How do directors know their management follows their strategy and are on track? How does the work force understand they are doing the rigth thing at the right time? In other words, how do we know either the strategy is wrong or the execution? Or maybe both a little? In the hierarchy of execution there are many chances of misunderstanding and individual contradictory perceptions. And misunderstandings lead to wrong actions. Actions derailed from the strategic plan is a bad bad thing. In this article we highlight the damage that derailing from strategy can cause.
How the 3 tiers derail strategy.
Let’s have a look how the three tiers in a company derail a strategy caused by ambiguity. For our observation we split an enterprise into 3 organisational tiers.
- Tier 1: Knowledge Worker
- Tier 2: Management
- Tier 3: Directors
Tier 1 – How do you perceive strategy as a knowledge worker?
It is a misconception and short-mineded understanding to assume that only directors are disapointed by strategy-rejecting actions. Knowledge workers will face the consequences of other arbitrary non-aligned actions from other knowledge workers or maybe are confronted with contradictory strategy-abiding actions, that causes a mismatch in operations and thus bears conflicts, frustration and certainly efficiency loss.
What one should not do in this case, is to continue to reject the strategic order even if one knows bettter. The reason is simple. You have your responsibility, accountability, tasks and competences that is depicted in detail in your job profile. And so do the directors. Look at them as a co-worker who has it’s own set of responsibilities, tasks and competences. Do you interfer with your friendly co-workers duty’s? No. You don’t because you know that entails emotional conflicts not valuable for a sound work place. And the same applies to directors or managers.
Although, alike any co-worker you can stimulate their due diligence. From experience limited to a central european culture, I suggest, to wrap the stimulation in expressing your own need. “Dear Ms. Doe, I fail to understand what I currently should prioritize to perform aligned with your ideas. Do you find a minute to describe them to me, thus that I can be in line with your strategic thinking?”. No serious management staff can reject such a request and migth also also be flattered you take their directives serious.
Tier 2 – How does Management enrich or trim the strategy?
Depending on the personal understanding of management and leadership, the degree of freedom of competence, strategy is enriched or trimmed. Sometime also totaly neglected. Sometimes followed to the letter. So the input (understanding of the strategy by the directors) must be correctly interpreted and the strategy continuation (conveying strategy to blue colour workers) must be enriched with unambigious policies. A failuire in the interpreation and enrichment phase of strategy, will deliver wrong results.
Tier 3 – Do you as a director avoid a high interpretation spectrum for your strategy?
It goes without saying, that as a director we also can fail to communicate our strategy and thus our knowledge management and knowledge workers start to interprete our strategy. There are numerous factors that shape the interpretation variety by the ambiguity of the strategy communication. Size of the company, hierarchical depth, company culture, pluralistic settings, precision of the strategy, etc.
I recall a very simple graph drawn by Nancy Latham, Ph.D. that expresses the symptoms I mean to explain. It illustrates what follows on an incoherent strategy: fragmented and conflicting initiatives. And it might remind you of the outset of this article: “mismatch in operation”, “conflicts”, “contradiction”. It’s like one person started to paint one side of a boat (without sanding it down), while on the other side his/her buddy starts to sand down the old coating. Not only that the sanding dust would decrease the quality of the new coating, the process of a well-prepared surface leads to a different result.
Needless to say, from our perspective as a director, it is disparetely more difficult convey a strategy than just developing it.
So, what is the cost of derailing from a strategic plan?
I assume there is a common agreement that arbitrary motivated actions are just one specific type of how people reject strategy. Be it deliberately or not. That given, there is a list of costly damage that I have observed in my career and literature lists, which sprouts from a heterogenous understanding – the pure opposite of a common understanding – of a strategy.
The research on strategy coherence is so mature, profound and well known, that it is pointless for this article to dig any fruther. Here are a few sources on strategy coherence.
