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Four Fundamental Building Blocks of Strategy Execution

  Apr 15, 2016
 

Corporate Kenya is awash with failure, with both private and public sectors affected in equal measure. Kenyan companies probably have very sound strategies but still get into trouble. Of course the issue of corporate governance comes in, but a weak spot in execution can be very damaging as well. In this regard, we can infer that a brilliant strategy, blockbuster product, or breakthrough technology can put you on the competitive map, but only solid execution can keep you there. You have to be able to deliver on your strategic intent. Unfortunately, the majority of companies aren’t very good at it, by their own admission. So how come these major companies fail to execute well?
I believe there is a wrong approach to what is called execution. As the Jubilee Government was just about to release its scorecard, it made changes in its structure. One explanation given was that due to poor delivery, the Government was restructuring to ensure it delivers on its campaign promises.
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The same approach seems to take place even in the private sector. When Uchumi got into trouble, the CEO was changed and the board reconstituted. National Bank also reconstituted and restructured its management.

 

So what is strategy execution? One key understanding should be that it is the result of thousands of decisions made every day by employees acting according to the information they have, and their own self-interests.
The fundamental building blocks to strategy execution are: clarifying decision rights, designing information flows, aligning motivators and making changes to structure. Most organisations rush to structural changes — restructuring and reconstituting. Structural change can improve execution, but it’s the capstone, not the cornerstone, of any organisational strategic transformation.

 

Actions having to do with decision rights and information are about twice as effective as improvements made to the other two building blocks.

 

In the companies I have worked with that were strong on execution, 71 per cent of individuals said everyone has a good idea of the decisions and actions for which he or she is responsible. That figure drops to 32 per cent in organisations weak on execution.
On average, 77 per cent of individuals in strong-execution organisations agree that important information about the competitive environment gets to headquarters quickly, whereas only 45 per cent of those in weak-execution organisations do.

With regards to decision clarity, 71 per cent of respondents in weak-execution companies thought that decisions were being second-guessed, whereas only 45 per cent of those from strong-execution organisations felt the same way.

Lastly, 61 per cent of individuals in strong-execution organisations agree that field and line employees have the information they need to understand the bottom-line impact of their decisions. This figure plummets to 28 per cent in weak-execution organisations.

Thus, to succeed in your execution, structure comes last, but before that, ensure you put in a place a culture where the four building blocks that managers can use to improve strategy execution are in place.



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