3 secrets of successful execution webinar

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3 SECRETS OF SUCCESSFUL STRATEGY EXECUTION Paul Docherty – Founder and Executive Director, i-nexus

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KEY TOPICS Why is Strategy Execution the #1 CEO Priority? What Are the 3 Secrets to Executing Well? 2. Close the Loop – View Planning/Execution as an Integrated Process 1. Stay Focused – Reinforce The Right Behaviors 3. Follow-up Relentlessly – Leverage Strategy Execution Software Why is Strategy Execution Difficult? Copyright i-nexus 2013. All rights reserved. Summary/Key “Take-aways” 1 2 3 4 5 6 7

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Good Strategy x Good Execution = Superior Results You can beat expectations with good execution of a mediocre strategy But... You can miss expectations with poor execution of a brilliant strategy Good execution is the critical determinant of superior results GOOD STRATEGY IS NOT ENOUGH…

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“70% of companies believe they select the right business strategy, but fail to execute it due to short-comings in their management system” – Accenture Report “In the majority of cases – we estimate 70% - the problem isn’t bad strategy but … bad execution” – Fortune Magazine “…only 11% of companies employ a fully fledged strategic control system” – Ashridge Strategic Management Centre “90% of organisations fail to execute their strategy” – David Norton, Balanced Scorecard Report “ex-e-cu-tion (ek si kyoo shun), n 1. The missing link. 2. The main reason companies fall short of their promises. 3. The gap between what a company’s leaders want to achieve and the ability of their organisations to deliver it…” – Larry Bossidy and Ram Charan, Execution: The discipline of getting things done “… over 66% companies with over $500M in revenue set targets that exceeded 9% real growth, yet less than one company in ten achieved this level of success.” – Chris Zook, Havard Business Review WHILST MANY ORGANISATIONS CRAFT GREAT STRATEGIES, FEW EXCUTE WELL…

i-nexus Solves a Big Problem:

i-nexus Solves a Big Problem What do CEO’s care most about? Profit Growth? Revenue Growth? Customer Satisfaction? Quality? Execution is the #1 CEO Priority Key Execution Problems – CEO Perspective Poorly Communicated Strategy Unclear Accountability Poorly Defined Roles/Responsibilities Inadequate Execution and Performance Monitoring THE CEO PERSPECTIVE…

Current Approaches and Tools Simply Don’t Work...:

Current Approaches and Tools Simply Don’t Work... Senior Management Goals Goal Cascade Process Operational Management Goals/Action Plans Performance Reporting Process Operational Management Review 10% Problem Rearview Mirror Problem Execution Urgent vs. Important Problem Underlying Challenges: Ensuring Alignment and Accountability Maintaining Focus in the Whirlwind Looking Ahead – Not Behind THERE ARE SEVERAL UNDERLYING CHALLENGES…

Some interesting numbers... Help shine a light on the root causes of poor execution...:

Some interesting numbers... Help shine a light on the root causes of poor execution... “<15% of companies routinely track how they perform over how they thought they were going to perform” Marakon Associates/Economist Intelligence Unit “95% Employees don’t understand their companies strategy” Kaplan and Norton, Harvard Business Report “<27% employees have access to their company’s strategic plan” Kaplan and Norton, Harvard Business Report “86% of executive teams spend less than one hour a month reviewing strategy” Kaplan and Norton, Harvard Business Report “70% of organisations do not link middle management incentives to strategy” Kaplan and Norton, Harvard Business Report THE EVIDENCE BACKS-UP THESE HYPOTHESES …

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Grow Sales of New Product Customer Focus Invest in China Improve employee satisfaction The Off-site Strategy Day Unclear Accountabilities Poorly Defined Goals .ppt deck The Ivory Tower Exercise Funding Constraints Give me your numbers... I need to include some contingency... Way too much! Cut by 25%! If I don’t include it I’ll lose it... The Budget Dance It’s close enough for Military work...                         Divisional President Functional Heads Departmental Heads Middle Managers Employees Project Project Project The Ad Hoc Cascade STRATEGY EXECUTION - WHAT HAPPENS IN REALITY… Projects