- Make Your Strategy Coherent, Harvard Busines Review, Paul Leinwand and Cesare Mainardi
- Coherence: It is Only a Good Plan (Strategy) If It Makes Good Sense, Greg Githens
Anyhow, we can conclude from this understanding that we need to know our reality to take countermeasure against strategy-hampering and strategy-violating events. And the base is to relentlessly establish pure transparency. Think of controllers. Finance or IT controllers. What is their main assignment? It’s showing the truth of expenditures, presence of budgeting, IT project progress. Their task is to reveal the truth. Show reality. Why do their roles merely exist in finance and IT? There is reasoning: You do fianance wrong, you fall. You do IT wrong, you suffer from long lasting cost penalties and loss of market share. What makes us think we can relinquish the process of truth-exposure for strategy coherence? It’s a rethoric questions. We need confirmation that the link of strategy and execution is well established – in both directions. Otherwise, fix the gap first and read below.
- The 5 Pillars of Strategy Execution, Gartner Group, Sharon George
- 5 Ways the Best Companies Close the Strategy-Execution Gap, Harvard Business Review, Michael Mankins
- How the Most Successful Teams Bridge the Strategy-Execution Gap, Harvard Business Review, Nathan Wiita and Orla Leonard
It entails, we require transparency about performance with specific qualities to ensure we do not derail our strategy: a low variance of interpreation, robust indicators and timely accurate. The low variance is to fight multiple interpretations of perfromance and it’s cause. Whereas robust indicators help us to recognize a common image that everyone is familiar with (e.g. a fixed dashboard or business performance cockpit). It is the common denominator and facilitates discussions for everyone to follow and understand. And of course, that information must be derived from the latest data, saying it must be timely accurate. if not, the variance factor increases again.
ANALOGY TO SCRUM SOFTWARE DEVELOPMENT –
For those familiar with agile or lean processes (e.g. agile strategy, agile software development) that might ring a bell, doesn't it? They all require transparency of performance to make another educated decision. The educated decision is about what do we develop next from the pot of needed changes. Speaking daily business, in a SCRUM Software cycle we employ Sprint Planings to define work packages we want to deliver. In the Product Backlog though, we deliberatly de-prioritize work packages we intend to deliver later in the year (or future). And the daily stand-up meeting allows a high-frequent and accurate
verification of performance (and from experience, mea culpa, I can say it is really hard to lie in such a team without anyone noticing it after a few days). The burn-down chart helps to share a common KPI throughout the sprint, which makes the transparency robust. The sprint review will help us to illuminate the sprint performance.
All together we can rely on timely accurate facts, robust indicators and a low variance of how we interpret progress. The quality criteria of transparency are met.
Well, that is creating transparency for Software Development. And what is the cost if you neglecting transparency and strategy-execution cohesion? Here some causes and failures:
- by content
- failing to understand strategy LEADS TO insensitivity of the delta between current and the target situation.
- failing to understand strategy LEADS TO insensitivity of absent knowledge.
- lack of delegation LEADS TO few individuals can collect the required knowledge.
- assumption that strategy is doubtful LEADS TO frequent change of strategy or tactics.
- by time
- failing to understand the prerequisites LEADS TO delays in procuring knowledge and execution.
- lack of delegation LEADS TO overload of individuals and causes delay.
- by resources
- lack of delegation LEADS TO unfocused work endeavours
- fail to understand strategy LEADS TO a lack of HR-expertise
- lack of delegation LEADS TO a fail to educate experts on time, which is compensated by hiring costly experts.
The list could be widely extended. So, derailing strategy is expensive. Let’s see how we can create transparency for strategy and execution in the next chapter with the help of Enterprise Architecture.
So. What do the 3 tiers require to be coherent with the strategy? There is many ideas about what’s needed to connect strategy with execution, like the article by Greg Githens – which I believe are too short-sighted because we are confrontend with additional demands these days.
- Connecting Strategy to Execution, Greg Githens
We need to be agile. We need to obey to the fact that VUCA is not just a buzzword. The volatility, the uncertainty, the complexity and the ambiguity requires tribute. Now, being an agile CEO/CFO does not mean you react ad-hoc and arbitrary to circumstances, as Alessandro Di Fiore from the Harvard Business Review depicts it. It means you adjust your strategy in a frequent manner to reflect reality, to make sure your strategic directive is plausbile for your next target situation. What does next mean? Next referes to the idea of having multiple mid-term situations (in EAM that is call a transitional business architecture) on our strategic and infinite road map.
