Wednesday Feb 26, 2014

Are 90% of Companies Still Failing to Execute on Strategy?

“90% of companies fail to execute on strategy effectively.”  This statement was made over 30 years ago – but has nothing changed? Jennifer Toomey, Senior Product Marketing Director for Performance Management Applications at Oracle interviewed Denis Desroches, Director of Research for the Institute of Management Accountants (IMA), about this subject and got an update about current experiences on organizations’ ability to execute on strategy.

Denis is part of a volunteer research team called the Business Research and Analysis Group (BRAG) that, over the past 15 years, has done world-wide studies on a number of current business practices, including the adoption and use of performance scorecards, and issues in costing and profitability. The team’s results have been published in various magazines and journals and in a book called “Scorecard Best Practices; Design, Implementation and Evaluation.” In addition to Denis, Dr. Raef Lawson, Vice President of Research and Professor-in-Residence for IMA, and yours truly – Toby Hatch -  a Senior Product Marketing Director for Oracle Business Analytics, are also part of the research team.

According to Denis, the team chose to research the topic of executing effectively on strategy because during the 15 years of conducting research together, they continued to hear the same statement repeated again and again, in a number of settings, and therefore began to question its current legitimacy.  The quote, “90% of organizations fail to execute on strategy effectively,” originates from an article by Walter Kiechel III in 1982 article titled “Corporate Strategists Under Fire”. This number became a catalyst for businesses to seek improved methods for defining, articulating and, ultimately, executing strategy. This fact - less than 10% of organizations can fully implement their strategies - has been repeated, relatively unchanged, over the last 30 years.  



In our interview, Jennifer asked Denis what the BRAG team found out through their recent research activity. “Things do appear to be getting better,” said Denis. “Results of our on-line survey show that in 2012, a higher percentage of organizations were successful at executing their strategy”. In fact, about 40% of the survey respondents self declared that they were successful or very successful. “We did not define what constituted success; we let our respondents self-declare their own success level.” said Denis. Demographic characteristics like industry and company size didn’t appear to be predictive on which organizations would declare success or non-success.

“So what distinguishes successful organizations?” inquired Jennifer.

There are some cultural or organizational characteristics that appear to contribute to successful execution of strategy, and some technical issues and processes that need to be considered, Denis explained. For example, organizations who feel that they are very successful at executing strategy are more likely to have:

A supportive culture,
Effective leadership,
Clear communication to everyone about what the organization is trying to accomplish,
Clear links among strategy,  
Focus on organizational strengths,  
And align the initiatives to get it all done

Denis also offered several technical aspects of successfully executing on strategy that should be considered (hear more by listening to the complete podcast).

Although there are still a large number of companies failing to execute effectively on strategy, the number that are executing effectively is improving, and the checklist of items to consider for improving execution is fairly comprehensive. To read more about the results of this study, refer to the article called, “Are 90% of Companies Still Failing to Execute on Strategy?” in the March/April 2014 edition of the Journal of Corporate Accounting and Finance published by John Wiley and Sons.

To listen to the entire podcast, click here.

To learn more about the Business Research and Analysis group, click here.
To learn more about Oracle Scorecard and Strategy Management used to monitor the execution of strategy, click here.


Tuesday Feb 05, 2013

How Corporate Culture Affects Performance Management

Good news – now there is research to support the idea that corporate culture really does impact corporate performance management!

A new article by the Business Research and Analysis Group (BRAG) was published in the January 2013 issue of Strategic Finance called "How Corporate Culture Affects Performance Management". Click here to read the article. It is an interesting piece that focuses on two main things:

1) An original bit of research on the attributes of effective CPM systems (EPM in Oracle vernacular) and

2) How/if those criteria support Howard Dresner’s Performance Culture Maturity Model. This model tracks 6 critical measurement criteria through four levels of maturity therefore highlighting the status of any company in fostering a performance directed culture. 

The article starts off listing strategic and operational benefits that can result from having an effective EPM system, and then goes on to investigate how significant Dresner’s six criteria of a performance directed culture are to the organizations in the survey that had achieved significant strategic and operational benefits – with a view of the level of maturity organizations reached with respect to these criteria. In the end, we can see which factors impact the achievement of benefits from an EPM system.

Dresner’s six criteria from his Maturity Model are:

1) Alignment with Mission

2) Transparency and Accountability

3) Action on Insights

4) Conflict Resolution

5) Common Trust in Data

6) Availability and Currency of Information


Through a series of graphs and tables presented and an analysis performed, it was determined that three of the six criteria are very significant to achieving benefits from an EPM system, while the  other three (although still important) are less significant to the sample of organizations involved in the study. The three very significant criteria are:

a) Alignment of an organization with its mission and vision

b) The presence of transparency and accountability

c) The ability of an organization to resolve conflict effectively

An interesting detail noted in this article was that in general, organizations are doing a poor job of achieving organizational maturity in the three areas that were found to have the most significant impact on achieving benefits!  The four levels of maturity modeled were Level 1: Chaos Reigns, Level 2: Departmental Optimization, Level 3: Performance Directed Culture Emerging, Level 4 Performance-Directed Culture Realized.

Another interesting detail was that the ONE criteria that organizations have really improved upon over the years and have reached a higher degree of maturity on – was one that was considered to have less impact on achieving significant benefits (Availability and Currency of Information).

The big message here is although it is important to have good EPM information in a timely fashion upon which to base sound business decisions, corporate culture has an even bigger impact on being able to achieve significant EPM benefits.

Click here to access the article.

About

This blog will highlight key EPM market trends, recent events and other news of interest to our field, customers and partners.

Search

Categories
Archives
« April 2014
SunMonTueWedThuFriSat
  
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
   
       
Today