The Strategy Execution Duality

Execution has enjoyed an impressive reputation in the last few years under the banner that any strategy is worthless if not executed. While this assertion is tautologically undeniable, it is also true that a flawed strategy execution can have unappealing consequences. New Coke or the Betamax video format come to mind.

From Detachment to Duality

One of the best known proponents of the execution point of view is Larry Bossidy, author of the bestselling book Execution: The Discipline of Getting Things Done, with the basic premise that “Strategies most often fail because they aren’t well executed.” He sees strategy & execution as two separate processes.

Bossidy’s view was criticized by Roger Martin, who claimed that separating strategy from execution can be damaging. In an HBR article (The Execution Trap), Martin advances the idea of “Strategy as a Choice Cascade” where choices flow from top to bottom on a set of rapids each representing a choice point.

In his own example, the CEO’s decision to invest heavily in the U.S. retail banking industry, prompts the President to ponder winning strategies to win in U.S. retail banking. By choosing superior customer service, the President challenges the EVP of branch operations to review customer service capabilities and, in this example, going for easing customer interaction and triggering the Branch Manager to develop an approach for hiring and training CSR who in turn ponder how to ease customer service on specific cases.

Martin’s cascade metaphor bridges the strategy-execution gap by empowering employees at all levels of the organization to implement their own local strategy within the constraints of their immediate upper level, turning it into a more organic process. The advantage of this approach is that employees become participants in the strategic process, developing a sense of ownership, contributing their own expertise and knowledge of the local environment.

While there is feedback built at every choice point, there is not an explicit upward communication mechanism in Martin’s model that allows the CEO to evaluate the effectiveness of the strategy at each level. As long as the top level strategy is appropriate and noise through the system is mild enough to not interfere with the chain of messages, the organic mechanism should be effective.

However, in many cases, strategies generated at given choice points – including the top level – can produce perverse results. In Martin’s example it is easy to imagine a scenario where the strategy to grow presence in the U.S. retail banking industry is realized at the cost of declining stock performance. An outcome hardly identified with success. Points of failure can be found anywhere from the top level strategy – the US market might not support a new entrant – to any choice point in the cascade such as an inefficient funding strategy or flawed marketing campaign.

Closing the Loop on Strategy Execution

A solution is to equip this organic strategy with a feedback loop that conveys information upward to be proactively analyzed from any given decision point. The first step in building such a loop is to define a measure of the strategy’s ultimate goal. In Martin’s example the stated top strategy execution is to invest in the U.S. retail market, but the ultimate goal is presumably aligned to value as represented by ROI for example.

The next step is to define metrics for the next level down that support ROI. Ideally, the corresponding set of metrics can be mathematically linked to ROI, but indirect links can work as well. The idea is that the cascading strategies and its metrics should drive our ultimate goal. If ROI is not increasing as expected, management should proactively look at downstream strategies and metrics to identify opportunities, and to understand underlying relationships. This process should be replicated at each decision point.

Furthermore, the construct helps continuously test the validity of the assumptions and metrics at each level. Say that ROI is on the rise, but at some decision point everything looks grim. Before trying to “improve” the local process, the system’s internal logic calls to question the relationship of the local strategy to the ultimate goal and the soundness of its metrics and assumed relationships. It might not be necessary to fix the process at all, but simply to choose better metrics. A similar logic applies to a strategy that is failing to deliver while the underlying components seem to be working fine. We need to review and revise a few assumptions, including missing intermediate strategies along with their network effects.

The cascading approach provides an organic means to develop and execute strategy. The feedback loop allows management to continuously learn and adapt. The purpose of the system goes well beyond accountability, it is about collectively reaching a well-defined goal and everything is on the table.

About the author: Jorge Zazueta helps leaders solve business problems and achieve sustained performance improvement. He does so by partnering with the business and embracing its goals as his own.Before founding Zazueta & Company, Jorge Zazueta spent two years as a Principal in CSC’s Strategic Services Group and five years with IBM Global Business Services with their Strategy and Transformation Group; seven years with Cummins, Inc. in Columbus, Indiana; along with brief stints with Cooper Standard Automotive in Auburn and ThyssenKrupp Mexinox in Mexico. He is well trained in business process improvement methodologies, including Six Sigma.Jorge achieved both an MBA and an M.S.S.M. from the Kelley School of Business at Indiana University in Bloomington, and an MA in Mathematics from the University of North Carolina in Wilmington.