- Planning Doesn’t Have to Be the Enemy of Agile, Harvard Business Review, Alessandro Di Fiore
- The agile CFO, IBM
- How CEOs Keep Transformations Moving, BCG, Martin Danoesastro, Benjamin Rehberg and Grant Freeland
There is more than meets the eye on agile strategy and leadership. As members of an enterprise, we need to accept constant change. That statement is a first class citizen of enterprise’s culture. And needs to be developed.
Making the assumption that change is embraced as an opportunity, we still need to establish the 2-way-linked strategy-execution control system. As a 2-way control system I regard a organisational system that produces immediate feedback to the board of directors, in order for them to react.
That understood, I insist to answer the very question: What do the 3 tiers require to avoid oblivion, to link their doing with the strategy directive, to always walk the shortest path to the target situation with the latest knowledge? And here enterprise architecture management (EAM) comes to the rescue to restore transparency for the good of educated decision-making.
EAM: the transparency amplifier
EAM’s main purpose is to create transparency. A picture of reality. A common understanding where we are and where we want to go. For this reason the 2-way-linked strategy-execution is essential.
The Zachman framework asks for that about what, how, where, who, when and why we do something. And they ask that for every dimension: scope, business model, system model, technology model and detailed representation. Thus, one is forced to answer the scope (organisaitonal unit, time scope, strategic motivation, etc) first, because the business model will be derived from it. And so are the system, and technology model.
The TOGAF framework also knows the notion of creating a strategy, link it to business, information and technology architecture. It allows to go back and forth, till all dimensions are fully aligned.
A framework has the purpose of providing a structure. In this case structure and relations. It usually evolves from lessons learned and theory. Either way, showing an approach from business strategy to technolgy harnessing and the way back, is a great benefit. But how do you report? Respectively, how to you satisfy our demand for the 2-way-link, the feedback on the strategy execution? You may report manually, but that requires a great deal of discipline. Do your workers understand what to report for you to understand? Do they do it always the same way to allow comparision? Can they do it highly frequent to be accurate? Without an enterprise architect’s design, that is very unlikely to happen. The enxt chapters describes how to maintain the transparency.
Instituionalize and Maintaining Transparency
We know the main purpose of EAM is to create transparency to enforce a common understanding. But how can we keep up with the volatile (VACU) entironment? Is EAM and all it’s proposed documentation not tying up our resources. Yes, that is at least one risk of EAM. EAM is propably one of the most critical resource-binding endeavours you face that might string itself through the entire organisation.
Starting with EAM: Architecture Partitioning
Frameworks like TOGAF are aware of this threat of resource consumption. That’s why TOGAF introduced Architecture Partitioning out of lessons learned and best practices. That is no rocket sicence. It simply considers that enterprises need a resource-conscious start into EAM. It’s an accepted approach and pattern.
The most common appliance of partitioning is to set a business vision and strategy and define a fragment, a partition of the organisation to institutionalize EAM. That partition could be constrainted by 3 dimensions according to EAM (one could think of others).
- Subject Matter, that is for example “applications, departments, divisions, products, services, service centers, sites, [..]” and so on.
- Time Period describes e.g. an length of an initative, project, continuous till recalled, coupled to a milestone, etc.
- Level of Detail sets the target depth. A board of directors could want to set a strategy and corporate capabilities: the top notion of business, information and technology architecture. Though, capabilities of business segments are developed by themselves or by project management actions.
So. Partitioning allows us to start with the current personnel. Without employing new ressources. And that is a big advantage.
LESSONS LEARNED FROM PROCESS MANAGMEENT INITIATIVES OF THE 90IES – Do you recall when consultants stormed into your enterprise with the task assigned to model all your business processes to the highest degree of detail? Has ever since someone consumed these models? Are they still accurate? To me it remains a mistery how directors believed that modeling without a process management institution is of any value. However, those days are gone.
We learned that we need to engage our own staff. We need to entrust them with the responsibility to cleanup, assign them with the accountability to run their own realm of competence properly. No one else can do it for them and that is what they are employed for. Management needs to lend trust and support to their work efforts as long they are in line with the strategy. In return, we aquire passionate workers and honest communication of results. Honest? Yes, the truth of results is what we search for in order to adapt our strategy-execution.
