Strategy is only an idea unless executed well
It’s time for boards and their management teams to start putting their attention to where it can really count: not just creating strategy but turning it into reality.
Boards are being encouraged to spend more time identifying, measuring, managing and mitigating risk. However, one key risk that is often overlooked is not the creation of strategy but the execution of it. It was Chair and CEO of JP MorganChase who said “he would rather have a second-rate strategy executed well than a first-rate strategy executed poorly”.
Rather than being obsessed about strategy setting and its formulation, better outcomes can be derived when energy, effort and valuable resources are directed to regularly monitoring the execution process and ensuring the changing environmental factors are continuously reviewed in line with the organisation’s strategic intent.
This risk often emerges, not because the company lacks the money and/or resources to execute the strategic intent, but because the whole organisation is not sufficiently aligned with or have brought into the strategic intent and therefore not focused enough on the delivery of it. As Schreiber Bart Group recently pointed out: “(Ironically), while Boards are being encouraged to spend more time reviewing and approving their company’s strategy and its “formulation” to help create greater value, research has been fairly consistent in finding that 90% of companies fail due to poor execution of their otherwise pretty solid strategy”.
This suggests Boards not only need to spend time evaluating financial and operational risks, but they also need to spend time evaluating the execution of its agreed strategy for as research shows: the inability to execute a strategy properly can be the cause of more than 50% of an organisation’s value erosion.
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