View Jorge’s short bio

In the day of the simple country store, business intelligence was comprised of knowing what was “in stock,” what was “out of stock,” what it cost to replenish and how much turnover was in a given period. Today, retailers capture how long a product is on a specific shelf and does it sell better here or there – in which season and at what price and it was sold to whom.

Every competitive business recognizes the power in knowledge. The definition of “knowledge” is both subjective and obscure. All too often, a business is unable to succinctly express what information it wants and what it will do with this information. Many earnest efforts are made to develop effective data reporting resources. The most common mistakes are costly, time consuming and wasteful.

Taking the path less traveled can seem daunting and treacherous – when it comes to business intelligence, it can often be the right one

Because different companies have various needs and goals, a business intelligence system will differ from one company to another. Classic business intelligence is merely a reporting tool for historical performance. Effective analytics and data mining can establish a series of “knowns” and expectations from a series of influencing data points to provide a trending forecast that can lend a few potential outcomes with which managers can make decisions. Much like how a meteorologist relies on readings of barometric pressure; wind speed and direction at different altitudes in conjunction with high and low pressure areas, next week’s weather can be predicted better than relying on whether someone’s arthritic knee is throbbing in pain.

It is common to build reports comprised of disparate data points from functional islands reported separately and conclusions are drawn manually. Without a predefined plan, business intelligence can cause managers to react and the overall enterprise can appear rudderless. Managers struggle with the truth but business intelligence isn’t intended to be there to endorse the business’s decisions or validate a specific strategy but to provide sensitivity to how things are progressing against goals and targets– and provide alerts if the targets and goals are slipping away – and most importantly, provide insights into which dials to turn that will get everything back on track.

The most common tool managers rely on as business intelligence resources are simple Excel spreadsheets. As a platform for business intelligence, Excel spreadsheets are inherently flawed. The manual entry nature of most Excel spreadsheets simply means that, on average 7-11% of the data in a spreadsheet is an error. In addition, as exposed by most Sarbanes Oxley audits and security penetration tests, spreadsheets rarely have adequate security, protection and process compliance to ensure the integrity of the data. For example, sales people who aren’t likely to make their sales figure for a period are readily there to change data points that reset their expected sales but the changes are rarely reflected in all relevant data.

Additionally, spreadsheets are portable. This means that there will be numerous versions and even more copies of versions floating around inside and outside of an organization. Those on laptops, tablets and flash drives are the most commonly found to wind up in the wrong hands.

The fact is, it isn’t about the data but it is in planning for how to use the data to create knowledge an organization can act on. For many organizations developing business intelligence, they work to define what data they want, but this is only a small first step – not the end. Assessing, first, how an organization will act with what information is the first real step in assessing the genuine use of business intelligence. Figuratively, as if you are planning a trip, establish your destination objective and plot the most desirable route to your current location. Next, establish an honest gap analysis and assessment of the resources, effort and commitment required to move from where the organization is to where it needs to be. This is a very critical step since a swimmer doesn’t set their destination goal to be half way across a lake.

Establish how decisions are made before deciding what data you want and when

Decisions are, typically, a result of cascading inputs. Analytical systems see this as “if this– then.” Experienced managers use a great deal of information to make decisions. Not all the information is in the same place, in the same applications, in the same form or even in the same functional departments. Inherently, experienced managers gather data points from here and there and the outcome helps guide their actions. Effective business intelligence delivers the collective “reasoning” derived from the existing data points to empower managers to make the best decisions based on all the relevant information available.

Be sensitive to certain realities. In developing effective business intelligence resources, remember that 60% to 80% of the real end users are going to be non-technical. In addition, recognize that what is available is too much for too few. To serve the needs in a separate and compartment alized way will hamper the ability for the organization to operate with a genuine real time dashboard. The components should seam lessly aggregate to a collective overview as easily as it would be to take a snapshot of relevant information in a defined smaller “ecosystem.” While it seems obvious, too few business intelligence systems create a picture that easily delivers the sum of its parts as a refined presentation of results.

