9 Components of Strategy Execution

What is Strategy Execution Management?

Strategy execution management is the evolution of traditional project delivery. It’s recognized by Gartner as a key part of Strategic Portfolio Management processes and tools, and while ultimately, it’s about delivering the initiatives, it’s not just blindly following a strategic plan in the hope that you’ll end up in the right place. Instead, strategy execution management enables you to drive business agility and optimize your return from strategic initiatives by ensuring alignment from the top down of everything from an evolving or completely new strategy through delivery and benefits realization.

9 Essential Components of Effective Strategy Execution

Successful strategy execution is largely about ensuring all of the strategic work of your organization is aligned with the strategic plan, and that everything is being driven from the top of the organization – from those strategies themselves. Harvard Business Review (HBR) refers to this as strategic and organizational clarity. If you are able to combine these nine elements, you’ll be well on your way:

1. Strategy Definition & Communication

• Setting of priorities, goals and objectives
• Communication across the enterprise
• Definition of investments and success criteria

Unless the strategic plan and individual strategies are clearly defined, communicated across the enterprise and integrated with the tools used to manage investments and work, it will be impossible to create a fully aligned business. Strategy execution management has to start with a direct connection between work and strategy – strategic goals and objectives are broken out into investments with appropriate metrics to measure performance. Those investments are then further decomposed into work items (epics, projects, etc.).

Example

• Executives define their north star
• Department heads across the enterprise align with that north star
• Investments are investigated and proposed that directly contribute to it

2. Funding & Financial Performance

Historically, organizations have funded work how they have planned it. At the project level, often defined from the bottom-up, with attempts to force alignment with objectives through sales pitch style business cases. This is inefficient, unnecessarily cumbersome and results in heavy governance and oversight that does nothing to enable success.

Effective funding must be at the program or product level, aligned with the investments that are defined as part of planning.  Investment owners have autonomy over their budgets and can further allocate resources where needed to deliver work. Governance is where it should be – also at the investment level, where it is effective without being burdensome. Investment owners are able to manage their investments across each of the tri-modal realities, ensuring work can be done in the most effective way without compromising oversight.

The program and product level is also where finance needs to be managed, with investment level budget, actual and forecast numbers. That leads to better abilities to monitor performance and take corrective actions in less time, again helping to optimize returns. This approach is in stark contrast to traditional project portfolio management platforms and approaches that prioritize management to arbitrary schedules and / or attempts to control resource assignments, deprioritizing financial management in the process. It is critical for strategy execution management to prioritize financial performance as ultimately optimized spend drives optimized returns.

3. Resource Management & Capacity Planning

Work today requires organizations to be able to fully leverage all their assets, and the most expensive asset of all is people. Traditional resource management is ineffective:

• Over allocation of some resources creates bottlenecks and delays
• Under allocation of other groups results in lost opportunity and reduced ROI
• Failure to adapt to changing resource demands and skills needs impacts delivery
• The tri-modal reality of delivery leads to people being managed across multiple, often disconnected systems.

There must be a single, integrated approach to resource management that captures resource demand, capacity, allocations, and utilization – both by function or role, and by individual.  We explain further in our guide to optimizing resource capacity planning.

4. Delivering With Strategic Roadmaps

Roadmaps are effective collaboration and planning tools that allow an organization to quickly and visually determine priorities and then communicate them to all stakeholders in an intuitive way.  Roadmaps must show dependencies, must be able to flow from strategies to investments to work delivery across each of the tri-modal realities, and must be integrated with the rest of the organization’s SPM platform to ensure roadmap changes directly feed investments, funding and work delivery.

Strategic roadmaps must be living, evolving things and must reflect the near-term and longer-term strategic plan of the enterprise.  To maintain that effectively requires two-way, seamless integration with work execution across each of the tri-modal realities.

Example

Suppose an investment can achieve greater benefits than anticipated. This not only contributes to greater company performance, it also allows the company’s strategy to be adjusted. Work execution feeds the roadmap, the roadmap is adjusted to reflect the performance metrics and the organization can successfully execute an enhancement to strategies that is then communicated via the updated roadmap.

5. Outcome / Benefits Realization

Successful strategy execution requires the ability to validate that the expected business outcomes have been achieved.  As noted in the challenges section above, historically this is an area where organizations have struggled, particularly with non-financial metrics.  Organizations must use standardized metrics and targets, to validate value delivery and see where performance adjustments are needed.

Those metrics must be defined at the time that investments are approved.  The process of decomposing strategies into investments, discussed earlier in this section, must incorporate the definition of appropriate performance metrics and targets that will ultimately be used to ensure outcomes have been achieved.

The shift to top-down decomposition of work also involves a shift to top-down metric definition, and this often highlights weaknesses in organizational approaches to benefits realization.  Unless there are appropriate, clearly defined metrics and measurement approaches, and unless that measurement happens for all performance targets, organizations cannot ensure they are optimizing performance.

6. What-if Portfolio Analysis / Modeling

Shifting customer expectations, competitor actions, advancements in technology and a myriad of other factors result in the need to be able to adjust and adapt plans during delivery.  Success comes not only from ensuring the work that is approved and funded aligns with the strategic goals and objectives on day one, but that the alignment is maintained throughout the delivery window.

That means it is essential to be able to adjust strategic roadmaps and analyze the implications through what-if analysis and portfolio modeling.  Such analyses may include portfolio prioritization, resource capacity planning, benefits optimization, and roadmap optimization at both the business unit and enterprise level.  There are many, highly differentiated, analyses that combine to provide a complete picture, but all of those must be delivered within a single, integrated solution.

