Wednesday, November 24, 2010

Is your strategic plan a piece of paper?

One of the biggest challenges facing any manager is execution. Most organisations are fairly competent at strategic planning. However, when it comes to execution of these plans there is a yawning gap between the plan and implementation. A very small percentage of strategic plans actually get executed.
Our experience with facilitating the execution of strategic plans for organisations across the globe suggests that three key steps are essential to bridge the gap between strategic planning and execution.
But before we discuss execution, let us step back a moment and understand the nature of a strategic plan. The usual perception is that of a “big picture” plan that is created and developed at the highest echelons of management, and only parts of which get filtered down to the operational areas of management.
In addition, there are strategic plans at every level of the business, which dovetail into the grand organisational plan. A recruitment plan that lays down how to attract, retain and develop talent at all levels of the organisation, a business development plan that describes strategies to attract and retain customers, a marketing plan that explains how the organisation’s products and services or brands will be positioned, an operational plan that lays down a strategy to reduce operational costs; these are all strategic plans, and each one of them impacts the “big picture”.
So, how do we ensure that these plans get implemented successfully? The answer will vary for each organisation depending on the nature of the leadership, the organisational culture, the willingness of senior management to be open to new ideas for better performance, and the unique operational challenges facing the organisation. Nevertheless, broadly speaking, a focus on three key areas can help improve the success rate of implementation of strategy.

Step 1: Involvement and buy in

Success in execution begins during the planning phase itself by getting a high level of involvement, not just from the senior executives who are part of the planning process, but also from the key managers who will be critical to the implementation of the plan. Who these key managers are will vary across organisations, and differ from department to department, depending on various factors such as organisational structure, key result areas and functional responsibilities. But it is important to identify them and involve them in the planning process. This means ensuring they understand the organisation’s strategy, soliciting their inputs in the planning process, obtaining feedback from them on challenges and opportunities that success is contingent on, and doing a reality check on actions to execute.
With involvement, comes buy in. It is an established fact that, even when people give inputs that are not finally integrated in the strategy, they still feel a sense of involvement and contribution, which helps increase buy in.

Step 2: Commitment

Enhancing and reinforcing the commitment level of people who are responsible for implementation of the strategy is critical to successful execution.
Higher levels of involvement and buy in to a strategic plan also lead to higher levels of commitment for execution. This is why the first step of involvement needs to be applied to all the key people who will be involved in execution. If they have a greater buy in to the plan, they will be more committed to execution of the plan and ensuring its success.

Step 3: Accountability

In most organisations, accountability is a euphemism for allocating responsibility for a problem or for finding someone to blame for mistakes made. The word accountability evokes negative emotions.
We work with organisations to build cultures of accountability by removing the negative emotions associated with the word and building a positive energy around it. The implementation of accountability in its true, positive sense, leads to enhanced performance. This happens because, when people work in organisations that have a culture of accountability, they deliver on their commitments to a greater degree and this leads to more effective execution, which enhances performance.
It is a proven fact that a culture of accountability can enhance the success rate of strategic plans being executed.
It is important here to distinguish between being committed and keeping commitments. These are two very separate things. While involvement and buy in enhance a person’s commitment to the success of a strategy, that does not necessarily mean that this will lead to that person keeping all their commitments. The first pertains to intention and the second to action.
This is why accountability is so critical to successful execution. By focusing on action, it ensures that intention is converted into reality.

Exercise
Here’s a small exercise that can help you assess where your team stands right now. Score the following statements on a scale of 1 to 4, where 1 implies strongly disagree and 4 means strongly agree.
1. My organisation /leadership involves every key member of the team who is responsible for planning and execution of strategy
2. My organisation/leadership has a well defined and effective process or method for reinforcing the commitment of all team members towards the execution of strategy
3. My organisation/leadership has a well defined and effective method for implementing accountability across all levels of the hierarchy
4. In my team people at all levels of management are very clear about the organisation strategy and how it is to be executed
5. In my team at all levels of management agree with and are fully committed to the execution of the strategy
6. In my team people hold each other accountable for delivering commitments

Now, add the scores to get a total. If the total is less than 18 you need to work on making the execution of strategy more effective in your organisation or team by applying the three step process described here within the framework of your organisation structure, organisational culture and operational constraints.

Thursday, February 25, 2010

LEADERSHIP IN TIMES OF UNCERTAINTY

LEADERSHIP IN TIMES OF UNCERTAINTY

A 5 POINT STRATEGY FOR LEADERS TO NAVIGATE IN TODAY’S WORLD


We live today in uncertain times. Forecasts, both business and economic, are being revised almost every month, if not more frequently. Even in emerging economies, which seem to have recovered and are faring better than the developed economies – at least in terms of GDP growth – optimism is tinged with caution. The events of the last two years have left an indelible imprint on how business is run and managed; One key learning has emerged, if nothing else: for the foreseeable future, at least, it is prudent not to assume anything.

