The One Indicator for Measuring Strategy Execution

Boardrooms across many enterprises shape the strategy and set goals they wish to achieve from the business, its customers, the employees and the investors to ensure continued success. Strategy execution is a key component that successful leaders focus on.

According to a research published in The Harvard Business Review, “Companies realize only 40-to-60 percent of their strategies’ potential value”. Successful leaders know these numbers and understand it takes much more than to just have a great strategy, they need to have facts and information, true business insight in order to help them form and make the most appropriate decisions to ensure they meet the desired strategic goals.

Execution starts with a strategy and a plan with budgets and forecasts. But ask yourself this: Which is more difficult? Implementing your strategy or your execution of that strategy? (for the avoidance of doubt; According to Dictionary.com, implement means to put into effect according to or by means of a definite plan or procedure, and execute means to perform or accomplish something, as an assigned task. So the word execute means to see through to completion) It is without a doubt that the majority will respond “Execution!” While there are many experts that discuss the importance of creating and implementing a strategic plan in order to be successful, there are few out there that truly hit the nail on the head. They argue that by increasing the importance of execution, one will be able to produce extraordinary results.

“Execution has to be a part of a company’s strategy and its goals. It is the missing link between aspirations and results. As such, it is a major—indeed, the major—job of a business leader.”

― Larry Bossidy, Execution: The Discipline of Getting Things Done

Execution is about turning your top line income into a bottom line profit. Companies that are strong on top line performance and yet struggle to make a reasonable or attractive bottom line profit typically have challenges with execution – that is being both efficient and effective operationally. In addition, execution is all about hitting and exceeding company targets like gross profit margin and profit goals.

One of the most important elements of executing is measurement of progress – amongst setting priorities, accountability and communication, all require great metrics. But how do we measure great execution?

So what is the one essential metric which covers performance on execution? Simply put, it’s the consecutive amount of months in which an entity reached its target. By tracking company goal achievement, especially when falling short can give great insight in the ability of the company to execute strategies.

Let us think about this question: How many consecutive months has your company or any other entity exceeded its revenue, reduced its costs or increased its profit goals? If you consistently meet or exceed your targets, you are outstanding at execution. If you are not consistently hitting your targets, there is obviously a bigger issue to solve. How do we create this elusive consistency and repeatability?  It can be addressed by understanding the impact on all aspects of the organisation and the changes made to each and how they affect the overall ability to hit those goals. Measurement provides this ability.

Sources:

Verne Harnish – Rockefeller Habits; Scaling Up

Chris McChesney, Sean Covey and Jim Huling, The 4 Disciplines of Execution,

HBR Jun 26, 2017

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