Can You Measure Strategy Execution in One Metric?
Most strategy execution metrics are like colored pins on a world map: They show you where you’ve been, not where you’re going.
Many organizations use some variation of a balanced scorecard to document a strategy’s objectives and KPIs. These are typically results-oriented; good for clarifying the objectives of strategy but not as good for measuring the organization’s ability to execute. By the time leaders realize their strategy isn’t working, they have no idea why. All they know is that the team is missing the mark.
If you can’t measure your ability to execute, how can you expect to get better at it?
At Catalant, we’ve worked with over 30% of the Fortune 100 on some of their most important strategic initiatives. We’ve seen first-hand how the best-performing organizations drive strategy execution by focusing on getting the right people on the right work at the right time.
In fact, we’ve developed a single strategy execution metric leaders can use to assess and improve their ability to execute on strategic initiatives — the convergence index.
What is Convergence?
First, let’s understand that the three fundamental elements of strategy execution are:
- Objectives (What are we trying to achieve?)
- Work (What needs to be done to achieve our objectives?)
- Resources (Do we have the right people and capabilities to complete the work?)
An organization in which these three elements overlap significantly is one that is likely to achieve a lasting advantage over its competitors. To help leaders accurately measure convergence, the business transformation team at Catalant has developed a metric called the convergence index.
Ideally, all three of the fundamental areas will overlap entirely, yielding a convergence index of 100%. In the real world, this is almost impossible. Most organizations will discover a much lower degree of convergence between objectives, work, and resources, giving them an opportunity to improve strategy execution.
We can even plot an organization’s current state of convergence against ideal future states, as shown below. As the organization improves its ability to assess objectives, work, and resources holistically, it also improves its ability to deliver on strategic initiatives.
As the organization improves over time, improvements in productivity (with more people focused on doing the right work) and reductions in waste (fewer redundant efforts and less wasted time) can yield big bottomline results.
In the case of one example organization (a 1,000-employee organization in the consumer packaged goods industry), we found that improving the convergence index from 32% to 71% would yield a cost savings of about $19 million. This is the result of improved productivity and reduced waste, as more of the organization’s people are focused on the right work.
Calculating the Convergence Index
While the concept is simple, the work required to understand the organization’s performance is very difficult because of the way most organizations are structured. Typically, strategy lives in presentations and hallway posters, work lives in project management systems and spreadsheets, and resources live in legacy HR software. This is why most strategy execution metrics fail to accurately assess the organization’s ability to execute.
Arriving at a convergence index is complicated, but well worth the effort. The Catalant team helps leaders score objectives, work, and resources across several dimensions with industry-specific guided questions. The team then works with customers to design a program to improve their convergence index.
Finally, we’ve built the Catalant platform specifically to support convergence, with an environment that captures all relevant information on strategic objectives, work planning, and resource management. In one system, leaders can document their strategic objectives, organize complex work streams, and find and access the skills and capabilities they need (both within the organization and Catalant’s 65,000+ expert marketplace) to deliver results.