Moran Management

What are the 4 Common Barriers to Strategy Implementation?
What is The Balanced Scorecard?

Why is strategy so difficult to implement? Research by Kaplan and Norton1 suggests there are four common barriers to strategy execution:

The Vision Barrier
Only 5% of the work force understands the strategy. The “command and control” mechanisms of the industrial age, when employees were merely “spokes in the wheel,” who required little knowledge of the company vision are no longer effective in the age of the knowledge-based economy.

The People Barrier
Only 25% of managers have personal objectives and incentives linked to strategy. Most incentive compensation systems are tied to short-term financial results, rather than the long-term initiatives that support strategy execution.

The Resource Barrier
60% of organizations don't link budgets to strategy. This occurrence is not uncommon, as in many companies the budgeting and strategic planning functions don't interact! Amazing! And since budgets are the traditional tools for planning the allocation of human and financial resources, strategic plans and strategic initiatives may fall short in terms of necessary resources.

The Management Barrier
85% of executive teams spend less than one hour per moth discussing strategy. Have you ever conducted a monthly operations review meeting with your staff? When you hold operations reviews, is the majority of time dedicated to a discussion of financial results, focusing on "budget versus actual" variances. Not uncommon. But, since budgets are often not linked to the strategic plan, the discussions may completely avoid any focus on the true value drivers in the business.

1 Kaplan & Norton, The Strategy-Focused Organization (Boston: HBS Press, 2001)