Paul Docherty, CEO and founder of i-nexus, outlines the multiple benefits of introducing business execution software.
New financial years come and go, and organisations face the same execution-related issues every time. Conference Board Surveys of CEOs highlight ‘execution’ as one of their major challenges. Coupled with the fact that only 10 per cent of global organisations consistently deliver on their objectives, it’s no wonder that CEOs are viewing execution with such trepidation.
In typical organisations, a great deal of time is spent and emphasis placed on strategy creation, usually led by the CEO and a senior team. But once the strategy is in place, objectives agreed and cascaded and the day-to-day challenges take over, a CEO is often left in the dark as to how the strategies created are being managed and delivered at the frontline. Another concerning fact is that, according to Kaplan and Norton’s Harvard Business Report, only 27 per cent of employees have access to these strategic plans, meaning that three out of four employees are often not even aware of the CEO’s vision, let alone able to see the crucial part that they play in its delivery.
Challenges facing CEOs, CFOs and senior executives across the globe can be categorized into three key areas:
1. Lack of clarity within the organisation of strategy, accountability and roles and responsibilities
2. Lack of a formularised process for driving actions and monitoring/reporting back on execution
3. Lack of visibility as to whether the actions, once delivered, will be sufficient to ‘turn the dials’ and result in the planned and forecasted business outcome
Taking each challenge in turn, it could be argued that there are plenty of ways in which these can easily be addressed—management frameworks and methodologies such as Hoshin Planning, Lean Six Sigma and Balanced Scorecard are widely used by organisations to address these challenges. But the real issue here is that these well-established management frameworks are often used in isolation, resulting in a number of disparate action plans or project plans that are not linked to the overall organisational strategy.
For example, although a typical large organisation will have a comprehensive goal cascade process in place, it is often dysfunctional. Senior executives have little real opportunity, on a day-to-day basis, to directly impact results. They are forced, in effect, to pass instructions to the people implementing the change via a chain of people who put their own spin on their message, while only being able to see the outcome of the project once it has ended.
Without a feedback mechanism in place that links these actions to the strategic objectives, the opportunity to effect change and really drive strategic initiatives is almost non-existent, meaning that comprehensive, well-thought-out strategies often never get realised because the tools needed to drive execution are not in place.
To successfully execute, organisations need to ‘close the loop’. They need to not just be able to connect the goals to the actions that realise them, but they need to be able to measure and forecast the impact those actions have on the indicators being used to track the achievement of company goals. At the heart of business execution is the recognition that organisations need to integrate goal management, project management and performance management processes.
By integrating methodologies such as Hoshin Planning, Lean Six Sigma and Balanced Scorecards using business execution software, a closed-loop business execution system is created, one that can really deliver increased benefits for an organisation. On-demand software of this kind is growing in usage and it brings substantial benefits to organisations, particularly large-scale ones where the actions of thousands of employees need aligning for best effect. A major benefit of using business execution software is in the management time saved by reducing non-value-added activities, mainly in the creation and validation of reports for feeding back up the chain to the senior management team or the C-suite.
Commonly, organisations rely on spreadsheets to manage their business execution processes, whether these are Lean Six Sigma projects or Balanced Scorecard metrics. While spreadsheets are perfectly adequate for managing budgets or simple projects, they have their limitations when it comes to their ability to effectively manage multiple projects. Spreadsheets are not only time-consuming—the average manager spends 10 non-value-add hours a week maintaining spreadsheets—but they are quickly out of date and show multiple versions of the truth as a result of the number of iterations being maintained. Managing large-scale projects using spreadsheets is also a risky business as costly errors can creep in to formulae because of mistakes in formatting or incorrect links to other documents. As such, it is almost impossible to ensure data integrity.
So how can business execution software eliminate the need for managing with spreadsheets? It does so by bringing together all of the previously fragmented tools and systems used to plan and drive execution of business goals into a comprehensive and robust execution system. These systems make it possible to visualise the cascade of goals from executives right down through the organisation to front-line employees, and to see in real time the progress and impact of what can be, in larger organisations, many thousands of individual actions, projects and initiatives on the achievement of those goals.
Business execution software brings three major benefits to organisations:
Better alignment: Business execution software helps to bring about a dramatic increase in the percentage of employees who understand their contribution to achieving the goals of the organisation and the ongoing activities that drive them.
Speed of execution: Organisations are able to focus the energy of employees to speed up and bring forward the delivery of their strategy. Execution cycle time reductions of 25 per cent have been reported using business execution systems.
Better agility: Organisations receive earlier warning signs that the actions in place are not moving the dials, which provides the opportunity to make timely changes and avoid impending failure. There have been reports of 50 per cent increases in the success rates of actions that can be directly attributed to the implementation of a business execution system.
Ultimately, organisations that introduce business execution software, like i-nexus, dramatically raise the probability that they will achieve the goals they communicate to external stakeholders. Given the critical importance of delivering on their promises, understanding the potential of business execution should be on the immediate agenda of every leader.
A co-founder of i-nexus in 2001, Paul Docherty holds a Master of Engineering in Computer Systems and Software Engineering from the University of York and an MBA from the University of Warwick. His understanding of the challenges of embedding Six Sigma and other performance improvement methodologies into the fabric of organisations comes from his experience coaching senior management teams in many Global 500 companies and from leading the deployment of Six Sigma at Marconi.
i-nexus is a leading provider of specialist software that enables global organisations to turn business goals into results. i-nexus has its headquarters in Coventry, England, with regional offices in Zurich and Boston. www.i-nexus.com