This page details the Strategy Pillar criteria of our Operational Excellence model. The goal is not to explain in great length all of the criteria described here, but to give you enough details to enable you to better evaluate your own organisation Operational Excellence level.
At its core, the Strategy Excellence Pillar is about strategy implementation as it relates to your own organisation's ability to execute it perfectly. It's not about the strategy content itself, since it is ultimately specific to each industry and company.
Ultimately, this is something that could include nearly everything in the operations side of a business. Because of that, we have limited its scope to those "Direct" elements, the VIMOSA elements:
Though this pillar focuses on the strategy implementation and not the strategy itself, our model does cover the way the strategy is elaborated on and formulated. Essentially, it's easier to deploy a well-formulated strategy than one that isn't.
This document begins with the vision, mission and strategy definition. The criteria for Strategic Excellence rely on that clear and sound mission, vision and strategy. They must be consistent, communicated, applied and "lived by" through an operational strategic plan with key objectives cascaded across the organisation.
With that in mind, we have identified eight practical criteria for Operational Excellence in the Strategy Pillar, themselves broken down into three key areas: "From Vision to Strategy" "Strategy Implementation" and "Agile"
There is often a confusion between the terms "vision," "mission" and "strategy" - so we will define them here as simply as possible.
All three of these elements must be defined and formulated in a way that makes them easy to implement and even easier to adhere to by the people within that organisation.
A clearly defined mission or vision statement is a requirement for any organisation. It must always be well communicated but, even more importantly, it needs to be understood by EVERYONE.
People naturally become more engaged and experience higher levels of motivation when they know with both their brain AND their heart that all the effort is worth it and that they are truly going to accomplish something incredible together.
The strategy defines how the organisation is going to achieve the strategic objectives before them, along with which directions are chosen in the first place. A "clear" strategy implies that people recognise how this strategy is different from that of their competitors, and that there are real choices being made.
The term "sound" is naturally more difficult to evaluate, since it is about the future and is very specific to your industry. However, the minimal criteria that can be applied involve that some type of robust and documented analysis of the internal and external environment has taken place. This can include but is not limited to a SWOT analysis, competitor and market analysis, differentiation factors, consumer segmentation and more.
Ultimately, this is about making people confident about the strategy so that they fully adhere to it for each of their behaviour and action.
Clear strategic objectives, both medium and long-term ones, must be defined for the benefit of the overall organisation. Contrary to common believe, they should not always be ambitious. They must also be adapted to the specific situation the organisation faces, as demonstrated by the excellent article in the Harvard Business Review titled "The Stretch Goal Paradox".
In summary, the objectives should be defined according to the following cases:
The second section, "Strategy Implementation," is equally important because according to a 2017 study conducted by the Harvard Business Review, a full 67% of well-formulated strategies will STILL fail due to poor execution.
Our own model embeds the popular Hoshin Kanri concepts, but we want to emphasize the importance of the inclusion of a participative process in everything that follows. That in and of itself will be the decisive factor of a successful implementation - whether or not people were willing to follow the top Leadership on this journey the company is about to embark on.
Overall, the strategy defines the key directions that will be acted on in the future. It can be detailed, but it must still be complemented by a genuine implementation plan that defines and implements the practical actions necessary to take the strategic directions and to reach the defined strategic objectives.
The easiest way to measure the Excellence of such an operational plan is to check for a few of its key elements:
Strategy objectives are defined as mid-to-long-term objectives. They must be broken down by way of yearly objectives, and budgets must be connected to them. An older study by R. Kaplan revealed that up to 60% of organisations don't actually do this - our recent experience more than corroborates that idea.
Likewise, these objectives must be communicated and cascaded down at each hierarchical level into departmental (team, affilitates, business units...) objectives.
Though strategy implementation is primarily a top down process, it must also include a participative process to guarantee relevant integration with operations, a full understanding and the proper alignment between the different managerial levels.
This process should include collaborative and iterative sessions between two managerial levels, which itself is invaluable in terms of clarifying the strategy, objectives, indicators and all strategic action plans. Such a process is sometimes referred to as the "Catch Ball Process," coming from a Japanese game in which children playfully throw a ball back and forth.
Though the title of this is playful in nature, it's importance is paramount. This refers to the idea that the impact of each strategy on each organisational area and/or department MUST be identified as early on in the process as possible.
In other words, each individual must understand his or her role in achieving the strategy, or at least how their own efforts impact his or her organisation. People need to feel how their work and behaviour are aligned to the strategy. If they are unable to do this, then it is a strong sign that something has been missed in the strategy definition, communication, cascading or even implementation.
Maybe the best example of this is a now-famous story featuring then-President John F. Kennedy and a janitor he encountered while visiting NASA in 1961. Kennedy came across a man who was passionately and enthusiastically mopping the floor. The President stopped to ask him what his job was and the answer was a succinct: "I'm helping to put a man on the moon!"
In that moment, that janitor clearly understood not only the vision of the organisation he was working for, but his contribution to achieving it. If every member of your company doesn't share that same level of clarity, there is a problem that needs to be addressed before you continue.
Finally, we arrive at agility - something that is far more important than most people realise.
Keep in mind that the strategy, though mid-to-long-term, cannot be static. It MUST be able to adapt to a changing environment, which can include but is not limited to things like new competitors, new regulations, not achieving or even overachieving certain objectives, and more.
These are not ideas that you can control. What you CAN control, however, is how prepared you are in the event that they occur.
Therefore, a mechanism must be in place to regularly review both the strategy implementation progress and the environmental changes taking place. Then, you can adapt the strategy as necessary.
The minimal frequency for this is annual - however, we also believe that some strategy elements should be reviewed on a quarterly basis. That implies that the strategy is well cascaded and, because of that, has been integrated into the performance management system in all the right ways that you need.