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Execution of the Strategy Plan

September 20, 2011

This document intends to share author’s learning, ideas and personal reflection on the topic. If you intend to quote or replicate any part of this presentation, acknowledgement of this document and other authors cited in this document as your sources would be greatly appreciated

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Out of 197 companies surveyed, none met their multi-year projections

0%

5%

10%

15%

20%

25%

30%

2000 2001 2002 2003 2004 2005 2006

Pe

rfo

rma

nc

e (

Re

turn

on

ca

pit

al)

Plan 2001

Plan 2002

Plan 2003 Plan 2004 Plan 2005

Source: Crafting and Executing Strategy, Thomson, Strickland III, Gamble

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More than 1/3 of companies surveyed placed their performance realization at less than 50%

Companies typically realize only about 60% of their strategies’ potential value because of defects and breakdowns in planning and execution

– Michael Mankins and Richard Steele, Marakon Associates

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Session objective

• To outline key factors that enable a well-executed strategy

• To identify key areas that HR can really help the organization perform at their best

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Table of content

• What is a strategic plan

• How to translate a strategic plan into action plan?

• What is HR’s (your) role?

• Key takeaways

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What is a strategic plan and why do we need it?

• What is a strategic plan?– A long-term business plan that outlines its vision, purpose and goals for

a finite period of time – typically 3 – 5 years– A roadmap for the organization so to achieve its vision, fulfill its purpose

alongside with meeting financial goals and shareholder requirement

• Why do we need it?– Provide its stakeholders with a clear direction of growth– Enable trade-offs, resource allocation and decision making on day to

day activities and investment– Provide a set of criteria and framework around which the appropriate

new opportunities can be identified for pursuit

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What is good strategy versus a well-executed strategy?

• What is a good strategy?– Creates uniqueness, differentiation for customers that is hard to emulate– Creates value for not only the customers and shareholders but key

stakeholders (suppliers, community, government etc)– Leverages one’s strengths to exploit opportunities and mitigate threats

and enables the organization to learn and progress through optimization of resources

• What is a well-executed strategy– Strategy is understood by the entire organization and aligned with

everyone’s objectives with measurable outcomes– Functions and business units are aligned and work collaboratively– Results are reviewed and courses are adjusted accordingly to achieve

the objectives– Outcomes are delivered

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The strategy-making and strategy-executing process is neither a linear process nor annual process

Developing a strategic vision

Setting Objectives

Creating a strategy to achieve the objectives and vision

Implementing & executing the strategy

Monitoring development, evaluating performance & making corrective adjustments

Revise as needed in light of actual performance, changing conditions, new opportunities and new ideas

Source: Crafting & Executing Strategy (Book)- Thomson, Strickland and Gamble p.20

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A second-rate strategy perfectly executed will beat a first-rate strategy poorly executed

Richard M. Kovacevich, Chairman and CEO Wells Fargo

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Table of content

• What is a strategic plan

• How to translate a strategic plan into action plan?

• What is HR’s (your) role?

• Key takeaways

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The eight components of strategy execution process

The action agenda for implementing and executing strategyWhat to change or improveHow to get it done?

Building an organization with the competencies, capabilities, and resource strengths to execute strategy successfully

Marshalling resource behind the drive for good strategy execution

Instituting policies and procedures that facilitate strategy execution

Adopting best practices and striving for continuous improvement

Installing information and operating systems that enable company personnel to carry out their strategic roles proficiently

Tying rewards and incentives directly to the achievement of strategic and financial targets

Instilling a corporate culture that promotes good strategy execution

Exercising strong leadership to drive execution forward and attain operating excellence

Source: Crafting and Executing Strategy, Thomson, Strickland III, Gamble p. 362

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Where the performance goes??

