You’re reading a blog series based on the book “Strategy Acceleration” written by Ulf Arnetz and Catrin Brodin. The book was developed for everyone that wants to learn how to execute and realize company strategy. Is that you? Then you should continue reading.
We know that way too many companies fail with their strategy execution. The reason? A traditional approach to strategy execution. To understand how not to fall into the same trap we’re exploring the difference between traditional strategy execution and strategy acceleration. In the previous post, we covered aspects of Time. Now, we will compare how goals are set in the different methods.
To describe how traditional strategy execution is different from strategy acceleration we have chosen to compare them. We will share a number of factors that we see are contributing reasons why so many companies are unable to carry out their strategies within the organization. We will highlight what needs to be done differently, because in order to succeed you have to act differently and challenge ingrained opinions about what is possible. Below, we will look at two examples where we describe how things often are done in the traditional strategy execution, and in the other example, we describe strategy acceleration.
Don’t be put down if you recognize yourself in the traditional strategy execution. That is a good thing. That means you will understand the significant difference between these two approaches to work. Then, it is up to you how you chose to work in the future. Our guess is that you’ll change your view on strategy completely!
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Traditional strategy execution – we do too much at the same time
This is what a fairly normal strategy plan looks like. Management defines a number of strategic areas — it is not unusual for companies to have 10-15 of them. Each area has a number of activities linked to it. The activities are supposed to move the whole company towards the goal step by step, but this is rarely the case in practice. There is rarely anything wrong with the choice of activities nor areas—the problem is rather that there are so many of them at the same time that nothing gets properly done. We also see a serious inability in management to prioritize the most important activity or area.
Too many and too undefined goals
Examples of goal setting:
- We will increase our profitability
- We will increase our revenue
- We will be more efficient
- We will be more environmentally sustainable
In most of the strategies we encounter, the goals are defined, but a lot of times they are unclear and not measurable. This results in uncertainty around what is actually to be achieved. What does it mean that we will become “more efficient”, “more environmentally sustainable” or “more profitable”? Unclear goals create an inability to prioritize the right activities and a feeling of not knowing when the job is done.
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Strategy acceleration – focusing on the most important
Strategy acceleration demands a lot from management’s ability to prioritize. The ability to pick the strategic goals that will make the greatest impact has to be a key issue for management.
Naturally, all managers and employees think that their area is most important and will argue passionately for their cause. This is why it is important that there is only one structured way to prioritize, and focus should always be on the obvious: that which adds the most value. The strategic initiative that adds the most monetary value is also what needs to be prioritized. If a structured way of prioritizing is lacking, the result will be endless discussions and conflicts about what really is most important, and valuable calendar time is lost.
We would like to emphasize that the prioritization we are talking about here is what is strategically most important for the company to become sustainable long term. A quick 10% reduction of the company’s costs, by making a lot of employees redundant, is rarely something that will maximize the company’s value and competitive power in the long run. This could be worth reflecting upon.
Set goals based on what gives the most monetary value
Examples of goal setting:
- We will increase our profitability from 10% to 20% in 2 years
- We will increase our revenue from $100M to $200M in 1 year
- We will cut our carbon dioxide emissions from 4% to 2% in 3 years
In working with strategy acceleration we always start from the assumption that the overall goals can be measured in money and the time for execution. The initiatives that create more money will be prioritized. Why is this? Simple: a company cannot exist without profits and money is the best way for us to clearly see how our goals are achieved over time. Also, the chosen initiatives have to be the ones that can be executed within a reasonable amount of time. With no clear measuring points, we will spend endless time deciding what is most important. Instead, starting with initiatives that add the most monetary value is a method that everybody understands and can buy into. The goals that are set in strategy acceleration are called MIG: Most Important Goal.
To succeed and accelerate your strategy, you must prioritize what matters the most – the Most Important Goals. There should not be more than two Most Important Goals at the same time.
Continue reading the Strategy Acceleration blog series
This blog series is based on the book “Strategy Acceleration”. It is made for everyone that wants to learn how to execute and to realize your company strategy. It will give you the practical know-how to transform your strategy from words on a piece of paper into real everyday action.