Following a roundtable on strategy execution, Rick Payne takes a look at the key concerns for CFOs.
Strategy execution presents a significant
challenge for business. So we brought
together CFOs from a range of industries
and different sized organisations at
Chartered Accountants’ Hall to provide
some insights on the topic.
The group agreed there were a
number of underlying challenges to
maintaining a robust strategy in the
face of continuous change, with
particular areas of importance
highlighted as follows:
- changes in regulation, competition and technology;
- dealing with oversupply when new competitors abound – they undercut you then do not deliver;
- ensuring people understand the strategy, are motivated by it and can connect what they do to it;
- keeping the organisation focused and targeting resources appropriately, particularly when there is so much an organisation could be doing;
- changing the culture to align with a new strategy, particularly when the current culture has delivered success; and
- accessing the necessary skills and resources.
The discussion prompted a number of ideas around ways to solve these issues.
Honest conversations
Good structures, frameworks and management information
Good structures and frameworks that ensure the management team regularly discuss how strategy execution is progressing are important. This includes management information that highlights performance against genuine key performance indicators (KPIs) that connect to the strategy.
Such tools are at their best when used as a prompts for high quality, honest conversations.
However, attendees were wary of ‘paralysis by analysis’, the expectation that answers would magically arise from crunching data and believing because a computer was involved it must be right. Analysis needs to be sense checked to confirm the underlying logic and assumptions. If required, new information systems provide a useful focal point for getting people to use information more consistently and reduce endless conversations about whose numbers are right.
Successful strategy implementation requires settling on the right number of objectives for the circumstances.
Communication is key
Focus, focus, focus
To deal with this, one organisation had three strategic goals and a bucket called ‘commercial contribution’. With high-quality discussions on progress, people began to realise that work they had classified as commercial contribution could often be connected to the three strategic objectives. Unnecessary objectives began to be dropped. Over time, focus is achieved without demotivating those who were struggling to connect with the strategy. An alternative proposed was to widen out the number of objectives to be more inclusive.
Beware best practices
Getting back on track
Sometimes it’s obvious when a strategy is off-track, sometimes it’s not. Well thought through operational measures and milestones that connect to strategic goals and KPIs will help. Of course, in the event of unexpected cash flow and profitability declines, action needs to be taken – but by that time it may be too late.
Three examples of getting things back on track were discussed:
- In a turnaround, the new CFO said in town hall meeting: “What a mess, what a team, what an opportunity!” The team became more energised, they focused on what was going well and crowded out what wasn’t working. The leadership idea that “my job is to define reality and give hope” was also helpful.
- An organisation burning cash by offering a high-quality service based on physical locations was not connecting with consumers. It was then presented with a partnership opportunity. They were quick to realise this provided a much stronger business model with higher quality revenues. Iteratively they pivoted from providing an operational service to providing a software platform. It should be noted that this was in the context of a relatively small organisation with a focussed management team. Replicating this in larger organisations is difficult.
- One CFO highlighted the need to be cautious about jumping on the latest bandwagon, building a team and waiting for the revenues to flow in. Careful thought and financial modelling are required before deciding, albeit carried out quickly enough to avoid missing an opportunity. Organisations that have previously made successful bets based on gut feel tend to forget the bets that did not come off.
Training and development
Further reading
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Update History
- 06 Aug 2019 (12: 00 AM BST)
- First published
- 09 Aug 2022 (12: 00 AM BST)
- Page updated with Further reading section, adding related resources on strategy execution for finance leaders. These new articles provide fresh insights, case studies and perspectives on this topic. Please note that the original article from 2019 has not undergone any review or updates.