STRATEGIK (Strategic)

The 5Cs of Strategy Execution Dr Andrew MacLennan’s latest book, Strategy Execution: Translating Strategy into Action in Complex Organizations (2011) Compiled by Muhamad Bustaman Abddul Manaf Institute Aminuddin Baki, Ministray of Education mbustaman@iab.edu.my In 1956 a Princeton psychologist published what became one of the most famous papers in the field of psychology. George Miller entitled his article, “The Magical Number Seven, Plus or Minus Two”. He was fascinated by short-term memory span and studied people’s ability to recall items in a list. As his title implies, he concluded that most of us only recall seven, give or take a couple. It’s because of Miller and his study that I restrict my answer to five things, when asked, “what’s the secret to successful strategy execution?” Of course there is no simple secret solving all strategy execution challenges. But there are five things that really matter and as luck would have it, they all begin with the letter C . The 5Cs of Strategy Execution C 1. Causality. Successful strategy execution relies upon undertaking activities that will plausibly cause organisations’ strategic objectives to be achieved. However, in many organisations an enormous cognitive gap exists between ideas and actions. Explicit cause and effect reasoning can bridge this gap, by translating conceptual objectives into concrete activities. Equally, causal logic can be used to align projects and initiatives with strategic objectives ‘bottom-up’ – not every legitimate activity emerges from ‘top-down’ planning. Managing this alignment process effectively is perhaps the greatest strategy execution challenge. C. 2 Criticality. Criticality is vital alongside causality because large organisations undertake huge numbers of activities, making them highly complex systems. It’s impossible for organizational leaders to analyse and manipulate all these activities. Successful strategy execution relies upon reducing this complexity to focus resources and attention on the activities critical to delivering the strategy. Isolating critical activities in this way can resolve many dilemmas that leaders and managers face in their day-to-day work. C 3. Compatibility. It is not enough for managers simply to translate strategic objectives and strategies into apparently critical activities. They must also ensure that these critical activities will pull the organisation in a consistent direction. Activities that individually appear to support objectives may together have a different effect if they are incompatible. For example, problems will arise in an organisation that relies upon creativity and innovation but also operates a prescriptive performance management system that discourages unplanned activities. If compatibility is restored – perhaps by defining where innovation is essential and adjusting the performance management system accordingly – desired outcomes are much more likely to appear. This example illustrates an important point: organisational designs and systems, as well as plans, heavily influence activities. C4. Continuity. Applied effectively, causality, criticality and compatibility allow the identification of activities that will plausibly cause strategies to be realised. However, identifying critical activities is not enough; they must also be delivered. Organisational designs and systems need shaped accordingly. Strategic decisions must usually be passed down through hierarchies. As this happens, teams and individuals must interpret leaders’ intentions, determine the contributions they can make and take appropriate action. Where the continuity in these baton changes breaks down, strategic intentions are derailed. Continuity is also important over time, creating a threat from short-term distractions, structural reorganisations, personnel changes, budget cuts and so on. The ability to deliver critical activities needs to be baked into organisations’ designs and systems. C 5. Clarity. The fifth ingredient for successful strategy execution is clarity – such that individuals understand strategic objectives, how they are to be achieved via critical activities and how organizational designs and systems support their delivery. If they are to take rounded decisions at the coalface, they need to understand priorities and the trade-offs inherent in them. Leaders must help staff interpret how each of the 5Cs manifests itself for them as individuals. Staff need to know how their own actions plausibly cause overall objectives to be achieved (causality) and what the most important performance drivers are to prioritise their time and effort (criticality). They must not be pulled irreconcilably in different directions (compatibility) or made unproductive and disengaged by failing structures and systems (continuity). Clarity over all of these, at the individual level, increases goal congruence and commitment, which in turn heightens strategy execution potential. Ensuring compatibility, continuity and clarity seems a huge challenge, given the sheer magnitude and complexity typical in large organisations. Where do you start? By focusing on critical activities, ensuring they are compatible, managed for continuity and clear. That is a feasible challenge and a central