Strategic Planning Implementation
Background:
Developing a strategy is important but a strategy is only effective when it is implemented. If your
company struggles with implementation you are not alone. Below are two studies that show that
the majority of companies struggle with strategy implementation:
Study 1: Fortune Magazine conducted a study that analyzed 10 CEOs who failed
and found that the reason for their respective failure was not the lack of a
strategic plan. The study found that 70% of CEOs failed due to poor
implementation.1
Study 2: Times 1000 conducted a study of 200 companies and found that only
14% of these companies‟ management thought strategy implementation was
going well, and only 33% reported achieving „significant strategic success‟.2
For this reason some have said: “Better a poor plan well executed, than a great plan
poorly executed.”
Cathedral‟s prior Topics of the Months cover many of the facets for developing a
strategic plan. Here we want to consider the implementation of the plan for the next
several years. We are assuming that a three to five year plan has been done based on
the market positioning discussed in the prior month and that the plan has been put into a
financial model showing the financial statement implications of the plan for each year.
Steps for Strategy Implementation:
The following steps frame an implementation process:
1. The plan is communicated to the key members of the company
2. The first year of the financial plan forms the budget for the next year.
3. The measurement system or key performance indicators are aligned to the strategy.
4. The changes needing to be made to effectuate the implementation of the plan are
undertaken expeditiously.
This order of the steps is rather inconsistent with many of the published concepts for
strategy implementation. The reason for the above alignment is that the smaller
___________________________________________
1
Charan, Ram, and Geoffrey Colvin. "Why CEOs Fail It's Rarely for Lack of Smarts or Vision. Most Unsuccessful CEOs Stumble
Because of One Simple, Fatal Shortcoming." Fortune. 21 June 1999. Web. Sept. 2011.
http://money.cnn.com/magazines/fortune/fortune_archive/1999/06/21/261696/index.htm
2
Cobbold, Ian, and Gavin Lawrie. Why Do Only One Third of UK Companies Realise Significant Strategic Success? Working paper.
2GC Limited, May 2001. Web. Sept. 2011. < http://www.2gc.co.uk/pdf/2GC-WP-UKCoStratSuc-090311.pdf >.
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company has limited resources and thus needs to minimize radical changes while building good
management into the company‟s systems.
Communication of the Plan:
The key members of the company may or may not be part of the development of the company‟s
strategic plan. However, it is clear that all members of the company must know both the plan
and their role in achieving the plan. How far down in a company should the plan communication
go? What level of detail should a communication have? What level of buy–in is required?
These are some of the questions that strategists worry about. For the smaller company, the
answer is relatively easy.
In a small company, everyone should know the key components of a company‟s plan. What
level of detail they should know is generally answered by their need to know. Each member of
the company will function much better if they have a working knowledge of the overall plan, then
each person can identify his part of the plan. For example, a staff member does not need to
know about the cash balances of the company to do their staff level tasks, but she does need to
know the client service strategy and what makes the company different. What level of buy-in
they need to have is answered by the fact that smaller companies are owner operated. All
teams work better when each player knows his role and believes his coach is wise and
watching. In effect the communication has to come with a level of assignment and
accountability for delivery.
Regular management meetings are part of running any organization well. In a management
meeting the key points of the strategy need to be systematically reviewed. Good leaders have
found that opening each meeting with a recap of the strategy or its key points creates
momentum in both understanding and buy-in. Too often management adopts the view that
“We‟ve said this before.” Yet, often, there are new members in a company who were not there
for management‟s initial strategic plan communication, or the members have forgotten, or the
members did not really understand when it was presented.
The Budget Process:
November is the budget month in Cathedral‟s calendar year. By having the strategic plan‟s
financial model built out for the next three years, year one then becomes the target for the
budget. Aligning the budget process with strategy makes the budget process easier. The
budget becomes a measure of top down process and forces out any issues that will get in the
way of achieving the budget or the strategic plan. Each member of the company with
management responsibility can identify what has to change to make the budget and the strategy
happen. Thus a measure of strategy implementation is automatic.
The Measurement:
As we discussed in our Topic of the Month on Key Performance Indicators, measurement does
create behavior. Therefore, in the budget process, those items that need to be changed or
improved should be evaluated for measurement, and thereby management. The use of a
dashboard is particularly helpful in reinforcing the measurement/management changes that
good implementation requires.
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Making Needed Changes:
By now the operational changes needing to be made are naturally indentified. The challenge is
to make the changes expeditiously. The company needs to avoid the 1990‟s concept that the
only constant is change. People, customers, and suppliers all look for stability and
predictability. Stability does not indicate zero change, but does mean that change is made by a
plan that is known and understood. Strategy, when well implemented, allows systematic
responses to the market and internal system needs while the company environment seems well
operated.
Cathedral‟s view is that strategy, well implemented, allows for operational changes to be done
smoothly to the point that the members of the company and its clients do not notice the strategic
changes. Annually reviewing a three year strategic plan creates a management style where
needed changes in business allow for small changes rather than radical and disruptive changes.
A final observation is needed on making changes. Events in the market can disrupt the strategy
during any year. When the market changes cause the strategy tone to be modified, the blessing
of being a smaller company shines forth. Small companies can change quickly. Small
companies must change quickly, because of limited capital. Therefore, a strategy cannot be
viewed as a fixed plan, but a road map where the changes in the road lead to changes in the
operations.
Actions:
1. Complete a full strategic plan, including a full financial model.
2. Look at the first year of your financial model and its ability to be a budget for next year.
3. Arrange a key management meeting to discuss the strategy and its implementation in
the next year.
4. Identify changes in operations that are needed and the actions to make the change.
5. Review or develop the management tools or a dash board to monitor the results of your
strategic planning.
Philip Clements is CEO of Cathedral Consulting Group, LLC and a Managing Director in the
New York Office. Elizabeth Christenson is a former Intern Associate in the New York Office.
For more information, please visit Cathedral Consulting Group LLC online at
www.cathedralconsulting.com or contact us at info@cathedralconsulting.com.
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