Are your strategies as confusing as your mission statements? What’s your strategic mantra? Learn four tips to closing the execution gap.
Gary Harpst (@gharpst) revealed in his book Execution Revolution that only 5% of employees understand their corporate strategy. It is therefore no surprise that 90% of well formulated strategies fail due to poor execution.(Source: CPA Trendlines : How to close “the knowing-doing gap?” Just do it. Do it now, Harry K. Jones, at AchieveMax, Skip Reardon (@sreardon) and editor Rick Telberg (@CPA_Trendlines)).
Could it be that our strategies have gotten so complex that no one, let alone the management team, can understand? Are our strategies as confusing as our mission statements? Daryl Mather (@DarylMather) of Consulting Pusle recently noted that consultants have "helped companies produce mindless and inane garbage" that nobody reads, uses, or even thinks about. Daryl's suggestion for a mission statement: “make sure it embodies the one overriding mission that they exist to accomplish".
So how do you close the knowing gap on our strategic plans? Much the same way as developing a clear mission statement. Guy Kawasaki (@guykawasaki ) in the Art of the Start suggests instead of a mission statement and all the baggage that comes along with it, to craft a mantra (a sacred formula for repeated prayer, mediation, or incantation). In other words, evoke power and emotion for your employees and what they do for their jobs.
So how do we clear away the clutter in our strategies? We often are paralyzed by data, we use too much information that is often times in conflict with each other. Rich Schefren (@richschefren) of Strategic Profits highlights in his blog “we chase scattered information from everywhere – considering all sources we think might have something useful to share. The net effect is we waste our time, our resources, and our intellectual capital in pursuit of new discoveries. And within the blink of an eye, we become victims of information overload.” Rich notes “wisdom comes not from devouring information, but by filtering it through personal experience and taking action on it. It’s the action or reaction, not the information itself, that makes us wise.”
Small business technologies are a contributor to this information overload. Small businesses are now able to create reports that big companies have been using for years. For example, QuickBooks by Intuit Premier and Enterprise can generate more than 150 reports. Many small business owners and employees do not have the time and the resources to fully understand the complexity and overlap in these reports. As a consequence, many small businesses are using metrics that are in conflict with each other and ultimately undermining their strategies.
1)Define your one single strategic mantra: One useful technique is to pare back the number of these interdependent metrics in favor of a more balanced mantra that is capable of weighing complex business decisions. One such metric is economic profit, which is defined as the net operating income after taxes minus the cost of capital. Economic profit is often referred to as Economic Value Added or EVA (David Harper @Money_Matters) and Trademarked by Stern Stewart & Co. According to Joel Stern, businesses that use EVA as a performance metric have outperformed their competition by an average of 49%.
2) Utilize tools that provide knowledge of this mantra relative to you employee’s actions: In other words, can employees see how their decisions/actions impact the mantra? Virtually every individual objective, whether it be sales, marketing, purchasing, manufacturing, can impact EVA. Functions and objectives are now unified and their interdependence can be explained relative to EVA.
3) Utilize tools that evoke action by your employees: With knowledge, comes responsibility – give your employees the capability to respond to signals relative to your mantra. Guide your employees to make smart decisions.
4) Utilize tools that evoke emotion in your employees: With action, comes results – give your employees the capability to see how their actions are making a contribution to your mantra. Reward you employees for making smarter decisions.