The partitioning also prevents us from overloading our capacity. Some units in an organisation face constant lack of qualified resources. Thus, we rather commence with another unit. Also, some areas are not suited for EAM, simply because their profit is to low or promises no ROI, no cost saving. Very often these units are not core business. In other words, for our first stroke we pick on organisational units that promise a high return on investment and – more important – little risk for a paramount damage. Thus, we isolate the implementation restricted by our currently available and motivated forces and promises. The small bits and pieces also make EAM easier to handle. In particular for an unexperienced novice-EAM organisation. And that is of signifficant importance: if you want to establish transparency. If you don’t manage to succeed with a partitioned architecture, you won’t with an organization-wide EAM neither.
Architecture Partitioning limits the risk to be ceased by the resistence of the staff and other directors. The first EAM initative is the ice breaker for an expansion of EAM. Failing is not an option.
Adapt job descriptions and procure tools to maintain and develop your initial efforts
Sizing your EAM at full fledge in depth, breath and immediatly, will very likley make you fall. So, partitioning we have learned is a way to cope with these 3 dimensions.
Another field of action is the job description. Even if you distributed EAM work over many shoulder without hiering new expertise, you need to declare it. Besided the business culture that needs to embrace change, you still require a way to put the responsibility down on paper. Not to create cumbersome effort. Not to annoy people. But to create transparency. Who does what. Now, that is an HR job. HR needs to develop a concepts and embed your initial efforts – which is the initial act to institutionalize EAM – in a written form into the organization. The good thing: responsibility is provocativly challenged. Does the employee, manager and director agree? It allows little room for excuses why work has not been done. The type of responsibilities are numerous and I gladly point them out in another blog entry. However, job descriptions allow transparency of responsibility.
It’s pure craze to insist to do EAM with standard office tools. It’s like doing BPMN in Microsoft Visio and expect the staff to located it, employ it as a guiding document through operation and challange it for improvement. It just does not happen. Let’s toss in a equation here. The higher the discipline is that it requires to maintain a EAM (or in this case BPMN documents), the less likely it is updated. You might think, it is not cumbersome to locate a visio file during a wild day of operation. If you are on that side, you are either extremely young or have infinite time at your disposal to get your job done. Both is not the average Jane or Johng Doe. Maybe Baby Doe. Anyhow, embedding Enterprise Architecture into your staff’s day, not to say into their mind, is what you need to create an accurate and up-to-date picture of reality. The transparency we are looking for. The transparency we need to have a better idea what future can be. The transparency that allows us to describe the next little step and the step that follows.
What are the features of a good EAM tool in regards to transparency? It illuminates the connections between disciplines. It answers how the discipine of strategy is connected with the discipline of project portfolio management. That is to say, what projects are in the pipe to piggy-back our strategy. What part of the strategy and till when with what priority compared to others projects. Projects than are linked to discipline of business process to show what process will be established or improved – or removed. At the end and for example, every piece of software you produce can be tracked to a requirements analysis, to a process, to a project, to a stategic initative. The best of it, you also can consume the status of the progress at your fingertip.
The up-to-date information that is tightly embedded into daily operation and strategy work, comes with a not to underestimate task. And that is the standardized way of facts. How it is standardized is, of course, essential. But prevalent is that we share a common picture and interpretation of facts. Recall the initial argumentation about the spectrum of interpretation that leads to derailing strategy. Here the path of argumentation ends and answers the question how you can create high strategy-execution coherence based on transparency and truth.
The recomended actions to battle intransparency can be summarized briefly without any verbose detour.
- Enforce the understanding that strategy-execution cohesion is a mandatory requirement.
- Narrow the room for interpretation – or better – create commond understanding and expectations.
- Cope with VACU to create transparency for the good of accurate decision-making.
- Institutionalise EAM in job description and organisational responsibility – not necesarrily more ressources.
- Employ the rigth tools to embed EAM in your daily operation and as a common picture linking disciplines.
- Improve the EAM institution in a improvement cycle.