Strategy and execution are two aspects of a successful business. Neither will give results or outcomes without the other.
Let us explore each in turn, see what they mean, and how to develop each of them:
Strategy provides a sense of direction to the business. It involves macro goal setting, which would include a vision of where the business wants to be in 3-5 years, and what areas of business focus will lead to the results desired.
The strategy needs to take into account the following:
- One’s own strengths and weaknesses, and a plan on how to mitigate one’s weaknesses, while leveraging strengths.
- What the market scenario is, and what it is likely to be in the future.
- What one needs to do now to achieve market leadership three years from now.
Once this is done, the next important thing is to conduct a scenario mapping exercise. So, one should forecast a most likely market scenario, and also an upside on this as well as a downside, and prepare one’s strategy to take advantage of upsides, and cut losses in downsides.
The strategy needs to identify the resources required in terms of skills and money and identify sourcing for both of these crucial resources.
To summarize, a viable strategy will identify product groups, market forces, estimated outcome in a variety of market scenarios, and internally required resources to achieve the desired outcome.
Execution is just what it says, implementation of the strategy to achieve outcomes. The first step here is to break down the broad strategy into annual, quarterly, and monthly targets.
The next step is to develop a resource plan on a running monthly basis, to execute the specific month targets. While doing so, it is important that senior management does not lose sight of the overall strategy and direction, which can all too easily happen.
Systemic working, developing SOP’s, protocols, and procedures is a very important part of execution, because it eliminates dependence on individuals, and instead emphasizes teamwork and process orientation.
Equally important is a review mechanism which analyzes performance of a particular month, and takes corrective action wherever required. Reviews should be conducted at least once a week, in order that course correction is timely. Many modern organizations have a “standing morning meeting” every day to review the previous day’s activity, and set the goals for the current day, keeping the overall month target in mind. These meetings can be as brief as 15 minutes, but greatly help to achieve focus within the organization, besides building teamwork.
Reporting is the last main arm of execution, wherein data generated over the previous month with regard to sales, marketing, finance, manufacturing, quality, inventory, are reported to management, and analyzed in depth to ascertain alignment with strategy, and if there is misalignment, to effect internal changes quickly and decisively.
An organization should, wherever feasible, try to allow the market to “pull” product, rather than attempt to “push” product to the market. Manufacturing and services should be geared internally to be flexible so that they can respond quickly to market fluctuations. An excellent way is to set up a “supermarket” for delivery. The market requirement is met from supermarket inventory, the supermarket in turn releases a “kanban ticket” to the manufacturing plan to make up the inventory, the manufacturing plant in turn releases kanban tickets to the supply chain to provide components, and so on down the chain.
Ideally, information should flow smoothly from front to back, and materials and services should flow from back to front. Superfluous manufacturing or effort should be avoided. The concept of value add is very important here.
There are broadly three kinds of activity:
-Value added: Activity which one does, and which adds value, i.e., for which the customer eventually pays.
-Essential nonvalue added: Does not add value, or the customer does not pay for it, but the organization must do it all the same, though it’s just a cost. Examples are tax audits, filing of returns, maintaining inventory, and so on. An organization should try to minimize instances of ENVA.
-Nonvalue added: This simply does not add value, is a pure waste. Such activity could be things like multiple movement of material for no real reason, multiple movement of people, waiting around for materials or inputs, and so on. Such activities should be identified and systematically eliminated in order to improve organizational efficiency and focus.