Guide to Business Strategy Execution

Business Framework
Business Strategy Execution
DECISION
RIGHTS
Without proper execution, the best strategies are
just theory. This document explains various
frameworks related to successful business strategy
execution and organizational effectiveness. Topics
include 4 Building Blocks to Execution, 17 Traits of
Execution, Transformation Program Design, Balanced Scorecard, and Blue
Ocean Strategy (4 Organizational Hurdles). Also includes PowerPoint
templates to be used for your own presentations and analysis.
Find our other documents at http://flevy.com/seller/learnppt
INFORMATION
MOTIVATORS STRUCTURE

4
Most materials out there teaches the theory of strategy, but don’t teach
how to execute that strategy…
Executive Summary (1 of 2)
Most frameworks, guides, and business gurus who discuss corporate strategy focus purely on the
theory of great strategy, but don’t teach the art of great execution. Without execution, strategy is
merely theory.
In fact, a common complaint of strategy consulting firms is that they leave clients with comprehensive
presentations outlining the best strategy for their organizations. However, after the final presentation,
employees will go back to their desks the next day and continue to do what they have been doing the
days prior. There is a missing link between the strategy and its implementation. Even in MBA programs,
95% of the time is spent on the theory of strategy, while 5% (at best) is spent on execution. In real life,
the exact opposite is true—5-10% is spent on strategy development—the remaining effort and time is
spent on executing that strategy.
A great strategy may put you on the competitive map, but only great execution can keep you there. Most
organizations struggle with execution. They understand the strategy, but can’t translate that vision into
the day-to-day changes to operations and actual implementation.
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/guide-to-business-strategy-execution-873
This document addresses business strategy execution.
“Strategy without execution is hallucination!” – Mike Roach, CEO of GCI

7
There are 4 fundamental building blocks to successful strategy
execution
Basic Building Blocks to Successful Execution
From a study of 250 companies, we found 4 fundamental building blocks that executive can use to influence
effective execution of strategy
DECISION
RIGHTS
INFORMATION
Clarify decision rights—
specify who “owns” each
decision and who must
provide input
Align motivators—ensure
incentives support the
proper objectives
Decision Rights and Information are far more important—about 2X as effective—as
improvements to Motivators and Structure.
Source: Neilson, Martin, & Powers, The Secrets to Successful Strategy Execution, Harvard Business Review, 2008
Ensure information flows
where it’s needed—e.g.
competitive info flows to
management, info flows
across business units
Make changes to
structure—e.g. flattening
the organization

10
There are 17 fundamental traits of effective strategy execution and
organizational effectiveness…
17 Traits to Effective Strategy Execution (1 of 2)
These 17 traits that make organizations effective at strategy execution have been determined from a survey
research of over 26,000+ people in 31 companies. They are listed below in order of importance.
STRENGTH INDEX
(out of 100)
81
68
RANK TRAIT
Everyone has a good idea of the decisions and actions for which he or she is
responsible.
Important information about the competitive environment gets to
headquarters quickly.
1
2
3 Once made, decisions are rarely second-guessed. 58
4 Information flows freely across organizational boundaries. 58
55
48
Field and line employees usually have the information they need to
understand the bottom-line impact of their day-to-day choices.
Line managers have access to the metrics they need to measure the key
drivers of their business.
5
6
7 Managers up the line get involved in operating decisions. 32
8 Conflicting messages are rarely sent to the market. 32
32
The individual performance-appraisal process differentiates among high,
adequate, and low performers.
9
BUILDING BLOCK
DECISION RIGHTS
INFORMATION
DECISION RIGHTS
INFORMATION
INFORMATION
INFORMATION
DECISION RIGHTS
INFORMATION
MOTIVATORS

13
Trait 1: Deep Dive
Trait 1. Everyone has a good idea of the decisions and actions for which he or she is
responsible.
In organizations with strong execution, 71% of individuals agree with this statement. For organizations with weak
execution, only 32% agree.
The ambiguity of Decision Rights increases as a company matures. When a company is young and has few employees, it
is not difficult to know what other people are working on. At that nascent stage, it is okay not to have clearly defined roles
and responsibilities.
However, as a company grows, executives and other employees will come and go, bringing in with them and taking away
different expectations. With time, the approval process will get more convoluted and murky—it becomes increasingly
unclear where one person’s accountability begins and another’s ends.
Large organizations are prone to “tribal knowledge”—i.e. information that is only
known to a small number of people (many times just 1 individual) in a company.
1 2 3 4 5

16
Trait 3: Deep Dive
Trait 3. Once made, decisions are rarely second-guessed.
In organizations with strong execution, 71% of individuals agree with this statement. For organizations with weak
execution, only 45% agree.
The usefulness of second-guessing depends on the person’s vantage point. For instance, a more senior and broader
enterprise perspective can add value to a decision. However, managers up the line may not be adding incremental value;
instead, they may be stalling progress by redoing their subordinates’ jobs, while neglecting their own.
Second-guessing is a dangerous art form used to disperse accountability. Oftentimes, when a decision is finally
made, it has been vetted by so many parties that no one person could be held accountable.
By clarifying decision rights and responsibilities, an organization can also improve its ability to track individual achievement,
which helps it chart new and appealing career-advancement paths.
It is important for managers to delegate to, trust in, and rely on their subordinates.
1 2 3 4 5

