To move your business forward, you have to come up with the right strategy. But having that strategy on paper doesn’t change anything – you have to execute on that strategy to make things happen. Read in this blog post what strategy execution is and what the critical parameters are for your business.
What is a strategy?
We don’t want to talk about how to define your strategy, but let’s quickly have a look at what a strategy is to have the same understanding.
DEFINING HOW YOUR COMPANY WILL BE SUCCESSFUL
A strategy is a set of decisions on where you want your business to be in the future, in line with your company’s mission. It always involves answers to at least these questions:
- What is our market, and who is our customer?
- Who are our competitors?
- How do we position our product or services so we win clients? What is our USP?
A strategy is usually created in a strategic planning process by the senior leaders of an organization. Models that involve employees in developing strategies are on the rise and seem to pay off.
How do you know your strategy is the right one? Well, you don’t. But with some clear strategic goals, you avoid the confusion that prevents many companies from growing. Or to phrase it differently: “We might be wrong, but at least we’re not confused.”
Let’s say you are a manufacturer of kids’ books. Your market could be just Germany or the whole English-speaking world. Your customers could be toddlers or school kids. This is what you answer in the first questions.
Based on this, you can identify your competition. Who else is targeting this market segment? What do they do?
Last but not least, you will have to work on your unique selling proposition: What makes you stand out. Why would a customer choose your book over one of your competitors? Are you super high-quality? Or very affordable? Do you have a unique feature in your books that nobody else can offer?
A possible strategy could be: We offer kids’ books for the DACH-region (German-speaking) for ages 2-4. We have a low price strategy: Our books are of simple, stable quality so we can offer them at very affordable prices. We sell them online only.
What is strategy execution?
Now that you have an idea about what the target state of the company is, the critical question is: How do you get there. How do you make your strategy a reality? This is where strategy execution comes in. In short, strategy execution aims at operationalizing your strategic goals to give your organization the necessary alignment. The necessary steps are:
- Defining the gap between the status quo and your strategic goals and make an action plan on how to close that gap: The roadmap.
- Operationalize the action items on your roadmap into actionable targets and metrics for your team: OKRs.
- Ensure that your whole organization understands the strategic objectives and is thrilled to reach them: Align people.
- Make sure everybody has the right resources to work towards the goals: Provide resources.
- Finally, you want to make sure you are getting where you want: Measure success.
Let’s dive right in!
The roadmap is your first step in executing your strategy. It defines where you are right now, where you want to be according to the strategy and then describes which milestones you need to reach to get to where you want to be. You can compare it with the literal roadmap: You are in New York City and want to go to Boston, the roadmap will tell you which highway to take and which cities you need to pass on your way.
STEP 1: DEFINE WHAT’S NECESSARY
To create a roadmap, make a list of things necessary in your strategic target state. To guide this, stick to the categories People, Processes, Tools and Partners.
For the above example strategy, the list could look like this:
- People: We need an e-Commerce specialist. We need a specialist for content, SEO and affiliate marketing. We need an expert in fulfillment.
- Processes: We will need a book creation process that is lean and included market demands. We will need a fulfillment process for online orders. We will need a demand-planning process to order the right books for production.
- Tools: We need to set up an online shop. We will need to set up a sales funnel, social media accounts and other lead generation tools.
- Partners: We need a partner that can output 100,000 books in solid quality at EUR 1,20 max. landed cost per book. We need a distribution partner to send out the books to the clients.
STEP 2: WRITE DOWN WHERE YOU ARE TODAY
In the next step, you define where you are today. Again, it makes sense to stick to the categories.
- People: Our team consists of a writer, an artist and a publisher.
- Processes: No real process landscape in place.
- Tools: We have an Instagram account.
- Partners: We work with a publishing company that puts our book onto the market in smaller quantities.
STEP 3: DEFINE AN EFFECTIVE WAY TO CLOSE THE GAP
Now create the actual roadmap – a high-level execution plan on how you will close the gap between today and your strategic goal. This road-map will be the basis for goal-setting for your organization and successful strategy execution. The roadmap will always have a time component to it as it lays out the milestones in a chronological way. In our example, the roadmap could look something like this.
