How to Close the Strategy/Execution Gap
The shift is over, you have worked your ass off and say to your colleague, "These managers have no idea what happens without us! How could they be so stupid to …. "
I am sure you can fill in the blanks here.
When we talk about "the gap" in organisations we mean the holes that operations constantly feels like having to fill as a consequence of ill-informed management decisions. Yet the gap also exists the other way around … It's Friday, 7PM. Finally, the management meeting has ended. You figured out that operations has found a 'workaround' to the new strategy and wonder, "Why do we miss opportunities? Don't they see that …."
If you did not fill in the blanks earlier you could probably fill them in here.
The strategy/execution gap is often covered by many blankets and carpets or, in plain language, by hard workers and managers who report the expected instead of the real situation. The gap comes to the surface when harvesting the actual rules used to make operational decisions, aligning them with the business strategy — a common practice in methodologies like Decision Modelling and Business Rules Management — or changing the business strategy.
Some organisations have lots of strategy but no execution.
Take a road authority as an example. They are faced with huge investments to solve capacity bottlenecks in the traffic network. Building new infrastructure is one of the most expensive and time-consuming investments that a government can make. So, before building a new road (or while waiting for the new road to be built) it makes sense to research other opportunities. Could we reroute some traffic to other roads? Could we change the traffic light regime in the morning / evening? In response to an accident we could inform road users, etc.
There are many situations that result in traffic congestion. For each of these situations managers make a response plan. This way they can report that situations are 'taken care of'. For operations these response plans are 'nice to have' but difficult to execute. In practice there is not just one situation to handle but rather many situations that a traffic operator needs to deal with simultaneously. Could the traffic operator combine the response plans for different situations in real time? Of course not! So, instead of following the rules that are set in the response plan he makes decisions based on intuition and best practices.
Most organisations have lots of execution but no strategy.
Take a harbour as an example. It is faced with a huge variety of ships, loads, weather conditions, currents, and some regulations. To anticipate all these conditions, movements are managed by people with a lot of experience and know-how. We have captains, certifications, pilots, and a harbour control centre that coordinate all movements. The response to all different combinations of situations has never been written down completely.
Instead, we trust the professionals. They make sure every movement is compliant with regulations but, most importantly, is optimal for the given situation. Automating the resulting behaviour is probably easier using machine-learning algorithms than using a rule-based approach because there are not many explicit rules, and there is much tacit knowledge. (I will leave the comparison of the rule-based versus machine-learning approaches, though interesting, for another post if you don't mind because it would be off topic here.)
Just remember that many organisations turn out to be unbalanced when you try to relate strategy to execution and vice versa.
Why would you want to close the strategy/execution gap?
The reason that every organisation should close the strategy/execution gap is efficiency. It is a waste of effort to invest in a strategy without executing it. It is a farce to think that individual decisions in a chain without a common and explicit strategy result in an optimal outcome.
Who closed the strategy/execution gap?
I have to admit that not all my customers have closed the gap and many of them are struggling. To my surprise the road authorities were able to close it. How? The strategy existed but little was executed. In the little that was executed, the different road authorities in a value chain did so in different ways, using a different technology, methodology and approach. The good news, however, is that the strategy was well aligned between the partners and was highly structured. By finding a common vocabulary and common business rules we could define an execution methodology based on the strategy. The result is a general execution strategy with 'hooks' to relate the policy norms to geography, local traffic situations, and local traffic measures to prevent congestion.
What are the requirements to close the strategy/execution gap?
- The first thing you should do is align terminology and agree on a common vocabulary that is shared by all stakeholders. Now you can express the strategy and the execution (usually management and operations) in this shared vocabulary or use it as an Interlingua between the two different levels. If you work in a value chain, you would do the same with your partners.
- Next, you define general rules to execute the strategy on a very high level and agree on them, again with all partners. For example, what kinds of measures would we take in what kinds of situations? Standardise these rules.
- It would not work if existing local variations are neglected. Minimise them, but make sure the general rules allow for local variations by adding situation-specific rules to deal with exceptions.
- The fourth step is crucial: Make sure the general rules act directly upon the strategy definitions, defined in the first step, in such a way that if the strategy changes the execution changes automatically. This way the strategy and execution are always aligned and you achieve 'compliance by design'.
- Finally, think about technology to support the new way of working. This may be a project on its own. Don't be scared off if this step takes longer and calls for more effort than defining the methodology. Having the methodology in place is a benefit in itself. It will facilitate collaboration and make communication more efficient.
What are the consequences of closing the strategy/execution gap?
- Faster or immediate response to strategy changes
- More transparent and compliant business operations
- Better understanding of how to influence operations with strategy
Disclaimer: My notion of strategy changes includes changes to optimise an organisation's results and excludes a paradigm shift in the product or service offering of an organisation.
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