So, what does this mean for leaders? While there is no manager or leader in the world today who has any sort of experience of managing the business environment we have all experienced over the last two years, there are some basic rules which, if followed diligently, can help leaders navigate their way through a troubled business environment. In fact, all the wisdom of leadership in troubled times can be condensed into a five point strategy that can help leaders move ahead. These five points are basic and simple, probably even obvious. Unfortunately, however, I see many leaders who are aware of them, but for some reason or other are unable to follow them. But this five point strategy can stand leaders in good stead not just today, but even when times are good and business needs to grow, consolidate and become more efficient.

Who can benefit from this strategy? Any one who leads. You could be leading a business, a team within a business or even a specific function. The strategy is agnostic to the kind of leader you are. But the benefits are tangible. They have worked for me in the past and in the current environment and I have seen them work for others as well.

Here are the five points that form the pillars of the leadership strategy that I recommend:

1. Have a vision and have faith in the vision: even if your business is going through the most difficult of times, remember that where there is a trough there will also be a peak. If you are going through bad times, do you have a vision for what you will do when you emerge from the trough or when you are at the peak? If you do not, then you will lose opportunities at the peak. The time for planning and strategising for the peak is when you are in the trough. Unfortunately, it is human nature to get overwhelmed by circumstances and environmental considerations. Very often, leaders tend to get bogged down in the here and now because dealing with the present is also critical. You do need to get out of the trough in order to reach the peak, after all! But that does not mean that you lose sight of the future. It is very important to have a vision and even more important to have faith in the vision. If you, as a leader, are not confident about your vision, how do you expect your team to follow you through the storm?

2. Always introspect: having faith or confidence in your vision, however, does not mean that you leave yourself open to overconfidence. I have seen many leaders fail because of overconfidence; sometimes even hubris. Introspect. It is important. Understand the motivations, the rationale behind your vision. Ensure that it is, to the best of your belief, the best vision you can have. How do you test it? Ask yourself: is my vision the best possible for:

a. The business/team/function that I am responsible for?
b. The company I work for?
c. The people I lead?

If the answer to any of these questions is “no”, then you need to re-think your vision. Very often, leaders do think about the first two questions, but ignore the third question. People sometimes come last or don’t come to mind at all as an important consideration while testing a leader’s vision. But people are important for a vision to be achieved, as we shall see in just a moment.

3. Don’t get operational: this is another trap that many leaders fall into when confronted with tough times. It is easy to give into the temptation of rolling up your sleeves and getting to work in a hands-on way. And sometimes, that may be inevitable. But is it always the best way to get through a trough? Not really. If you are to achieve your vision, your focus must stay on your vision and not waver. And that is just not possible if you get bogged down with operational details. Even if you are most adept at multi-tasking or highly skilled in operational details. Imagine you are the general of an army leading it into battle. Where would you get the best view of the battle from in order to determine if it is going the way you planned? On the ground, surrounded by your own and enemy troops, cutting your way through the enemy ranks? Or in a helicopter high above, surveying the action below; or, as in ancient times, standing on a nearby hill or higher ground, assessing the state of the action far below? But operational details are important, so how do you ensure that they are not neglected in difficult times? By ensuring that you have the best people around. Hire people who are smarter than you; they will prop you up when you need someone to delegate the operational details to. If they are smart and skilled, they will not need close supervision but can run things independently, leaving you as a leader to focus on the vision.

4. Communicate: Sounds simple and obvious doesn’t it? But you’ll be surprised at the number of leaders who don’t communicate effectively. Communication is not just about talking to your team. Actually, communication works two ways. First, your communication to the team must be clear, specific and relevant. It should convey your expectations, detail your vision and create an inspiring visual of what you want your team to achieve. This gives them something to work towards. How often do you check with your team to ensure that they have interpreted your communication the way you wanted them to? Have they understood your vision and expectations? Or have they made assumptions that distort the meaning of your communication? All of us have filters which influence our interpretation of what we hear. In order for communication to be effective you need to ensure that you get your message past those filters without it getting distorted in any way. Second, your team should be able to communicate with you. How accessible are you to your team? How free does your team feel to be able to say something to you? If they are holding back information or data, it will affect the achievement of your vision. You need to ensure that your team has every opportunity to communicate with you and when they do communicate, they are not inhibited from speaking their minds.

5. Lead: shouldn’t this have been the first point in this list? Perhaps, but leading is an amalgamation of all the points that have preceded this one. If you have a vision you are confident of, you stay focused on it, introspect and communicate you are already more than halfway on the path of true leadership. But there is more to leading than this. The key to leadership is to be inspirational to people who follow you. They must want to follow you; they must be motivated to follow you. And the biggest motivator is integrity. Integrity not just to principles and financials. But integrity to words, thought and intent. You must live the words you speak and the thoughts you voice. A leader does not just articulate the vision and the strategy to achieve it. A true leader lives the path to achieving the vision. It may sound simple, but implementing this in practice is very difficult. But if you follow the first four points, you will find that being a true leader is much easier. And you will find people willingly and happily following you, even through difficult times!

