Article
Bridging the gap between strategy and execution
Published
23 May 2024
In today’s business landscape, many organisations are faced with challenges in bridging the gap between strategy formulation and day-to-day implementation. In fact, a staggering 67% of well-formulated strategies fail due to poor execution. This article sheds light on these challenges and the importance of involving all levels of an organisation in the process of detailing strategic goals – as seen in the Japanese management technique Hoshin Kanri.
A tour of the factory
Imagine that you walk into a factory. You are wearing the mandatory safety shoes and a yellow safety vest. You notice the noise of the machines. They all have a traffic light attached, and they all glow green, indicating that everything is as it should be.
As you move further into the factory, you see a large square marked out on the floor, and along the edge are some large boards with numbers in different colours. One of the boards has a fishbone painted on it with several Post-its sitting between the bones. You see a group of 6-8 people leaving the area. You manage to catch one of them on the way out. His name is John.
You: What are you doing here? Shouldn’t you be monitoring the machines?
John: Argh, they now mostly run by themselves. Over the past few years, we’ve worked on not having to monitor our machines all the time.
You: That sounds like a good idea. Does that mean you won’t need operators anymore soon?
John: I wouldn’t say that. We didn’t do it to cut the number of employees but to free up time to work on improvements. We have a number of milestones that we need to achieve every year for the business to flourish, and right now, for example, we spend two hours every Wednesday increasing the capacity of that machine (John points to a large CNC machine).
You: Interesting! How does it work?
John: Our goal is to become a leader in sustainable packaging within the next five years. But we can’t afford to go out and buy the latest machines. That’s why we’re working on increasing the capacity of the machinery.
You: So how did you decide to have a meeting every Wednesday?
John: It started with a review of the company strategy in the autumn, followed by a series of joint meetings where we discussed how we could contribute. Our team has been working a lot on improvements, so we mentioned to the chairman that we wanted to take the lead and initiate these weekly meetings to work on increasing capacity by 20%.
You: Do the leaders then tell you what you need to do to reach that goal?
John: No, it doesn’t work like that. We’ve had some training in problem-solving, and then we run some tests to see if our ideas work. Once a month, the production manager attends the meeting where he gets an overview of the status and what we have planned for the next step. Sometimes, he challenges our ideas, but other than that, it’s mostly something we do ourselves.
While the above scenario may seem contrived, it highlights a common challenge faced by organisations: the disconnect between strategy and execution. Often, technical experts like John focus solely on maintaining the machinery, while the strategic leaders handle the overarching goals. However, this separation can hinder effective implementation. Whether in manufacturing or other sectors, as companies grow, maintaining alignment becomes crucial. Without it, organisations risk becoming bureaucratic, slow and inflexible.
We want to put a man on the moon!
In some organisations, the employees’ daily routines reflect purpose, cohesion and a continuous effort to improve. In these organisations, the machine operator’s job is more than maintaining the machinery, and a straight line can be drawn from the daily tasks to the execution of the company vision.
The story of the janitor at NASA is a cliché that has been used in far too many PowerPoint presentations. It has not been confirmed as true, but it helps to emphasise our point.
In the early 1960s, at the height of the space race between the US and the Soviet Union, NASA pursued the goal of sending a man to the moon and returning him safely. It was proclaimed to the entire population in John F. Kennedy’s speech to Congress on 25 May 1961.1
Among all the highly talented people and surrounded by the most modern technology, there were also a number of janitors. The story goes that one of the janitors was asked about his job and what he did. He did not mention supervising the heating system or emptying trash cans. Instead, he answered the question with pride in his voice: “I help put a man on the moon.”
Kennedy’s speech said nothing about the process. He did not say anything about the implementation or how they would get to the moon. He set a direction. And got everyone from the control centre to the janitors pulling in the same direction: To the moon!
Hoshin Kanri
Hoshin Kanri is about the strategy deployment work that lays the foundation for the subsequent execution. The management technique was developed by Professor Yoji Akao in Japan in the 1950s. Akao talks about how every person is an expert in their job, and therefore it makes sense to involve all layers of the organisation in the process of detailing the strategic objectives.2
Hoshin means compass needle (set the course).
Kanri means leadership (executing the strategy).
Hoshin Kanri – the new (old) black
The example of the janitor at NASA could very well be characterised as a “breakthrough objective”, as described in the Lean mindset of Hoshin Kanri.
In the organisations that excel at Hoshin Kanri, the same clarity and culture exist where the employees do not just perform tasks but contribute to the overall strategy. The day-to-day work aligns with organisational goals. Whether the employees are adjusting machines, updating Excel spreadsheets or optimising a process, they are united in a mission that drives the entire organisation forward. These organisations are able to take bigger steps in less time and achieve what they set out to do.
To ensure involvement and create real change, it is about creating meaning for the employees and making it clear how they contribute to the specific project. It is about building momentum and letting the employees know that they are doing well. For some, meaning will come from delivering a perfect presentation. For others, it will come from writing a book, and for the janitor mentioned earlier, meaning came from ensuring optimal conditions for the colleagues to send a man to the moon.
“Breaktrough objectives”
Hoshin Kanri is built around the idea of breakthrough objectives. They are the few critical goals that are based on the vision and aim to close the gaps from the current state to the desired future state. These are usually defined on a 3- or 5-year basis, depending on the strategy period, and typically answer the question: “What do we want to achieve?”
They represent a significant change and require the organisation to stretch itself. They are often characterised by providing a significant competitive advantage, represent a significant change in process improvement, require multi-functional effort and teamwork or require the creation of new standards or systems.
Why does nothing ever happen?
