Strategy Planning versus Strategy Implementation

Strategic planning involves setting the direction of an organization. This consists of defining the mission and vision of the organization. The mission represents the organization’s reason for existing. The vision represents the direction the organization will take in the marketplace to realize its mission. Once the mission and vision are defined, strategic goals and objectives are then created. Goals suggest milestones for the organization, while objectives give specific steps to achieve these milestones in a given time period. For example, “we will increase market share of product ABC by x% in the next two years” is a valid objective.

Strategy implementation then rests mostly at the hands of middle management in the operations of the organization. While executives may guide and coach their managers to achieve goals to performance, the responsibility to accomplish their strategic objectives falls on the shoulders of management. Tactical budgets, including required resources such as personnel, capital, and technology, must reflect the specific goal milestones. Generally tactical budgets and plans reflect the fiscal year operations of the organization, further broken down by quarter and even month.

In today’s organization, strategy implementation is most effective when it is aligned to not only company but also to personal performance goals and objectives. Once tactical plans and budgets have been approved, managers can then decompose department goals into particular individual performance targets for their direct reports. This can be as part of work groups or projects with corresponding team goals (such as “complete the system planning project by February”) or individual targets (such as “complete $1 million in orders by June”). Performance should be fair and realistic to the department, the teams within the department, and individuals. Otherwise management runs the risk of not achieving department targets, impacting their own performance incentives in many cases.

For all of the great strategies proposed, none will be successful if they cannot be adequately monitored. Several monitoring approaches to strategy planning and implementation exist, notably the Balanced Scorecard approach which aligns strategic plans with results of the implementation across several resource and goal areas of the organization. Specific Key Performance Indicators aligned to strategic objectives should be defined and periodically monitored (monthly or quarterly) to ensure direction of the organization to achieve planning objectives.

Many successful organizations will yield the results of strategy implementation activities with the actual performance achieved and flow that back into forward strategy planning activities. If targets were not achieved, what were the root causes for the difficulty? Does the direction of the organization required redress? Is there a compelling event, such as a merger or acquisition, that could change the direction of the organization? Are there new innovations requiring increased market acceleration of products and services? Leveraging the results of strategy implementation to create better strategy planning in the future can separate winners from losers in the marketplace.

William Newman is the author of the forthcoming title, “Understanding SAP BusinessObjects Enterprise Performance Planning” to be available June, 2010.  He will be speaking at the SAP Insider conferences this week on corporate sustainability reporting, for more information please visit http://www.grc2010.com or http://www.newportconsgroup.com.  Twitter william_newman.

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3 Comments

Filed under Operations, Strategy

3 responses to “Strategy Planning versus Strategy Implementation

  1. Bill – nice post. In our business, we see a couple main trends in this space:

    1) The current economic conditions have caused executives to put off strategy sessions because the challenges of today are keeping them completely occupied. They lack the people, skills, tools and time to put much substance behind lofty sustainability or growth objectives.

    2) Companies cut a tremendous amount of headcount in the past two years and others lost their highest-performing resources to consulting or competitors. A main challenge that this caused was not having the right skills in the right positions to execute for results.

    3) In most companies, cost cutting took place. However, reductions in spending in certain areas of the business can trump growth, no matter how good the strategy or execution capabilities.

    A recent study by CFO.com said, “46% of the CFO’s surveyed say they have taken actions since the beginning of the recession that they believe could reduce their company’s long-term growth prospects.”

    Interesting times. All the best.
    Steve

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