Preparing for the Upturn: Part VI

In an earlier post, I had briefly dwelt on how organizations can focus on making their processes more efficient. I quote from that post:

“The downturn, then, is a great opportunity to weed these inefficiencies out of the system and trim the flab. This will create a leaner and nimbler organization which will be well prepared to grow rapidly when the upturn begins.”

What does this mean for the recovery and how does this help?

The answer lies, not in trying to make the organization even more efficient during the upturn, but in maintaining the efficiencies achieved during the downturn. It is relatively easy to trim the flab during a downturn. The circumstances and the environment compel a firm to put its processes under a microscope and examine them in detail to understand the cost benefits that can be squeezed out of them by making them more efficient.

But, once a recovery sets in, the microscope is set aside all too soon, in favour of a telescope that peeks out at the external environment, seeking out opportunities thrown up by the upturn. Furthermore, any introspection concerns itself with what internal changes are required in order to exploit these opportunities and maximize returns.

It is at this time that the firm faces a very real danger; that of the flab returning and the efficiencies built during the downturn being discarded or ignored in the pursuit of growth. Remember, after all, that this is how the flab had accumulated in the first place.

Organisations that recognize this put in place systems and processes to ensure that there is an eagle eye focus, even in the upturn, on maintaining efficiencies wrung out of their processes during the downturn. This ensures that, even while the topline growth is pursued, the bottomline is protected by sustaining cost savings derived through optimization during the downturn.

In my next post on the upturn, I will examine how talent management and talent development during the downturn can serve an organization well during the recovery.

Thursday, January 7, 2010

Preparing for the Upturn: Part V

Here’s how planning helps to prepare for the upturn. Apart from determining long term strategies, it is also important to identify the resources that will be required to implement them.

For a firm to rapidly expand during a recovery, financial resources will be required. These could be either internally generated or external sources of funding. To garner the levels of finance that are required to fund the expansion when it happens, the firm needs to ensure that certain pre-requisites are in place. These could pertain to building up the internal reserves of the firm or ensuring that the firm is credit worthy or attractive to external investors when the recovery starts. And this process must begin in the downturn, supported by short term strategies that enhance survival but do not have a negative impact on these factors in the long term.

A similar logic applies to human resources. I have dwelt at length on cost reduction through headcount management in earlier posts, so I will not go into details here. It will suffice to say that planned human resource management during the downturn will go a long way towards conserving them in the long term. This will enhance the firm’s ability to take advantage of the recovery.

Planning can also be applied to other resources. Infrastructure and support systems is another area. Once again, this process begins during the downturn itself. Very often, organizations cut down on infrastructure development or the implementation of support systems, citing cost reduction as a reason. This reasoning is myopic. Infrastructure never delivers results in the short term. Expecting it to produce immediate returns is unreasonable. And neglecting infrastructure or support systems essentially results in depriving the firm of long term resources, when they may be needed. There is a gap between the planning of infrastructure and its development. And there is a further gap between its development and utilization. So, by cutting down on infrastructure development during the downturn, the firm is substituting long term utilization of infrastructure with short term cost benefits, a trade off which can severely impair the ability of the firm to respond swiftly to market opportunities that may open up in the long term.

If a firm recognizes this, planning for infrastructure can be derived from the long term strategies that have been set, as described in an earlier post. If the strategies develop as planned, the infrastructure will be utilized in the time frame envisaged, and will deliver the return on investment that was planned. And, if the firm follows the scenario planning method I have mentioned in an earlier post, it is possible to tweak the infrastructure plans (though not significantly, as infrastructure is largely a sunk investment), to match the scenario that eventually develops and the strategy that is finally followed. The important thing to remember is that, irrespective of the scenario that unfolds and the environment that prevails, infrastructure and support systems will always be required in the long run. Compromising on these debilitates the firm in the long term, even if it delivers cost benefits in the short term.

In my next post, I will examine how the need to optimize efficiencies during a downturn can serve an organization well once the recovery sets in.

Monday, January 4, 2010

Preparing for the Upturn: Part IV

So, how does one prepare long term strategies when short term forecasting is difficult?

One answer is scenario planning.

This is how it works. When the future is uncertain, there could be a range of possibilities. While it is difficult to determine exactly which set of possibilities will eventually hold sway, it is possible to arrive at different scenarios with varying probabilities of occurring. Given that in this specific instance we are talking about scenario planning for a recovery, the upside risks will be significantly higher than the downside risks. Which makes it much easier to put together the scenarios, since one can usually anticipate the different opportunities that present themselves during an upturn.

Based on these scenarios, strategies to capitalize on the opportunities presented by each scenario can be prepared. Since each scenario has already been assigned a probability of occurrence, it is relatively easy to prioritise the strategies.

This is just one method of setting long term strategies. If anyone out there has any other suggestions, I’d be glad to hear them.

In my next post, I am going to talk a bit more about planning and how it can help prepare for the upturn.