Tag Archives: Learning

Why strategy implementation fails?

It is difficult to create the WINNING strategy,

BUT it is twice more difficult to EXECUTE it

 Creating a winning strategy requires lots of effort, geniality, cross-functional knowledge and involvement of everyone in the top management. And… all mentioned above is plausible. The President/CEO/Country Manager brings together the best top management team that creates the best possible strategy. And:

  • all members of the top management understand it;
  • they have skill and knowledge required for strategy creation and execution;
  • they can explain it and transfer it into operational plans…

BUT, in a lot of cases (several studies point to 60% or more), here comes the million dollars question:

Why this strategy is not bringing the expected results, or even worse, not bringing any results at all?

Revision of the market data, analysis, hypothesis, strategy and plans shows that there is no flaw. And still people that have to execute it do not do it in the expected – “right” – way.

This usually can lead to a furious frustration, misunderstanding and lost of trust:

  1. Top management blames, punishes and even layoffs middle management, accusing it of incompetence, incapability and underperformance (We have spent so much money and time on creating the strategy, involving the top experts and consultants in the industry, and what, our middle management fails to execute the strategy with its incompetence);

and on the other side,

  1. Middle management blames top management of lost connections with the reality, incompetence and self-centeredness (They are sitting up there in the comfortable chairs creating utopist’s papers without trying to understand the reality and the situation in which our company operates).

To find the solution we should look in the prerequisites for creating a successful strategy and execute it with excellence. The questions WHY, WHAT and HOW, should be answered and understood by everyone in the organization:

  • Why do we do something?
  • What is required to be done?
  • How are we going to do it?

Our experience and studies show that even the companies have managers and employees with all required skills and knowledge, still, the strategy execution fails due to the fact that middle managers can not answer the question WHY for the strategy. Top management fails into the translation of the strategy, thus strategy is not understood by the next level managers which are kept accountable for its execution. What is actually happening is that middle managers and employees are only executing their duties and responsibilities to be compliant with the corporate policies and procedures. They are not even trying to critically approach the actions and try to do them in better way, since they do not understand WHY they need to do them.

Where can be the solution of the problem?

We can look around and see what other professions, where mistake or not understanding is critical for human lives, are doing. Good examples are airplane pilots and SWAT forces.

Before they go into the execution of their duties they pass through simulated realities. And for them it is required. It does not involve “real” resources, does not spends real money, and can be repeated and tried several times during one day. The simulation can make them understand by trial and error WHY things must be done in one way or another.

WHY not use their experience and improve the chance of the strategy execution excellence. Companies can use business simulation as instruments for strategy translation. In this case, the participants (middle management) are put in the top management’s role of the company and there are required to create and execute a strategy and win in a competitive environment. Participants will have to pass through all of the processes the top management passes through, and they will learn by doing, sometimes by winning and sometimes by loosing. As in the real life, in the business simulation the results are measured by financial bottom line, with one difference, no real money is spent in the failures.

Production value chain – Production management business simulation

The role of the production facility in a corporation is to convert materials and parts into a product. The product is previously priced and sales department has put an internal order for production. Materials and parts are also with defined prices and in most of cases production facility could not influence these prices.

Having “defined sales prices” and “determined costs of materials, parts, energy etc.”, the main question for the production facility is: How its management can create value?

To answer this question we should look at the variables that are in control of the management of the production facility, or what should they do to create value. The mantra is very simple: “Produce more with less!” It is easier said than done.

The production volume is function with constraints: production capacity of equipment, supply chain efficiency and effectiveness, employees’ capacity and skills, etc. Having all that said, the key aspect that the management of the production facility should focus on is the throughput, which on the other hand is a function of production planning, materials release, human resources management and training, risk forecast and management.

Not an easy task that usually requires years to learn, decades to understand and lifetime to master. Without wanting, we come to the conclusion: “At last they mastered it, but they will retire in a month.”

We have understood the previous conclusion as our challenge and we have created the Production value chain business simulation.

Participants manage all variables that production management is required to manage during their day to day job. Different challenges contest their decisions, and results are measured in financial, qualitative and quantitative KPIs. Production Value Chain business simulation simulates several years of business and can be used as an instrument for general business processes understanding, learning business acumen, understanding finance and value creation, as well as, laboratory for testing of different decisions.

The seminar is designed for all level of managers and experts in the production companies, corporate analysis and bankers.