The CFO for a company is a key leader in helping to craft a company’s overall strategy. Yet, as any experienced business knows, developing a strategy is one thing. Delivering results that improve a business is something else entirely.
A recent article in CFO Innovation called “Strategy Execution: What Could Possibly Go Wrong?” outlines some of the common pitfalls in strategy execution. Our deep experience as outsourced CFOs for the San Francisco Bay area definitely echoes these sentiments.
The article’s key point is that many elegant company strategies do not have proper execution and implementation:
“Every year, many companies convene their sharpest thinkers to develop strategies to enter new markets, capture greater market share, become more profitable, or otherwise improve some aspect of the business. And every year a large percentage of these strategies are doomed from day one.”
The article states that there are 3 main types of implementation risks:
1. “Failure to adequately translate the strategy from high-level ambition to specific actions”
In our collective CFO experience in strategy development and implementation (especially with small businesses and technology startups), this is a classic example of overreach by the CEO or business owner. High-level vision and goals are great, but how realistic is the plan to get there?
“Failure to adequately translate the strategy from high-level ambition to specific actions the organization must take to make that ambition a reality. In this case, strategic ambition—while understood tacitly by senior leadership—is poorly translated into design principles and downstream implementation choices.
"This communication failure disaggregates the ambition so that elements of the strategy, when built, no longer fit. The result: the execution of the strategy defaults to best (or average) practice, rather than calling for next practice.”
2. “Failure to appropriately change the strategy when conditions change”
Simply put, business is messy. Things change. Yet, a company’s strategy may be rigid and not dynamically able to adapt to new information or competitive responses.
3. “Failure to put in place organizational capabilities”
Businesses are living, breathing organizations (especially small businesses). Company strategies can inflict significant stress on the people within the organization, which affects their effectiveness and ability to improve business results.
“Failure to put in place the organizational capabilities required to sustain the strategy after it is enacted. Implementation efforts “run out of steam” in this scenario, or do not take off at all. Some of the culprits include initiative fatigue, organizational resistance, and lack of ownership or clear accountability.”
The article also offers some interesting prescriptive advice to overcome these common causes of strategy failure:
“Dynamic strategy implementation demands a different kind of leadership attention as well, with consistent focus on managing for outcomes, not managing to milestones. Finally, a dynamic approach requires the use of metrics that specify a clear line of sight between program deliverables and the desired strategic outcomes.”