Stop Cascading Strategy

It's not wrong to cascade strategic goals throughout an organization but it's no substitute for having hard conversations with your employees about what's needed for success

The reason Robert Burns’ famous line that “the best laid plans of mice and men often go awry” has resonated down the centuries is because everyone feels it to be true. It’s impossible to plan perfectly for an imperfectly understood future.

But senior managers will tell you that when it comes to making a new corporate strategy work, there’s many more problems than just bad planning. It is equally hard, if not harder, to put any kind of plan into action.

Granted, asking thousands of employees working in many (sometimes multiple) time zones, cultures, business units, and functions to all pull together in pursuit of a few goals will never be easy but most managers would agree that the world’s companies tend to fail at strategy implementation more readily than most other disciplines.

Data from The Economist Intelligence Unit show that 61% of strategies dramatically underperform due to poor execution, and CEB data conclude that on average companies lose almost 40% of their strategic value due to failures in implementation.

The Lure of the Cascade

An increasingly common response of firms trying to improve their success in strategy implementation is to “cascade” managers’ goals. This involves each level, from the CEO down, making their performance goals available to their direct reports and then the direct reports working to create their annual goals that – in theory, at least – directly contribute to the goals of their boss. In this way employees at all levels of the organization should understand how what they are asked to do contributes to the overall performance of the company.

It’s a compelling idea and, not surprisingly, nearly nine out of 10 organizations say they now provide employees with more transparency through goal cascades. Further, 75% say that they provide metrics to help guide their employees with this process. But the “cascade and measure” approach is clearly not working.

CEB surveys show that two-thirds of employees still don’t understand how their work relates to overall organizational performance and only 21% of employees “actively align their efforts with company goals.” What’s worse is that just a quarter of employees actually understand the key performance indicators through which companies are trying to encourage alignment around certain strategic goals.

Cascade Kaput

At many firms, communicating strategy involves little more than a corporate version of the telephone game (or “Chinese whispers”) where strategy is set by a few senior managers and “pushed downward” on to the rest of the organization. In extreme cases, the only place this happens is via the goals that each employee is set.

Practiced in its rudimentary form this cascade absolves managers of some of their responsibility. It allows them to check a box, without testing ideas, uncovering obstacles, making sure everyone is able to align their activities while still getting their other work done, sensing if employees are engaged with the company and the strategy, and that everyone understands the context in which they are being asked to take certain roles or hit certain goals.

When companies and managers fail to have constructive, honest dialogue about strategy (which are often hard conversations), many strategies end up getting “pocket vetoed”, which means that someone’s inaction (because of disengagement, misunderstanding, or downright disagreement with the direction of the strategy) can delay or disrupt an entire project. And that pocket veto can happen almost anywhere in the company.

As Ben Horowitz writes in “The Hard Thing About Hard Things“, “whenever a large organization attempts to do anything it always comes down a single person who can delay the entire project.”

Improving Implementation

Rather than cascading or other possibly appealing approaches, it’s each business leader’s obligation to align and encourage employees’  commitment to the cause, and to source the roadblocks and constraints that can derail a strategy.

CEB Strategy research found that “winning the hearts” of employees improves execution success by 17%, showing them how they fit into the picture increases it by 20%, but by far the biggest driver is allocating sufficient capacity, which improves success by 31%.

In fact the dominant skill that separates the best senior leaders from the rest when it comes to getting the most from their teams was the ability to allocate resources effectively and nobody can do that well unless they engage their direct reports in a hard conversations about what’s needed for success.

 source:excecutiveboard