How to bridge the promises and results gap

The strategy discipline, in all its manifestations, has grown in popularity, stature and usage, especially considering the fact that Peter Drucker was forced to change the title of his book from “Business Strategies” to Managing for Results partly because then strategy was deemed to belong to the military or perhaps political campaigns but not to business. These days, businesses, government departments and non-profit organisations, big and small, and at different stages of their evolutionary cycles embark on strategic planning exercises every year to develop long-term, medium-term strategies as well as annual operating plans. It is also now commonplace for different divisions and subdivisions within these entities to embark on these processes.

It is no wonder that strategic planning ranked first in Bain’s 2007 Management Tools and Trends top 10 most used tools. Though it is not within the scope of this article to delve into the key driving forces behind this trend but, at the face of it, it would appear as though the trend towards strategising or planning is being driven by policy, legislative or governance requirements. At least this appears to be the case within the South African public service. To note, Treasury Regulations, chapters 29 and 30, as well as the Framework for Managing Programme Performance Information require government entities to, among other things, develop strategic plans specifying the entity’s objectives, indicators and targets that then get translated into annual operating plans and also form the basis of quarterly and annual reporting.

Although the planning trend is set to grow in the South African public service, my sense is that the focus will now shift towards the quality of planning and also towards ensuring that government departments produce impactful and deliverable plans. There are two underlying reasons for this. Firstly, the recession, which South Africa seems to be tentatively coming out of, has wiped off a substantial portion of the government’s revenue base, as a result the scarce money will have to be allocated to areas that make the most difference. Given the global economic uncertainties that we may live with for some time, I suspect this move will not be a once-off event. Secondly, the planning, monitoring and evaluation moves initiated by the Presidency aimed at, among other things, developing a coherent and coordinated national strategic plan as well as ensuring that sector and entity level plans are geared towards outcomes, combined with the fact that the Auditor General is set to start giving audit opinion on the performance of audited entities against set objectives, I sense that this interplay will lead to qualitative improvement in planning and service delivery in the public service.

Though the moves cited above are welcome and provide a positive signpost, I think policy makers and government officials will be well-advised to take into account the universal strategy cracks that have been spotted and documented by practitioners and academics around the globe. Though some of the cracks have been incorporated into the frameworks and green papers cited above, I do believe that it may worthwhile for government officials and policy makers to glance through some of the insights shared, who knows, this may trigger a “eureka moment”.

The biggest identified crack is the “planning and doing gap” or the “promises versus delivery gap”. For instance Morgan, Levitt and Malek in Executing Your Strategy (2007) indicate that less than 10% of effectively formulated strategies carry through to successful implementation, thus suggesting that 90% of companies fail to execute their strategies. Kaplan and Norton (authors of The Balanced Scorecard) in The Execution Premium (2008) also quote surveys which suggest that 60% to 80% of companies fall far short of the targets expressed in their strategic plans. In addition to the above, Gilbert, Buchel and Davidson in Smarter Execution (2008) also cite surveys which suggest that only 3% of executives believed that their companies executed their strategies effectively.

There are numerous reasons advanced for this state of affairs, for instance, Kaplan and Norton attribute the problem to the following factors:

1) Only 40% of companies linked their strategies to budgets.
2) 30% linked compensation to strategy, fewer than 10% of employees in the majority of companies surveyed reported that they understood their company’s strategy, as such cannot link their daily activities to its successful execution.
3) 85% of executive teams spent less than one hour per month discussing strategy, with 50% reporting that they spent virtually no time on strategy discussions.

Collins and Rukstad in the Harvard Business Review article “Can You Say What Your Strategy Is?” (April 2008) believe that the problem lies with the failure by entities to synthesise their strategies (defined as objectives, scope and advantage) into a simple and clear strategy statements, as a result the strategy does not cascade properly throughout the organisation, hence it does not get executed properly.

Though many of the reasons advanced above are valid and definitely contribute to the state of affairs, I believe that in most situations the main contributing factor lays with inadequate strategy formulation processes. In the Harvard Business Review article “What Is Wrong With Strategy?” (Nov-Dec 1988) Campbell and Alexander indicate that most planning processes do not come up with any new or effective strategies because the strategies that emerge are not anchored or premised on the basic ingredient of a good strategy, namely insight. Because of this, Campbell and Alexander argue that most planning processes set unrealistic or unachievable objectives.

In turn, because the strategies and tactics are not premised on solid insights, they are also ineffective or not implement able. Campbell and Alexander go on to argue that “planning processes are not strategic unless they initially focus on defining insights from which a strategy will be developed … and developing strategy without insights is dangerous because it leads to unrealistic plans”. Net, my sense is that it is important for private companies and government to spend time and effort identifying and articulating insights on which any strategy or operational plan will be based as this increases the odds of success. Insights, will help identify key drivers that will deliver the set outcomes, as well as the internal operating and social levers that will need to be pulled to create movement towards the desired outcomes. This will also makes it easier to determine how changes within the broad operating environment will impact on the outcome drivers and also what changes and adjustments to make well in advance.