Implementing Strategy

Reiterating the importance of execution in implementing strategy. Here are 5 keys to getting the job done.

Develop a model for execution.

Strategic yardsticks are plentiful. Michael Porter's theory of comparative advantage, for instance, gives strategists a way to conceptualize market leadership goals. In the evaluation of narrower plans, William Sharpe's capital asset pricing model, or more recent schema such as real options theory, can play a similar role. But when it comes to managing change, there are few such guidelines.

It's important for managers to have a model identifying the critical variables that define -- at least for the manager -- the things they have to worry about when they put together an implementation plan. Without that, managers will say something like, 'We just hand the ball off to someone and let them run with it,' and that's the execution plan. That isn't going to go anywhere.

Choose the right metrics. 

While sales and market share are always going to be the dominant metrics of business, more and more of the best companies are choosing metrics that help them evaluate not only their financial performance, but whether a plan is succeeding. For example, when a large cable company realized that the speed at which it penetrated a new market correlated directly with the number of service representatives it had in the field, executives began tracking the progress of how quickly representatives were being added in particular territories.

It’s important to choose metrics in a package so that they can change if market conditions change. For example, sales of cars might be a good metric for a car manufacturer, but if interest rates rise, sales will likely suffer. A good set of metrics takes that into account.

Don't forget the plan. 

As noted above, plans are often simply agreed to and then forgotten. One way to keep the plan on center stage is to separate executive meetings about operations from those focused on strategy. Strategy only succeeds when it is integrated into operations, but day-to-day concerns often so overwhelm the executive team that such an agenda management process is the only way to keep executive attention focused on the organization's progress. 

 Assess performance frequently.

Performance monitoring is still an annual affair at most companies. However, plan assessments at many of the leading companies happen at much more frequent intervals than they did in the past. The reason why Wal-Mart is so good at execution is it knows daily if what it is doing in each of its stores gets results or not. For example, when Wal-Mart learned this year that its Christmas sales strategy hadn't worked just eight days after the close of the season, it was able to mitigate the damage in a way it wouldn't have if results had been slower in coming. By shortening the performance monitoring cycle -- from quarter-by-quarter to month-by-month or week-by-week -- top management can get more "real-time" feedback on the quality of execution down the line.  

Communicate. 

Companies often go wrong by creating a cultural distinction between the executives who design a strategy and people lower down in the corporate hierarchy who carry it out. Asking ongoing questions about the status of a plan is a good way to ensure that it will continue to be a priority.