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#1 Reason Why Companies Struggle to Become World-Class

By Martin Rowan November 15, 2018 by Martin Rowan

The Lack of Alignment Between Strategy and Execution

Recently Gartner commented at a conference that, if organizations want to be or remain world-class, they need to consider spending 8 times more on execution than they spend on innovation. What?! Just yesterday everyone was saying ~ “innovate or die”. The context to the statement was not that innovation isn’t important, but with innovation happening much faster, cheaper and more aggressively than ever before, an organization’s ability to remain agile enough to execute to the latest innovation is becoming a priority.

So where do we spend that money, to become/remain more agile in our execution? Technology seems to the be the obvious choice. As an example, SAP S/4 HANA was developed to provide companies with a digital platform for gathering information rapidly, responding instantaneously and disrupting business processes and, even, business models. As the new SAP slogan states: “Run simple, run live”.

What history has taught us though, is that this digital wave will have many similarities to other waves we have had to endure in the past. Remember the days when we all heard that mainframe technology would soon be dead and would be replaced by client-server? Then there was the certain “end of the world” due to Y2K’s two-digit year limitations. The internet phenomenon changed the way we share information and advancing mobility technology put humans in charge of the user experience. What we have found is that no matter which impending disruption we are about to face, if we do not align the strategic intent with the day-to-day execution, we will not realize the business benefit of becoming an efficient, effective and scalable world-class value-chain.

To align strategy with execution, organizations will need to overcome the following top five factors that continuously drive a wedge between people (and their behaviors) and best practice/system processThe absence.

  1. Absence of Trust – the lack of trust in the SAP data, eliminates our ability to turn information into insights. Furthermore, the lack of trust in our colleagues and their intentions builds bigger walls around our organization’s siloes and drives a wedge between strategic goals and tactical objectives.
  2. Fear of Conflict – conflict stems from mistrust (refer to point #1). The fear of addressing the conflict amongst teams and individuals is a fundamental constraint to achieving high performance in our organization. Fear of effectively addressing system “conflicts” isalso a fundamental constraint of achieving high-performance processes. System “conflicts”, also known as exceptions, help point users to identify the tactical execution activities that are not aligned with business rules & strategies.
  3. Lack of Commitment – not trusting our people and systems, and our inability to deal with conflict, puts a weight on our ability to commit to each other, commit to business targets and more importantly commit to daily disciplines that help us follow through on the business strategy.
  4. Avoidance of Accountability – the lack of commitment means that we will avoid accountability. I.e. accountability to our commitments/targets and our ability to understand the end to end impact of our actions. This lack of accountability will minimize our ability to achieve the targets we have set for ourselves or the business.
  5. Inattention to Results – avoiding accountability limits our ability to set measurable targets. However, even if we achieve our targets, we fail to set new and higher targets due to a complacency of achievement. It is never the end, and good is never good enough.

To address these challenges, Reveal’s ongoing VALUE optimization® (oVo®) takes a holistic approach to drive people behavior, process, and best practice alignment.

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Digital is exciting, and S/4 HANA is a great platform on which to capitalize on the digital era. But be cautioned as in previous technology disruptions, we need to ensure that the modern-day organization is ready to capitalize on the impending change. By aligning the strategic and the tactical elements of the value stream and addressing the system, process and people elements holistically, organizations will be able to step into the new era with confidence!

If you are interested in more information on this topic, the upcoming 2019 Webinar series will help attendees to further their understanding on how to prepare their business, mature the organization and transform their employees to capitalize on the new technology (S/4 HANA Business Suite).

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