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VALUE OF AN EFFECTIVE EXECUTION SYSTEM - IMPACT OF THE DANAHER BUSINESS SYSTEM

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3 SECRETS TO SUCCESSFUL EXECUTION… CLOSE THE LOOP LOOK FORWARD, NOT JUST BACKWARD, ON AN REGULAR BASIS View planning and execution as an integrated process Define the leading measures that predict achievement of the goals Set targets based on expected impact of actions and review progress periodically Continually test assumptions and act quickly if hypothesis is wrong STAY FOCUSED FOCUS ON 1-3 BREAKTHROUGH/WILDLY IMPORTANT GOALS ONLY Actively decide what not to do, not just what to do Ensure there is absolute goal clarity – make sure the finish line is clear Ensure every employee understands what winning means FOLLOW-UP RELENTLESSLY USE STRATEGY EXECUTION SOFTWARE TO DRIVE RELENTLESS FOLLOW-UP Ensure every employee can easily see, understand and update their progress against the plan Leverage automated exception reporting to reinforce ‘monthly’ heartbeat Create focus on action by taking the ‘heavy lifting’ out of preparing for execution reviews Create accountability for results through clarity and transparency

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STAY FOCUSED – THE CONFLICTING FORCES… The Whirlwind Goals or The Day Job New Activities URGENT IMPORTANT

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IMPORTANT URGENT URGENT NOT IMPORTANT URGENT AND IMPORTANT NOT URGENT NOT IMPORTANT IMPORTANT NOT URGENT LOW HIGH LOW HIGH STAY FOCUSED – AVOID THE URGENT NOT IMPORTANT TRAP 5% 10% 70% 15%

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STAY FOCUSED – CREATING CLARITY AND FOCUS Less Structure More Structure LAGGING MEASURE From X to Y by When FranklinCovey 4DX Wildly Important Goals LEADING MEASURE LEADING MEASURE 1-2 WIGs Hoshin Kanri Planning Tables/X-matrices 2-3 Breakthrough Objectives Kaplan & Norton BSC Strategy Maps/BSC

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CLOSETHE LOOP – CHANGE VS. RUN THE BUSINESS CHANGE THE BUSINESS RUN THE BUSINESS

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CLOSED-LOOP STRATEGY EXECUTION CYCLE Initiatives Indicators Goals Action Impact Insight Translate Business Goals into Executable Initiatives and Create Clear Accountability for Delivery Drive and Review Execution of The Resulting Initiatives Measure and Forecast the Impact of Those Initiatives on Performance CLOSE THE LOOP – WHAT’S THE REAL QUESTION? Are we on track? If we are not on track – are we doing something about it? In aggregate, will the actions underway get us where we want to go?

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1. Establish Vision 2. Develop 3-5 Year Breakthrough Objectives 3. 4. 5. Implement Annual Objectives 6. Monthly Review 7. Annual Review P D C A Reflection Hoshin Process in Concept Develop Annual Objectives Deploy Annual Objectives Catch-ball Planning CLOSETHE LOOP – HOSHIN AS BEST PRACTICE

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CLOSETHE LOOP – HOSHIN BOWLING CHARTS/ COUNTERMEASURES Bowling Chart Are we likely to hit the future targets? If not, why not? What’s the root cause and what can we do about it – short and long term? Countermeasure Plan

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W T M F T F T W T M T W T M W W F T M F T F T W T M F T T W T M F T W T M Monthly Business Execution Review Meeting Monthly Business Execution Review Meeting Week 4 F T Week 1 F T W T M Week 2 T W T M Week 3 W Week 4 Month 1 Month 2 W F T M Make sure its right F T F T W T M Instigate actions to maintain momentum / lift performance Update previous month’s actuals F T T W T M Add commentary and identify local actions F T W T M RELENTLESS FOLLOW-UP – ESTABLISHING AN EXECUTION HEART BEAT

