The 5 Keys to Strategy Execution: #1. Strategic Understanding

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There’s an excellent article in Forbes, written by John Kotter on July 19, 2013, called “When CEOs Talk Strategy, 70% Of The Company Doesn’t Get It”. And in June, 2013, an article in Harvard Business Review, “When CEOs Talk Strategy, Is Anyone Listening?”cited research recently completed by Timothy Devinney and associates at the University of Technology in Sydney that found the following: even in companies who take the time to communicate about the strategy throughout the organization, including all levels and functions, only a small percentage of employees actually take in the information. Per the article, “…the researchers asked employees of 20 major Australian corporations with clearly articulated public strategies to identify their employer’s strategy from among six choices. Just 29% answered correctly.” Let’s discuss why this matters, and what CEOs can do about it.

Why is it Important For Your Employees to Understand the Business Strategy?
Achieving strategic objectives requires countless decisions to be made by people throughout an organization each day. From deciding how to prioritize tasks, to evaluating quality, to determining how to shape conversations with customers and which solutions to apply when handling customer complaints, as well as deciding whether to purchase capital equipment based on its speed and efficiency or its flexibility to customize a product or service — each employee in your organization makes decisions that either contribute to your company’s differentiation and competitive strategy, or that have no impact on it, or worse, that conflict with the strategy.

In addition, a personal understanding of the strategy aligns your people, both individually and across functions and teams, with a clear, actionable shared direction. It gets everyone rowing the boat in the same direction. Understanding the strategy and how one fits enables an employee to see what difference he makes in the way he does his job, and creates opportunity for the employee to find meaning in what he does — short and long term meaning that builds commitment and enthusiasm for the work. The stronger the understanding, the more likely it is that employees will take initiative to make a difference every day. This impacts the organization-wide achievement of the strategy and the sustainability of the business.

How Can Leaders Most Effectively Communicate About Strategy?
To build a strong understanding of business strategy among all employees, leaders at every level tell a compelling story explaining what makes the company different from its competitors, who the customers are and why they buy from the company. This story provides the context that aligns people and groups. This story is a cornerstone in establishing leadership credibility from group or team leaders to the CEO and executive leadership. Sharing this story is the first step in executing the business strategy.

The strategy provides a context for people that is critical to the success of your team and to your success as a leader. This context is a beacon that aligns people in a unified direction as well as, over time, providing compelling reasons for organizational change.

For strategic communication to be effective, leaders need to share information face to face with genuine enthusiasm, using language that employees understand and can relate to their work. The communication needs to be clear and actionable.

Strategic communication can most effectively be done using an organization wide, systems approach. For example:

– Communicating about the various strategic aspects of work can be done daily. Aspects include why customers buy from the company, who the key competitors are, how the company differentiates itself from the competition, the company’s value proposition, and performance against related metrics daily, weekly, monthly and so on.
– Routinely using a variety of communication vehicles, such as existing meetings, newsletters, visuals in work areas, postings on performance against objectives, continuous improvement initiatives, technology change roll-outs, and other initiatives.
– Making a habit of using events such as celebrations, picnics, cookouts to talk about the strategy
– Regularly leveraging special group meetings to share customer feedback, team performance results against goals, introduction of new technology, product and/or service improvements, changes in the planning stages
– Making it part of the process to discuss strategy in One-on-ones held for setting individual performance goals, doing performance reviews, discussing employee development plans
– Discussing the strategy as a standard part of your processes for Recruiting, interviewing, new-hire orientation/onboarding, new-hire training, new-hire goal-setting
– Including strategy whenever communicating the introduction of new products and/or services

Employees who are highly confident in their knowledge of the company strategy are likely to share that information with others, to talk with their colleagues, friends and families about it, and to find new ways to contribute towards achievement of it.

Strategic Understanding is one of 5 Keys To Strategy Execution.  Key Number 2 is Leadership – Key Number 3 is Activities and Structure – Key Number 4 is Balanced Scorecard – Key Number 5 is Human Capital.  These 5 Keys plus Market Discipline comprise the recipe for successful strategic performance.  Use the links to find out about each one.

What is your organization doing to build a strong understanding of its strategy among employees? How certain are you that all employees understand the strategy? What indicators do you observe that show how well employees understand the strategy?

Sharing your knowledge and observations will help others, so please feel free to write and share comments here. Thank you.

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