Average realized performance

62%

inadequate performance monitoring

3%

poor senior leadership

3%

inadequate consequences or

redraws for failture or success

3%

organizational silos and culture

blocking execution4%

uncommited leadership

2%

unapproved strategy1% other obstacles

(including inadequate skills & capabilities)

1%

unclear accountability for

execution4%

actions required to execute not clearly

defined5%

poorly communicated

strategy5%

inadequate or unavailable resources

7%Source: Crafting and Executing Strategy, Thomson, Strickland III, Gamble

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Table of content

• What is a strategic plan

• How to translate a strategic plan into action plan?

• What is HR’s (your) role?

• Key takeaways

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• Gaps

• Possible role / actions

• What is required? Ease of implementation ? Timing

• How do you know you are successful

Let’s think about your role…

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Let’s think about your role…Gaps Possible role Ease of implementation / What is

required / TimingHow do you know you are successful?

Inadequate resources

For human resources – identify talent and skill set pools; help prioritize current resources allocation to strategic priorities; identify gap and build a plan to recruit, outsource to close the gap

Use current talent review session to match people with strategic prioritiesIdentify gaps – and build a recruitment / outsource plan for 2012 in the next 3 monthsNot all gaps will be close – short-term outsource ; long-term need to decide the appropriate model

Relevance of strategy to functional activities unclear

Be the coach and facilitator between strategy / planning and employee groups that help use their language to translate strategy into meaningful actions

Map out key employee groups (levels or functions) – 2 weeksSchedule workshops to translate strategy into people’s objectives and actions (objective to ensure everyone understands what they need to do in their own language and is aligned) – 2 months

Everyone has an MBOPart of annual employee Survey – clarity of roles and responsibilities

Organizational silos and resistance to change – suboptimal outcome

Work with senior executives to drive employee communication on company direction and morale;Develop a culture of collaboration – help drive employee events that break down siloesRevisit incentive system that is not individual based

Create a series of corporate events that highlight corporate values and have competition to encourage employees to submitWork wit h senior leadership to coach them to drive change top downLong-term review incentive system

Part of the annual employee survey

• Putting together a strong management team• Recruiting and retaining talented employees

Staffing the organization

• Developing a set of competencies and capabilities suited to the current strategy

• Updating and revising this set as external conditions and strategy change

• Training retraining employees as needed to maintain skills-based competencies

Building Core Competencies and

Competitive Capabilities

• Instituting organizational arrangements that facilitate good strategy execution

• Deciding how much decision-making authority to push down to lower-level managers and front line employees

Matching the Organization Structure

to Strategy

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Three components of Building an Organization Capable of Proficient Strategy Execution

Source: Crafting and Executing Strategy, Thomson, Strickland III, Gamble p. 364

Decide which value chain activities to perform internally and which ones to outsource

Make internally performed strategy –critical activities the main building blocks in the organization structure

Decide how much authority to centralize at the top and how much to delegate to down-the-line managers and employees

Provide for cross-unit coordination

Provide for the necessary collaboration with suppliers and strategic allies

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Structuring the Work Effort to Promote Successful Strategy Execution

Source: Crafting and Executing Strategy, Thomson, Strickland III, Gamble p. 374

Trends - Five tools of organizational design

• Managers and workers empowered to act on their own judgments

• Work process redesign (streamline)• Self-directed work teams• Rapid incorporation of Internet technology

applications • Networking with outsiders to improve existing

organizational capabilities and create new ones.

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Source: Crafting and Executing Strategy, Thomson, Strickland III, Gamble p. 384

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Table of content

• What is a strategic plan

• How to translate a strategic plan into action plan?

• What is HR’s (your) role?

• Key takeaways

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• Leadership

• Communication

• Clarity, simplicity and relevance

• Accountability and performance management

• Measurement

Building an organization that executes well takes time

• Coach

• Relentless communicator

• Facilitator with an understanding employees’ levels, roles and needs

• Performance management & coach; Incentives system designer

• Monitor of key people measurements and linkages with performance

Key success factors Role

Baby steps – pick a few key tasks and do them well