- People: Hire an SEO marketer in the next month. Hire an eCommerce Specialist in 2 months. Hire a fulfillment expert in 4 months’ time.
- Processes: Build a book creation process until 1 month from now. Have the demand planning process in place three months from now. Have the eCommerce processes, including fulfillment in place five months from now.
- Tools: Build an online shop until four months from now. Define the fulfillment process until five months from now.
- Partner: Shortlist potential printing and distribution partners until one month from now. Decide on a printing partner and a distribution partner two months from now.
This strategy map gives you a rough path to reach your strategic targets. The next step is to operationalize further.
STEP 4: OBJECTIVES AND KEY RESULTS
Use the milestones identified in the roadmap to lay out the most critical tasks for the next three months. An excellent tool for this is Objectives and Key Results (OKRs). You are breaking down the 1-to-5-year horizon into manageable steps of three months. This clarity will help your team to set the right priorities. You will have to handle your regular business in parallel while working on strategy implementation. Staying focused on three topics per quarter will make sure your resources are used most effectively.
Check out how to use OKRs here.
From CEO or founder over Senior Management to your whole workforce – a strategic change means change for the whole organization. To manage that change, make sure you focus on the following topics.
You want your team moving jointly in the new direction. You must be able to transport the message of why the new set of strategic goals is important for the company. Your team needs to have a deep understanding of the strategic roadmap. Senior executives and team managers need to communicate the meaning of the strategic initiatives over and over again in team meetings. Provide insights into how the strategy execution process is going, where you stand and what the next steps are. The more visual, the better.
Furthermore, it’s important to keep strategic execution engaging. If you want to change your team’s behaviors, share progress on your strategic goals and highlight high performance and successful execution. Assign responsibilities for the strategic measure to your team for increased ownership.
As for any change process, training your team is a powerful tool to ensure effective execution of your strategy. There are different training demands that arise from a strategic shift.
- Make sure everybody has an in-depth understanding of the strategy
- Create the capabilities and expertise that might be necessary but missing as per your roadmap
- Executive education to develop the right leadership skills across all management levels
REWARD MECHANISM AND INCENTIVES
When you change your strategic direction, the way you incentivize and reward your team might have to change as well. In our example: When the team’s targets and bonuses were tied to artistic and creative kids’ books, you need to change that towards cost-effective book design etc. Make sure your strategy is reflected in your compensation components as well. Read more about employee reward systems here.
Your new strategy might make it necessary that you restructure your teams. Let’s say you want to diversify your product offering for your two main customer groups, it could be a good idea to change from a functional structure to a divisional structure. Read more about the right org-structure here.
When you need new roles or new employees, create a recruiting roadmap that is in sync with your strategy execution roadmap.
Your organization’s ability to effectively execute your strategy not only depends on your people, but also on the way you distribute resources. There are two possible implications.
WHERE YOUR RESOURCES GO
You might need to reallocate resources from one topic to another which is more important for your strategy. Make sure you cut budgets that don’t have relevance for your new strategy. That can be painful for the teams, but with the right people measures, the change will be easier to digest.
HOW YOU DISTRIBUTE RESOURCES
Depending on your strategy, it’s possible that you have to change the way resources are distributed. Where it is a top-down budgeting approach today, you might want to switch to a more autonomous and agile approach to enable your product teams to develop products quickly. This all depends on what your strategic goals are.
Read here what other factors determine your organization’s readiness for strategy execution.
Last but not least, while executing on your strategy it makes sense to measure your success frequently. This will enable you to give feedback back into the organization, showcase the successes on the way and keep engagement up. And of course, you want to know if your measures are paying off. Share the progress widely and in graphical form, e.g. as a big printout of your roadmap and an up-to-date dashboard of your measures. Also, use the quarterly OKR workshops to communicate progress.
Share your experiences with strategy execution in the comments below!
One thought on “A Strategy Execution Guide for Smaller Businesses”
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