Challenges to improving execution of strategy across business functions, as reported by organizations surveyed
|Ranked by frequency of mention |
|Rank* ||Challenge |
|1 ||Insufficient focus or investment |
|2 ||Difficulties or setbacks in execution of plans |
|3 ||Weaknesses in internal communication limiting effectiveness |
|* Based on 492 responses from our global multi-sector survey. Rank order may not reflect statistically significant differences in all cases. Unclassified/refused responses not shown. |
Improving execution of strategy across business functions
Percentage reporting challenges or delays in improving execution of strategy, by sector
Factors enabling improving execution of strategy across business functions, as reported by organizations surveyed
|Ranked by frequency of mention |
|Rank* ||Enabling factor |
|1 ||Regular communication on vision, goals and strategy |
|2 ||Strategy planning process involving all business functions |
|3 ||Alignment of business unit actions with performance drivers |
|4 ||Delegation of decision-making to the operational level |
|5 ||Regular training for employees on strategy |
|6 ||Monitoring of business environment trends |
|7 ||Enhanced planning, budgeting and forecasting |
|8 ||Definition of responsibilities throughout management team |
|* Based on 436 responses from our global multi-sector survey. Rank order may not reflect statistically significant differences in all cases. Unclassified/refused responses not shown. |
Respondents suggest that implementing such a far-reaching program effectively can be difficult.
Summary: The most frequently cited strategy by respondents to maximize this opportunity was to enhance strategic communication.
This is the first year we have invited respondents to comment on opportunities as well as risks. The executives we interviewed represent a range of senior management, from CEOs (about 19%of respondents) to CFOs (22%) and business unit heads (16%).
At the top of the ladder for 2011 is an opportunity that appeals to financial and business unit executives alike: improving execution of strategy across business functions.
This is also an opportunity for which organizations are relatively likely to report that measures to respond are needed but not yet implemented. Coupled with a high impact, this gives the opportunity a prime position on our heat map.
Opportunity outlook and impact
Looking across the sectors, the impact of this opportunity is uniform, rated highly in all cases. On balance, executives tend to see this opportunity as stable, neither rising nor falling when looking forward to 2013.
In the health care and power and utilities sectors, this opportunity is seen to be growing. This can perhaps be attributed to shifts in business models that are occurring in both sectors.
- In power and utilities, firms are increasingly moving into new markets, such as energy services, and this requires the development of new competencies.
- In health care, changes to health care systems and payments structures will arguably require companies to reorient business functions to support new strategies. At risk of over-simplifying a complex strategic picture, customer-oriented approaches may supplant strategies based on blockbuster innovation and high-cost products.
Across geographies, there is some variation in the perceived impact of this opportunity, but overall, improving execution of strategy across business functions achieves its high place on our list because it is popular everywhere.
- In most of the BRICs, the impact of this opportunity is expected to decline in the future. This could be because firms operating in these rapidly growing markets are currently struggling to develop the institutional framework needed to implement their growth strategies — a challenge they perhaps hope to overcome in order to focus on other opportunities by 2013.
Obstacles to success
The obstacles most frequently reported by executives seeking to take advantage of this opportunity are operational in nature:
- Their organization has been unable to execute current efforts effectively
- The strategic alignment process has been started but remains a work in progress
Responding to the opportunity
- In the US, nearly 60% of respondents indicate they are focusing on communicating strategy within the organization. In other geographies, the figures tend to range from 20 to 30%.
- In China, firms are more organizationally focused, placing particular emphasis on the development of a strategic planning function as a key opportunity.
- In many countries, efforts to respond remain a work in progress: Sweden, nearly 60%; South Africa, nearly 50%; Australia, 46%.
- In the power and utilities sector, where the importance of improving execution of strategy across business functions is seen to be rising, nearly 50% of respondents state that their efforts to respond are not yet effective. In the banking sector, the figure is 40%.
Both geographic and sector figures provide some evidence of the difficulty of implementing such a far-reaching program effectively, and demonstrate that maintaining operational effectiveness in the face of organizational and business model change is an ongoing challenge.
Organizations' responses to improving the execution of strategy across business functions
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