About this Video

• Video Title: Successfully Achieving Strategy | Episode 473
• Channel: CorneliusFichtner
• Speakers: Cornelius Fichtner, Frank Parth
• Duration: 00:52:51

Introduction

This podcast episode explores the reasons why organizations fail to achieve their strategic goals, despite investing time and resources in strategy development. The discussion features Frank Parth, author of "Successfully Achieving Strategy," who identifies key reasons for failure and offers solutions for successful implementation.

Key Takeaways

• Poor Strategic Goal Definition: Organizations often fail to clearly define their strategic goals, leading to misaligned projects and wasted resources. Internal politics and biases in the decision-making process further complicate this issue.
• Changing External Environment: The external environment is dynamic, and strategic goals may become obsolete due to unforeseen changes. Adaptability and flexibility are crucial for success.
• Lack of Implementation: Many organizations excel at strategy formulation but falter in the implementation phase. Effective communication and execution at all organizational levels are vital.
• Follow the Money: To truly understand an organization's priorities, observe where its resources are allocated, as spending patterns often reveal the true strategic focus.
• Three Waves of Business Strategy Implementation: The evolution of business strategy implementation can be categorized into three waves: project management, program management offices (PMOs), and portfolio management. Each stage represents increased coordination and efficiency.
• Benefits Management is Key: Focusing on benefits realization ensures that projects contribute to the overall strategic goals. Project planning should be structured around delivering benefits early and incrementally whenever possible.
• Leadership Buy-in and Organizational Change Management are Crucial: Successful strategy implementation requires strong leadership support, clear communication, and active engagement in change management to address employee resistance to change.

According to Frank Parth, the top three reasons organizations fail to achieve their strategic goals are:

1. Poorly defined strategic goals and strategy selection: A lack of clarity regarding the real strategic goals and a flawed process of selecting the core strategy to achieve them. Internal politics and personal biases at the management level heavily influence this selection.

2. Changes in the external environment: Unforeseen shifts in the external environment render the strategic goals irrelevant or ineffective.

3. Failure to implement the selected strategy: Organizations often develop sound strategies but fail to effectively implement them due to a lack of attention to implementation details and poor communication of goals down the organizational hierarchy.

Frank Parth states that the short-term consequence of not implementing a chosen strategy is the waste of time and money on projects that don't support the strategic goals. In the long term, companies that fail to effectively implement strategy will fall behind competitors and may ultimately fail. He uses Eastman Kodak and IBM as examples of companies that suffered due to this failure.

Frank Parth indicates that strategy consultants can help, but only if the right consultant is chosen. He points out that an independent consultant offers an objective perspective, free from internal politics. However, a downside is that they lack the internal motivation to ensure successful implementation, as they don't have "skin in the game." He cites the example of Swissair's bankruptcy as a result of poor advice from McKinsey. Even good advice is useless without proper implementation.

Frank Parth argues that while strategic goals may be presented for marketing purposes (e.g., to investors), the true priorities of an organization are revealed by where management allocates its financial resources. Strategic goals are often chosen to impress external stakeholders rather than to provide clear internal guidance, so funding decisions better reflect what's truly important to the organization.

Benefits management is crucial because projects are undertaken to deliver benefits to the organization. By focusing on how to best provide these benefits, project management becomes more effective. Ignoring benefits realization leads to wasted time and money. The speaker notes that some projects (like building a ship) have benefits realized at the very end, while others (like a mixed-use development) allow for incremental benefit realization and income streams along the way. Effectively managing benefits, particularly through enterprise portfolio management, helps organizations avoid duplicated efforts and ensures resources are used efficiently to achieve the greatest overall benefits.

The podcast states that yes, enterprise portfolio management is the most efficient way to achieve benefits at a corporate level. The reason given is that without it, resources are wasted on projects that benefit only a small part of the organization, rather than the whole. The example of Hewlett-Packard developing office printers in seven separate divisions is cited as an example of this kind of wasteful duplication.

Developing a strategy is the responsibility of executive leadership (CEO, CIO, etc.), providing high-level guidance for the organization's direction. Implementation, however, requires different skills and approaches. It involves selecting and prioritizing projects, utilizing effective project management practices, and ensuring coordination across the organization. While distinct processes, they are intertwined; a well-developed strategy is useless without effective implementation, and implementation efforts are wasted if the underlying strategy is flawed.

The reasons given for the low success rate of strategic initiatives (only 56% in the last three years, according to a statistic cited) are multifaceted. First, strategies are often developed with dual purposes: for external marketing to investors and for internal organizational guidance. This duality can lead to misalignment between stated goals and actual implementation. Second, the external environment can change, rendering strategies obsolete. Predictable changes should be accounted for in the strategy, while unpredictable ones must be adapted to. Finally, internal politics within the organization can influence both the strategy's development and its implementation.

The primary driver for successful strategy implementation is leadership buy-in and support, combined with a top-down understanding of the strategy and how it should be implemented. This includes clear communication and ensuring that everyone in the organization, from executive leadership to the lowest-level employees, understands and is motivated to contribute to the goals. The speaker emphasizes that simply delegating tasks without ongoing communication and support is insufficient.

While having the right skillset, particularly in project management, is critically important for successful strategy implementation, Frank Parth argues that securing buy-in and motivation from employees is even more crucial. He emphasizes the importance of organizational change management in gaining the support of those who will be directly implementing the changes. Without this buy-in, even a highly skilled workforce will struggle to achieve the strategic goals.

The speaker suggests that the lack of appropriate support from 50% of C-level executives stems from imperfect communication. They may define the strategic goals and initial approaches but then fail to provide ongoing guidance, prioritize tasks, or address the needs of those responsible for implementation. This lack of follow-through leaves lower-level employees struggling to understand their priorities and to effectively execute the strategy.

The podcast asserts that projects are unequivocally the most effective way to implement strategic change within an organization. However, the difficulty lies not in selecting projects in general, but in selecting projects specifically aligned with the overall strategic goals. Often, individuals at different levels of the organization select projects that benefit their own departments or interests, rather than the organization as a whole. This necessitates clear communication and a well-defined process for selecting projects that directly contribute to the overarching strategic objectives.

The three steps for implementing an Enterprise Portfolio Management System (EPMS), as outlined in the podcast, are:

1. Prepare the organization: This involves analyzing how decisions are made within the organization, identifying decision-makers, defining goals and expectations, developing a business case for the EPMS, and planning for organizational change management. A key element is addressing biases in decision-making and creating an objective selection process, potentially using automated systems.

2. Design considerations for the EPMS: This stage focuses on gathering detailed requirements by engaging with executives, defining the decision-making process within the EPMS software, and outlining the financial aspects of the project selection process. The importance of defining and locking down requirements, especially in the context of software development, is highlighted here.

3. Planning and executing the EPMS: This final stage assumes the project manager is experienced and competent. The focus is less on specific project management processes and more on providing guidance for this particular type of enterprise-wide project. The speaker uses the example of the fictional company "Mega News International" to illustrate the steps involved.

The major takeaways from the podcast, as summarized by Frank Parth, are:

1. Treat the implementation of an enterprise-wide project like a project itself; use all the project management tools available. Secure buy-in from all levels of the organization, not just executive leadership.

2. Actively manage the organizational changes involved in implementing the EPMS. Ensure that everyone at all levels understands how the system will benefit them personally.

3. Organizational change management is paramount to success. The implementation will significantly impact how people work, so addressing and mitigating resistance to change is critical.