Leaders constantly pressure their businesses to perform better when what they really need is a better business strategy. Or they often come up with a new business strategy when the real weakness is the successful execution of that business strategy.
From idea…
Most companies' business strategies deliver only 63% of expected financial value. Why is that?
Leaders constantly pressure their businesses to perform better when what they really need is a better business strategy. Or they often come up with a new business strategy when the real weakness is the successful execution of that business strategy.
How to avoid those mistakes?
Think of business strategy and its implementation as inseparable activities – and then improve both at the same time. Start by applying seven simple but deceptively simple rules, including: Keep your business strategy simple and specific, make resource allocation decisions early in the strategy formulation process, and continuously monitor and supervise the implementation of your business strategy in practice.
Business strategy planning and implementation must be considered as two inseparable things.
By following these rules, leaders will minimize errors in their business operations. Even if the business strategy is slightly wrong, you can quickly determine whether the error is caused by the business strategy, the plan to implement the business strategy, or the implementation process itself.
What are the results?
You can make adjustments quickly as you go. As demonstrated by the experiences of well-known companies such as Cisco Systems[1], Dow Chemical[2], and 3M[3], you can improve your company's financial results from 60% to 100%.
…To reality
Seven rules for executing a successful business strategy:
1. Make sure your business plan is simple and specific: Avoid long descriptions of far-fetched business goals. Instead, clearly define what your business will and won't do.
For example, the board of directors of Barclays Capital, a large European investment bank, said it would not compete with the big American investment banks or invest in the less profitable equity markets. Instead, they identified Barclays as serving investors with a growing demand for fixed income.
2. Assumptions about challenges: Ensure that the assumptions in the long-term business strategy reflect the market economy and the actual business performance of the enterprise compared to competitors.
For example, Tyco Corporation[4] authorizes cross-functional teams within each business unit to continuously analyze market profitability, growth opportunities, costs, and prices relative to competitors. These teams meet with corporate management every two weeks to discuss the information they gather.
This process of adjustment led to more realistic business plans and contributed to Tyco's impressive success.
3. Consistency in operations: The leaders of the departments as well as the business strategy, marketing and finance teams of the enterprise must agree on a common performance evaluation framework.
For example, some of the world's most efficient companies use a benchmarking system to predict the profitability of each market in which they operate, as well as the potential growth in profits. Based on data on market share and profitability, they can know what percentage of profits they own.
Once a common voice is found, the corporate board can easily agree on financial projections.
4. Discuss resource allocation early: The challenge for businesses is when they need new resources to execute their business strategy. By asking questions like “How quickly can your business deploy a sales force?” and “How quickly will your competitors react?”, you can create more realistic and market-relevant forecasts and business plans.
5. Identify priority areas: Running your business according to plan requires that a few key activities be done at the right time and in the right way. Make strategic priorities public so that all employees know what the business is focusing on.
Always monitoring each step of strategy implementation is the key to success.
6. Continuously monitor business activities: Track your actual business results and compare them to your business plan. From there, rebuild your business plan assumptions and reallocate resources if necessary. You will be able to correct any errors in your business plan and in the execution of that plan. Avoid confusing the two activities.
7. Develop the ability to execute business plans: The people who execute the business strategy are more important than any business strategy. Make the selection and development of the company's managers a business priority.
For example, Barclays' senior management is responsible for all recruitment activities. Board members closely review potential candidates across divisions and reward talented new hires for their outstanding performance. At the same time, good employees are not penalized when their business unit enters new markets and achieves lower initial profits.
According to vietnamnet
