce weren’t prepared to efficiently undertake the gold project due to its remoteness and consequently the costs had blown out.
- The tendering team was insufficiently prepared to submit competitive quotes to the bigger market.
- There was conflicting information about the level of commitment to the new direction and the CFO had been reluctant to recommend the extra funding for skills and logistics development to cope with the new requirements.
- Overall there was insufficient confidence and expertise to enter the mining market at that time.
That review took a half day, after which the board alone had another half day meeting led by the facilitator, now reviewing their role in the outcome.
They agreed on the following:
- The board had not followed through with sufficient oversight and mentoring to the executive, consequently causing the lack of communication needed to ensure the drive and commitment to invest more in the initiative.
- The board needed to have included the wider leadership during the original strategy planning to create the shared knowledge of the strategy and the sense of ownership and commitment amongst the executive and workforce.
- The board had not seen that the culture, including traditional silos, needed to open up and be more collaborative.
- There was no effective corporate communication plan.
- There had been insufficient investment in both preparation and marketing, caused by the lack of confidence and perceptions about commitment, because the board had failed to mentor and support the key people.
The following day was devoted to a facilitated meeting with all the key stakeholders mentioned earlier to devise a strategy that would rectify the situation.
They decided to deliver these outcomes:
- A communication practice that would ensure effective multi-directional timely accurate information to all parts of the business.
- The business development unit required improved relationships with the tendering team and workforce as well as deepening contact with the market.
- The tendering process required more mining expertise and closer collaboration with the workforce teams.
- The workforce required additional development and mining expertise.
- The above was supported by an increase in funding and a commitment by the directors to mentor and support the key leaders.
- The target results were to secure three significant mining projects over the next twelve months whilst growing their position in the traditional market.
- Any restructuring was to be within the increased budgeting and to deliver the results.
- The return on investment was to be measured as an ongoing management process.
At the end of the period the company had secured four significant projects, albeit two were within one client but in separate locations. The company had a 28% increase in EBITDA for the period, exceeding the target by 8%. The return on investment was 14%.
The company has since sold off its mining division at a significant profit and chosen to refocus on the traditional market. Beyond the profit the best benefit was the enlivening of the culture and the improved collaboration between business units.
Conclusion
New strategy is always risky. The risks can be mitigated by better board and stakeholder interaction, effective communication and focus on results. The blocks are always going to be fear, habits and ignorance.
What can you do to ensure the blocks are removed?
