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July 30, 2005

Why Strategy Execution begins with Portfolios

Everybody has a strategy.

But it's not a commodity; and if strategy was easy, everybody would have one that works.

The science of "strategy failures" is intensive. Discounting 20/20 hindsight, the main factors in the failures are predictable -- they are the same ones that would have led to success:
- goals (that are clear),
- priorities (that are shared and supported),
- requirements (that are validated and adopted)
- and methods (that are instituted and controlled)

But how does the failure develop?

Strategy starts out as an idea that becomes a plan. When the strategy plan is not being realized, the holdups or breakdowns occur at one or more of the four points above, making their interdependencies untenable. Underlying that, the most critical missing ingredient is stakeholder commitment to generate the needed interactions.

Usually a failed realization is discussed in terms of an execution failure. Although that might be the punchline that people seem to care about the most, it might be missing the point.

By analogy, imagine an application that is installed on a network. It depends on the network components to establish the links between its various parts and its users. But as we have all heard, and as nearly every experienced consultant can confirm, an application will not achieve its aim if the network is not configured OR if the users are not trained. Just because the application is "installed" doesn't mean that it is going to "run" -- it has to be implemented before it can effectively execute.

To implement a strategy, appropriate commitments must be made to ensure that the key factors (goals, priorities, requirements and methods) are addressed in ways that allow them to successfully interact.

The traditional view of these commitments involves three key resources managed to the need: people, processes, and technologies. The main problem to solve is to resolve "competition" for the availability of these resources while verifying that the quality of the resources is sufficient.

The source of the competition for resources is where implementation must be prepared; in most companies, most resources are not at-large, and the deployment of resources may be following a plan driven by legacy jurisdictions, budget allocations, or disparate perceived needs not aligned with the support needs of the strategy.

But if managed as a portfolio, the various resources can be deployed as investments in the objectives of the strategy. In that way they constitute the "infrastructure" needed for the dynamics of the strategy's realization. Without this level of resource control, the implementation of the strategy is far less assured.

Posted by Malcolm Ryder at July 30, 2005 9:31 PM

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