19
Contents
• Executive Summary
• 4 Building Blocks of Strategy Execution
• 17 Traits of Successful Strategy Execution
• Transformation Program Design
• Balanced Scorecard Overview
• Blue Ocean Strategy – 4 Organizational Hurdles
• Templates

22
Below, we have listed 15 potential initiatives in a Transformation
Program—each has been mapped to at least 1 of the 4 building blocks
15 Initiatives in a Transformation Program
Focus corporate staff on supporting business-unit
decision making.
Clarify and streamline decision making at each
operating level.
Focus headquarters on important strategic
questions.
Create centers of excellence by consolidating
similar functions into a single organizational
unit.
Assign process owners to coordinate activities
that span organizational functions.
Establish individual performance measures.
Improve field-to-headquarters information
flow.
Define and distribute daily operating metrics to
the field or line.
Create cross-functional teams.
Introduce differentiating performance awards.
Expand non-monetary rewards to recognize
exceptional performers.
Increase position tenure.
Institute lateral moves and rotations.
Broaden spans of control.
BUILDING BLOCKS
Decision Rights
Information
Motivators
Structure

The Balanced Scorecard is a powerful strategic management tool to track
the execution of activities
25
Balanced Scorecard Overview
The Balanced Scorecard (BSC) is a strategy performance management tool—a semi-standard
structured report, supported by proven design methods and automation tools. It was developed by
Robert Kaplan and David Norton. It can be used to track execution of activities and trace each activity
back to the source strategic goals or initiatives within the Transformation Program.
The BSC approach takes a “balanced” approach by supplementing traditional financial measures with 3
key non-financial areas:
• A company’s relationship with its customers;
• Its key internal business processes; and
• Its learning and growth.
Financial
Measures
Customer
Relationships
Internal
Processes
Learning and
Growth
Financial
Measures
Customer
Relationships
Internal
Processes
Learning and
Growth
VS
TRADITIONAL SCORECARD BALANCED SCORECARD
This approach enables companies to track financial results, while simultaneously monitoring progress in
building the capabilities and acquiring the intangible assets they need for future growth.
Source: 2GC Balanced Scorecard Usage Survey, Using the Balanced Scorecard as a Strategic Management System, Kaplan and Norton (2005)

28
This diagram illustrates the iterative process among the four processes
Four Processes of Balanced Scorecard – Framework Diagram
Balanced
Scorecard
Communicating and Linking
• Communicating and educating
• Setting goals
• Linking rewards to performance
measures
Feedback and Learning
• Articulating the shared vision
• Supplying strategic feedback
• Facilitating strategy review and
learning
Translating the Vision
• Clarifying the vision
• Gaining consensus
Business Planning
• Setting targets
• Aligning strategic initiatives
• Allocating resources
• Establishing milestones
1
2
3
4

31
Blue Ocean Strategy describes 4 organizational hurdles to must be
overcome for successful strategy execution
Blue Ocean Strategy – 4 Organizational Hurdles to Strategy Execution
Resource Hurdle
• Limited resources—whether in
staff or finances
• The greater the shift in strategy,
the greater the resources
needed to execute it
Political Hurdle
• Opposition from powerful vested
interests
• Any significant shift to an
organization will result in a shift
in political power
Cognitive Hurdle
• An organization stuck on the
status quo—an unwillingness to
“rock the boat”
http://flevy.com/browse/document/guide-to-business-strategy-Motivational execution-873
Hurdle
• An unmotivated staff
• Motivating staff to change the
status quo often takes years—
time that most organizations
cannot afford
1
2
3
4
Source: Kim and Mauborgne, Blue Ocean Strategy, 2005

34
Insert headline
TEMPLATE – Execution Building Blocks
DECISION
RIGHTS
INFORMATION
Insert bumper.
• Filler text
• Filler text
• Filler text
•Filler text
•Filler text
•Filler text
•Filler text
•Filler text
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•Filler text
•Filler text

37
Insert headline
DECISION
RIGHTS
INFORMATION
Insert bumper.
• Filler text
• Filler text
• Filler text
•Filler text
•Filler text
•Filler text
•Filler text
•Filler text
•Filler text
•Filler text
•Filler text
•Filler text
TEMPLATE – Execution Building Blocks (Motivators)

40
Insert headline
TEMPLATE – Execution Building Blocks (Pillars to Execution Diagram 1)
BUSINESS EXECUTION
Text
Text
Text
DECISION RIGHTS
Text
Text
Text
INFORMATION
Text
Text
Text
MOTIVATORS
Text
Text
Text
STRUCTURE

43
Insert headline
TEMPLATE – Transformation Program
INITIATIVE NOTES
• Focus corporate staff on supporting business-unit decision making.
• Clarify and streamline decision making at each operating level.
• Focus headquarters on important strategic questions.
• Create centers of excellence by consolidating similar functions into a single organizational unit.
• Assign process owners to coordinate activities that span organizational functions.
• Establish individual performance measures.
• Improve field-to-headquarters information flow.
• Define and distribute daily operating metrics to the field or line.
• Create cross-functional teams.
• Introduce differentiating performance awards.
• Expand non-monetary rewards to recognize exceptional performers.
• Increase position tenure.
• Institute lateral moves and rotations.
• Broaden spans of control.

46
Insert headline
TEMPLATE – Blue Ocean Strategy (Four Hurdles to Execution)
Resource Hurdle
• Filler text
• Filler text
Political Hurdle
• Filler text
• Filler text
Cognitive Hurdle
• Filler text
• Filler text
Motivational Hurdle
• Filler text
• Filler text
1
2
3
4

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