The importance of strategy execution
Strategy execution is hugely important to organisations – especially large and complex ones. It’s a core source of sustainable competitive advantage.
However, strategy implementation failure is common. The Strategy Execution Capability Survey run by Dr Andrew MacLennan at London Business School reveals that around 60 percent of strategy execution efforts fail to achieve all their goals.
Estimated percentage of strategies, upon attempted execution achieving:
Source: The Strategy Execution Capability Survey conducted by Dr Andrew MacLennan at London Business School
What is strategy execution?
Strategy execution is fundamentally about translating strategies into critical activities to ensure high performance. It is the glue between conceptual goals and concrete actions.
If you prefer a more formal definition, strategy execution is best described in relation to strategy itself:
- Strategy is the pattern of resource and market interactions an organisation has with its environment in order to achieve its overall objective (MacLennan, 2010).
Therefore, here’s a formal strategy execution definition:
- Strategy execution is the process of indirectly manipulating the pattern of resource and market interactions an organisation has with its environment in order to achieve its overall objective (MacLennan, 2010, emphasis added).
Strategy execution vs Change management
Crucially, strategy execution is distinct from change management. Although an equally important challenge, managing change can destroy value if it is misaligned with valid strategic intent. Many organisations have both sound strategies and efficient operations, but suffer from a disconnection between the two. Effective strategy implementation closes that gap.
Our deep expertise in strategy execution helps our clients to focus on delivering the right change.
A strategy execution framework
The point that strategy is implemented through indirect manipulations of patterns of interactions is important. Patterns of activity emerge over the (relatively) long term and and as leaders cannot attend to all activities themselves, they must create the right environment for them to occur in the right way.
The Inverted Pyramid
The diagram below is a simplified version of the Inverted Pyramid, a strategy execution framework developed through empirical research undertaken by Andrew MacLennan (MacLennan, 2010).
It illustrates the challenges that leaders face in executing strategy:
- translating strategic objectives into concrete activities
- ensuring these critical activities are actually delivered
- designing organisations to support this
- managing the performance of individuals, teams and the whole organisation