Regardless of which analyses are being carried out, the ability to quickly assess alternatives, understand and plan for dependencies, collaborate to select the best strategic decisions, and then communicate the changes is essential.  As is the confidence to know that the best decision has been made based on the information available.

7. Change Request Management

Historically, change requests have been among the most disruptive parts of strategy execution.  But in today’s fast paced world, they’re a necessary tool, work can’t simply deliver against the original plan in an environment that is constantly evolving.  Those change requests must be carefully managed to ensure that the changes being made are the right ones, that they succeed in keeping work aligned with required benefits, that the implications on dependencies impacting company strategy are understood, and that they are continuously optimizing returns. That requires:

• Understanding the impact of proposed change requests
• Ensuring that only the right work is approved
• Implementing changes in the right way and at the right time
• Analyzing implications on budgets, resources, schedules, dependencies and benefits

8. Reporting & Dashboards

Successful strategy execution is complex.  Different stakeholders have different information needs to manage that complexity, and organizations must be able to meet all those needs to have the best chance at success.  From portfolio level performance data to work team variances against constraints, and specialist functions on governance, costs and resources, there must be integrated reporting and intuitive dashboards based on a single data set that provides consistent information to all stakeholders.

Example

To make the best decisions about a new product investment the product owner needs to understand progress against client expectations, the CFO must be confident that the costs are sustainable and that revenue projections justify the investment, the CEO must believe that the benefits will align with strategic priorities, resource owners must know that they can support current and upcoming demand for people, and so on. This can only happen when the data from that single investment is presented as information that drives insight in a context that makes sense for each of the executives, senior managers, and investment stakeholders.

9. Integration

One of the biggest drains on effectiveness and efficiency is the lack of integration.  Information in multiple locations, duplicate data entry across systems, reliance on spreadsheets for data capture and dissemination – the list goes on.  Effective strategy execution management needs seamless integration with all of enterprise solutions – traditional and agile work delivery, HRIS, ERP, configuration management and so on.

Common Challenges

Strategy execution management can be problematic for organizations.  While there is no shortage of potential challenges that can be experienced, the following are common barriers to good strategy execution:

• Aligning all investments and resources with strategy. The traditional strategic planning process see a disconnect between the enterprise wide, top-down planning approach to setting the new strategy, goals and objectives, and the bottom-up, often siloed, approach to defining the projects and initiatives that are supposed to deliver on those goals and objectives. This approach, driven by senior leaders within individual silos, results in the wrong work being approved and funded, resources committed to areas that simply cannot deliver, and an underperforming organization.

• Harmonizing across all project execution styles. Organizations today have to deal with the tri-modal reality of delivery.  Work is delivered using traditional, waterfall project management, agile and ad-hoc methods. There is frequently difficulty in monitoring performance and managing resources across those different approaches, resulting in incomplete pictures of what’s happening. This leads to delayed and flawed decision making and hurts overall performance.

• Benefits realization and outcome management. Organizations only succeed when their investments generate a return. Yet many organizations struggle to not only measure performance, but even define effective and appropriate metrics. This is especially true for non-financial metrics – revenue and profit margin are relatively easy metrics, but beyond that confirming that the strategic plan has delivered is difficult for many businesses.  Organizations that can’t measure performance can’t confirm that benefits have been realized, and can’t take actions to correct shortfalls.

How Does Strategy Execution Management Differ From Project Execution?

Gartner has made the distinction between Strategic Portfolio Management, and Adaptive Project Management. This is the more traditional, execution focused approach to work delivery, management and status reporting, and it is critically important to success.  Strategy execution management is an element of Strategic Portfolio Management and sits at a more strategic level than the work execution that occurs within Adaptive Project Management.

Strategy execution management is a more comprehensive, strategic approach that focuses on alignment between strategy and execution and covers the elements we are going to consider in this guide. It is not an alternative, to traditional project and work management, it is an additional capability that is necessary and that must integrate with the work management and delivery tools that operate at the APM layer.

Whole Enterprise Management

Beyond the capabilities of strategy execution management, it is essential to recognize that, as an overall discipline, it must integrate with the overall strategic approach to running and transforming the enterprise. That means integration with business and enterprise architecture to ensure that the work being done with strategy execution management is moving the enterprise closer to the desired end state.

As part of an overall SPM approach, it is also essential to ensure that approved enterprise architecture models are driving strategic priorities, which are in turn driving investments, execution and benefits realization. This requires integrated business processes, and an integrated toolset to ensure optimal performance through an end-to-end approach that incorporates detailed roadmapping tools to help plan and communicate organizational strategy, the development of strategic investments, the breakdown of work into multiple structures and delivery modalities, and ultimately the validation of performance.

The bottom line

Without delivery, strategy execution success will never be achieved. Organizations have invested heavily in their tools and approaches for strategic planning in recent years, striving for the consistent delivery of a successful business strategy, but they have often done little to address the disconnect that still exists between those planning capabilities and the execution of work.

As a result, through a combination of flawed processes, disconnected tools and a lack of awareness of the impact of those problems, organizations are consistently failing to optimize their return on investments. And it’s all unnecessary. With NH360 Enterprise Connect to help understand your business, and NH360 Portfolio Insights to plan, prioritize and deliver, you have the total solution to enable strategic success.