By Gerhard Diedericks
"Never mistake motion for action."
- Sir Ernest Hemingway
Almost everybody would agree that employee engagement is critical to effective strategy execution. Yet, many organizations find themselves in situations where they have acceptable levels of engagement, but strategy execution still lags. It appears as if employee engagement is a necessary, but not sufficient condition to successful strategy execution.
Why is this? What needs to be added to the mix to ensure strategy is executed effectively?
Most definitions and surveys seem to agree that engaged employees:
- Are committed to making the business a success;
- Are enthusiastic, involved in and satisfied with their jobs;
- Want to stay with the business;
- Will talk positively about the business;
- Are willing to go the extra mile for customers and work colleagues.
Very few engagement surveys seem to measure dimensions of engagement outside those mentioned above. If you have a closer look, most of what is measured relates to motivational outcomes. But being motivated is not necessarily the same as being effective.
Imagine the coach of a pro sports team that is able to motivate his players to extreme levels, but is unable to align them to the game plan or equip them with skills they need for the match. Such a team will win the occasional game on heart alone, but if they come up against an equally motivated team with stronger alignment to the game plan and superior skills, they will invariably lose.
In business, the same holds true. Not only does a business need highly engaged (read motivated) employees, it also needs employees that understand the game plan or strategy and have the skills to execute.
Our experience suggests that many of today's large firms struggle with basic questions of alignment and capability. And even though the gaps are recognized at many levels within the business, they still are very challenging to close.
Why is alignment so difficult to achieve?
The fundamental idea behind alignment is that all those responsible for executing the strategy devote most of their energy on the small subset of tasks and behaviors that have the biggest impact on successful execution (we call these High-Leverage Behaviors). When this is the case, the odds of execution increase significantly because everybody is focused on doing the right things.
Alignment is difficult to achieve because of the following:
Alignment and coordination at the top is lacking: We recently took a very large financial institution's executive team through an exercise where they implemented a new strategy in a simulated environment, prior to actually launching the strategy in the marketplace. This was a strategy they spent the previous 12 months formulating and fine-tuning. Every executive, bar one new team member, was intimately familiar with the strategy, yet when it came to execution, suddenly the subtle differences in understanding became very apparent.
It is impossible to mentally rehearse execution of strategy. And invariably, when the task of execution happens, it doesn't exactly go to plan and the executive team’s understanding of the strategy gets stress-tested to the extreme. As Mike Tyson said, "Everybody's got a strategy until they get punched".
Alignment has to be worked on all the time: Another phenomenon we frequently observe is that the executive team and the strategy office don't view execution as their task. Creating alignment is not a once-off task; it requires constant communication and coordination from the strategy makers. Like steering a ship requires the captain constantly monitoring, getting feedback and correcting course, the task of alignment is never done.
It is difficult to support and align to that which you don't understand: The best strategies are often the simple ones. They are easier to articulate and significantly increase the chances of successful execution. Strategy formulation is a highly intellectual, abstract exercise requiring those involved to deal with complex choices and issues. The challenge doesn’t end there though. Strategy-makers also have to translate the strategy into a form simple enough that any manager can articulate it without variation. Strategy-makers have to find the simplicity on the other side of complexity, and that can be really challenging to achieve.
Similarly, the task of communicating the strategy has to take into account the needs of the intended audience. For those non-critical roles in the business that don’t directly support strategy execution, a relatively simple communication plan that aims to create awareness would suffice. Strategy one-pagers, PowerPoint decks, road-shows and the like usually fall into this category. For those roles that are directly responsible for executing strategy, the aim of the communications plan has to move beyond awareness. It has to aim for comfortable familiarity with the strategy. Deep, immersive experiences of and interaction with the strategy is required, such as that provided by a well-developed business simulation.
Lack of employee participation: The easiest, most effective way to create alignment is to let employees participate in the decisions about how to execute the strategy. Give them an opportunity to critique, experience, fine-tune and determine what the strategy means at their level. The higher the level of upfront collaboration, the stronger the eventual alignment. This open collaboration is not natural for many leadership teams.
Alignment is not only achieved through aligning scorecards and performance indicators, it is a fundamental leadership activity as much as engagement is.
Capability: The second component to be added to the mix relates to capabilities. Not only should everybody know what High-Leverage Behaviors (HLB) they need to engage in, they need to have the right skills, knowledge and tools to be able to consistently perform the HLB's at a level of mastery.
Business Acumen: There is a fundamental skill set which almost every employee need to possess if they are going to be effective in executing strategy: business acumen. Why? Without the necessary business acumen, it is near impossible to create an appropriately aligned workforce. And we don't mean ‘business acumen’ in the sense of reading financial statements, that too, but business acumen that allows employees to understand the strategy in terms of how value is created and what drives profitability and long-term sustainability.
There are a few guiding principles when developing business acumen:
- Use discovery-based learning. Business acumen is a complex skill-set which requires understanding the business as a dynamic system. It requires plenty of context and a high-degree of interaction. Powerpoints and guru-based lectures are very limited.
- Make it relevant to the business and the strategy. There is so much to cover on business acumen that it could easily lose relevance and become top-heavy on content. It needs to be context-rich and content-poor.
- Connect to actions. Have those mastering business acumen clearly articulate what they are learning and how they are applying it.
- Repeat. Over and over and in different ways.
While employee engagement is critical to strategy execution, it is not sufficient. To effectively execute strategy, businesses also have to consider how they create and maintain strong alignment with the strategy and how it equips those responsible for executing strategy with the right capabilities to support successful execution.
About the Author: Gerhard Diedericks is Vice President, BTS Australia.