Unfortunately, the reality for many organisations is somewhat different. Research shows that a staggering 67% of well-formulated strategies fail due to poor execution. Bridging the gap between strategy formulation and day-to-day implementation remains a significant challenge for organisations.3
Many organisations invest considerable resources in detailing visions and comprehensive strategies. Unfortunately, these strategies often remain trapped in PowerPoint presentations or new mouse pads. The gap between development and execution widens, leaving leaders frustrated or indifferent when the next strategy cycle begins.
We often meet employees at the middle levels of organisations who complain that real change never happens. Every three or five years, new banners and bold visions are presented, but after the big joint meeting is over, everyone goes back to their workstations and continues their daily lives, unconcerned that the PowerPoint template has taken on new nuances.
Bridging the gap between strategy and execution
The problem lies in a lack of prioritisation. Strategy is about what we want, but even more so about what we do not want. We can only achieve a certain number of changes in a year, so it is essential to opt out, say no and focus.
Many companies fail to make it clear to their employees how they contribute to a specific project. Behavioural designer Morten Münster begins his book4 "I’m afraid Debbie from Marketing has left for the day” (In Danish: Jytte fra Marketing er desværre gået for i dag”) with a fictional conversation that unfortunately all too rarely takes place:
Recently, at a meeting about an in-house strategy roll-out at a large Danish company, the following conversation never took place:
Bert (responsible for the roll-out): “I had a fantastic experience yesterday. Henry – a shop manager- called to say how good the strategy is. He especially liked the concept of ‘customer centricity’. That sealed it for him.
“Apparently, he recently caught himself only considering his own needs and acting arrogantly towards a customer in our shop, but then he picked up his smartphone, logged into our intranet, clicked on tab number four, and read our manifesto. At bullet point four – right under the one about us being proactive – the words ‘customer centricity’ jumped out of him.
“The concept had never occurred to him. He found it extremely instructive, specific, and irresistibly easy to translate into specific behavior. He even said he thought the simple sentence was very useful, and that he’d like more of these kinds of strategies.”
A study from...
the Covey Institute shows that only half of the employees in a number of American companies knew about the company vision. And only about 25% could answer how they would contribute to it.5
From strategy to concrete actions
As the example from Morten Münster proves, many companies fail to bridge the gap between strategy and execution, which brings us to the need for a structured approach to bring strategy and execution together.
Hoshin Kanri introduces a number of tools that help visualise and support the rollout of the strategy, including X-Matrix, A3, Bowler chart, Catchball etc. We will not go into detail about these tools, but the essence of Hoshin Kanri is that the method enables us to translate the strategy into concrete activities at all organisational levels.
The starting point is the direction set by top management, and from here, the goals flow down through the organisation, where the employees together detail, challenge and concretise the few initiatives that will bring the strategy to life. At the same time, Hoshin Kanri ensures a structure for systematic follow-up and quick reaction to deviations.
Research show that...
48% of all organisations fail to meet at least half of their strategic targets. Before an organisation can reap the benefits of its business strategy, planning must take place to ensure that its strategy remains agile and executable.6
At Implement, we have helped several organisations implement Hoshin Kanri, and based on that experience, we would like to share the following lessons:
- “No” is the most important word in Hoshin Kanri: It is about limiting yourself. It is better to finish a few initiatives than to deliver several initiatives halfway. Stay the course and say no to changing direction halfway through the period.
- Follow-up is key: For many companies, X-Matrix, A3, Bowler charts etc. are something that departments dust off around New Year when presenting plans to management. The essence of execution is a continuous evaluation of progress and dedicated time to problem-solve red indicators.
- Reflect on your organisation’s Hoshin Kanri maturity: The annual evaluation should not only be based on the achievement of strategic goals but should be combined with a reflection on the Hoshin Kanri maturity of the organisation.
- Prioritise horizontal anchoring: How does a department secure resources that organisationally belong elsewhere? In which X-Matrix should the initiative appear? Horizontal anchoring is difficult, and it is important not to fall into the trap of “only” holding Catchball sessions between managers and teams.
- The strategy needs to be ready by summer: Time needs to be set aside for the rollout. If the new strategy is to be executed from 1 January, the strategy must be ready by the end of June. This gives the organisation time to complete several iterations of Catchball and formulate elaborate X-Matrices and A3s.
Build on the philosophy of developing people
Many Western companies have embraced Lean tools because they can drive profits and improvements. Unfortunately, the tools can be misused, and important points can be lost, making it difficult to sustain.
In Japan, the tools have a deeper purpose. They are useful for solving a specific problem, but they stem from a philosophy of developing people. These people need to be trained to solve problems and ensure the company’s long-term profit and survival.
In Japan, employees are seen as the greatest resource and are therefore involved in solving two types of problems every day:
- Those that happen as a result of an incident.
- Those created through the introduction of goals.
Hoshin Kanri is about creating the problems that, if solved, ensure that the strategy comes to life. The exercise is not about filling in an X-Matrix or holding meetings around a Bowler chart. It is about solving problems at all levels and ensuring that the problem-solving muscle is continuously exercised by all employees at all levels every day!
It’s all about people!
If you have the courage and want an organisation that actually achieves what it sets out to do, you need to make sure that you start with respect for the employees and the idea of developing people.
A good place to start is to delegate ownership of the formulation of the strategic initiatives and objectives. Let the employees present their recommendations and engage in a dialogue about the pros and cons. From here, it is the manager’s job as a coach to ask the right questions that promote learning and development without taking over the solution and taking the decision away from them.
References
2. Source: Yoji Akao, Hoshin Kanri – Policy Deployment for Successful TQM (2004)
3. Executives Fail to Execute Strategy Because They’re Too Internally Focused (hbr.org)
4. “I’m afraid Debbie from Marketing has left for the day.” Morten Münster, pages 3-4 (2017)
5. "I’m afraid Debbie from Marketing has left for the day." Morten Münster, page 11 (2017)