Process “Best Practices” call for defined and communicated workflows – complete with interdependencies and relationships exposed. Best practices in business intelligence require the same discipline be applied to the flow, importance and dependency on data throughout the enterprise. A great of data will be discovered to be historically relevant but serve little purpose in overall strategic decision making. Users likely defined the need by stating how that data point has always been a metric watched but few can say why it is relevant any longer.

A business intelligence system can therefore be customized to answer the particular needs of a particular company. The tools and necessary resources can be designed in such a way that it features the company’s unique performance indicators and measurements. This way the business intelligence system will help determine if the company’s strategies and plans are compatible with their goals. This is an important part of the assessment process because it is at this stage that the company’s current status and position is analyzed to determine how it is going to fare in the next few years to come.

To ascertain if your organization is ready for business intelligence, explore how your situation stacks up.

Senior Executive Commitment

• Sponsorship to drive the establishment and reliance on a solid business intelligence strategy is more important that the requirements, design and development stages. Is it being woven into the culture? Are groups likely to feign support? – submit requirements but maintain their own particular reporting tools outside the business intelligence infrastructure?

Well defined short and long term goals

• Is the organization ready to do a genuine assessment on setting, documenting, communicating and steering based on short and long term goals? Are all oars in the water pulling in the same direction and cadence?
• Establish key performance indicators KPIs – as mile markers toward 3-5 year enterprise The foundation of a successful Business Intelligence Competency Center is critical.
• The driving inspiration behind a BICC is (and should remain) a service It isn’t about the IT department– developing and maintaining an application.

Service orientation – for example – good ones implement a classic help desk tracking system to ensure users receive the highest level of support

• Keep as a mantra – Be an adaptive, responsive and proactive resource.
• BICC metrics established in the planning phases – keep an eye on the target.
• Experienced staff with the service mentality to support the functional areas.
• Measured benefits linked to the incentives for a service oriented organization.
• Manage the content to relate to the end user needs.
• Continuous training– for BICC staff and users– with a focus on continuous improvement.

From a technical aspect, Business Intelligence benefits can be derived from the following approaches

• Use of Data Marts that automatically   propagate spreadsheets   in a central work space.
• Locating historical data – collection tools – actions expected- migration of data to a single source for analytics.
• Knowing how to work from unstructured data to deliver a comprehensive executive performance dashboard.
• From the start, establish a regular and natural approach to data cleansing and processes to ensure integrity, security and optimization…as a continuous effort instead of on a project basis.

Start with solid vendor management policies – don’t let vendors drive the strategy and outcome

• Data integration, reports, analytics and performance management tools – being able to buy as modules – when ready.
• Training – feedback loops – development resources for special needs adhoc access

A good business intelligence platform must have:

• Traceability – transparency – meta data integration – compliance with governance and regulatory requirements.
• Ease of adoption by functional areas- relevant– ready to use logical and physical data models, data integration processes, analytical models and a series of cascading standard reports.
• Benchmarks – industry performance –competitor intelligence – market research.
• Solid business intelligence reporting will deliver more than ROI, customer churn, costs of goods sold or other classic metrics, real business intelligence can help to show what combination of offers or promotions have the most impact on aggregate gross margin For example, which bundle of services at what price points deliver the highest profitable ARPU from which segment of mobile customers?

Business Intelligence is not immune to what haunts most other major enterprise initiatives

An organization gets out of Business Intelligence what is willing to put into it. Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) are just two classic initiatives that experience a 60% to 70% failure rate to complete and/or fully implement. Many senior executives have disparaging things to say about what they got against what they expected and, in almost every instance, it is easy to find where the commitment waned and the effort simply became too difficult to do well.

To relate the effort to how we think:

Business intelligence is less like a diet and more like a commitment to a complete change in lifestyle. Are you really ready?

About the author: Joe Orlando

Global Technology Executive with strong business and financial acumen. Strong ability to link marketing strategy and results directly to overall business strategy and company financial goals. Keen abilities to develop strategy from in-depth analysis of buyer and/or customer insights. Documented program development skills, from advertising to digital presence across all relevant marketing channels. Possesses excellent influencing skills and able to drive consensus. Able to recognize and articulate a future direction; provide strategic direction, and have the ability to direct global and localized products, brand, advertising and related specialties while managing budgets. A strong track record of new product development and demonstrated ability to forge strategic alliances with key partners. Accustomed to driving results and delivering return on investment. View Joe’s short bio