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Key Goals for 20XX (Re)Define Strategic Goals © i-solutions Global Ltd. 2007 Cascade Goals/ Develop Plans Execute the Actions Set Personal Objectives/ Develop Action Plans Run the Operation HR/Talent Management System Spreadsheets/ Documents Presentation Decks/ Spreadsheets Review and Analyse Performance ERP System BI Tools/ Spreadsheets Project Management Tools/ Spreadsheets/E-mail RELENTLESS FOLLOW-UP - EXISTING PROCESSES AND TOOLS MAKE FOLLOW-UP CHALLENGING….

Solving this problem disrupts three big software markets...:

Solving this problem disrupts three big software markets... RELENTLESS FOLLOW-UP – A NEW BREED OF CLOUD-BASED STRATEGY EXECUTION SOFTWARE IS EMERGING… STRATEGY EXECUTION SOFTWARE PROJECT PORTFOLIO MANAGEMENT CORPORATE PERFORMANCE MANAGEMENT EMPLOYEE PERFORMANCE MANAGEMENT Size: $1.1Bn/CAGR 9% (IDC) Primary Buyer: Operations Planning and Execution of Projects and Programs Optimisation of Project Portfolios Size: $2.2Bn/CAGR 15% ( Bersin ) Primary Buyer: HR Management and Automation of Employee Goal Cascade Process Talent Management Size: $1.9Bn/CAGR 28% (Gartner) Primary Buyer: Finance Tracking and Forecasting of Financial Performance Tracking of Key Performance Indicators “The fundamental problem with traditional performance management software is that it fails to close the loop – it helps you identify the action to take but doesn’t help you understand if the action you have taken has had any effect.” Martin Butler, CEO, Butler Research “Business Execution software is emerging as the answer to two questions - how are we as an organisation going to do that? And how does it specifically apply to me? Business Execution software brings together people, projects and corporate performance into a single system.” Bruce Richardson, Chief Research Officer, AMR Research Action Impact Insight Translate Business Goals into Executable Actions and Create Clear Accountability for Delivery Drive and Review Execution of Those Actions Measure and Forecast the Impact of Those Actions on Performance

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STRATEGY EXECUTION SOFTWARE Strategy Execution Software – helps you to: Translate business goals into executable actions; Tie in the people who need to execute those actions; Drive and monitor execution of those actions; Understand if the actions are actually moving, or are likely to move, the dials that measure achievement of business goals. RELENTLESS FOLLOW-UP – A NEW BREED OF CLOUD-BASED STRATEGY EXECUTION SOFTWARE IS EMERGING…

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RELENTLESS FOLLOW-UP – THE RIGHT STRATEGY EXECUTION SOFTWARE CAN ACTIVELY DRIVE “FOLLOW-UP” What Actions Are We Taking and Are We Doing Enough? Reminder – Time to Focus on the Important! Are My Team On Track? Where Do We Need to Focus Our Attention?

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SUMMARY – KEY POINTS Strategy Execution is the #1 CXO Priority Success is Function of Right Behaviors, Right Process and Right Tool The Key is to Look Forward, Not Backward and Course-correct Early Focus Requires Tough Choices, Catch-ball and Absolute Clarity Strategy Execution Software Makes Follow-up a Realistic Proposition Current Fragmented Approach Makes Strategy Execution Difficult Copyright i-nexus 2013. All rights reserved. Stay Focused, Close the Loop and Follow-up Relentlessly! 1 2 3 4 5 6 7

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COMPANIES USING HOSHIN TODAY

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ANY QUESTIONS? Paul Docherty paul.docherty@i-nexus.com Skype: pauldocherty +44 (0) 7985 117784 For a copy of the slides please contact: richard.valentine@i-nexus.com Patrick Pecorilli ppecorilli@virtual-process.com Skype: patrick.pecorilli +1 514-816-0618

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