Strategy is the foundation of future growth for your business; however, if you do not measure it correctly, you may have an ineffective strategy without even knowing and lose sight of your business goals. It is sometimes difficult to understand how to measure your strategy implementation. That is why at Step Advisory, we suggest three basic principles to assist you on your strategy implementation measurement journey: Get started, keep it simple, and stay up-to-date. We believe these principles enable you to make effective business decisions and keep you on track to achieve your goals
A vision without a strategy remains an illusion”
– Lee Bolman.
Why measuring strategy implementation is important
Strategy formulation and implementation are vital in driving progress towards achieving your business goals. However, it cannot end there. Progress needs to be measured constantly throughout the implementation phase to evaluate whether it adds value in the right places and moves towards your goals. These metrics become particularly relevant within the start-up phase of your business. Entrepreneurs and founders often find themselves in new territory, which means that their organisations require a pivot of strategic direction to remain on the path to establishment and success. This frequent adaption of strategy within start-ups enhances the importance of measuring strategy implementation constantly. How do you know if your strategy is effective if you do not take a step back and measure its performance? The measurement process provides you with crucial insight into how your strategy is performing and allows you to make data-driven adjustments to your strategy to ensure you continue working towards your business goals.
An effective approach to measuring your strategy implementation
So, we now understand the importance of measuring your strategy implementation, but how do we do it? It is essential to first look at the characteristics of a start-up that determine its approach in measuring strategy implementation. Unlike established businesses, start-ups (and primarily early-stage start-ups) have been in business for a shorter period and have less data with which to work. Think about a company that has been around for 20 years, and it is likely to have 20 years’ worth of financial and non-financial data that will enable the business to measure its performance. It now understands which data points are relevant to track and analyse.
You don’t have to be great to get started, but you have to get started to be great” – Les Brown.
The most critical part of measuring your strategy implementation is to start! The longer you wait, the longer you delay having vital information to make better decisions and improve your strategy. Although this may be the most challenging part, consider these following two principles, and hopefully, we can get you going sooner than you think!
With the strategy implementation methodology we use, the goals we help clients set are often to “start measuring the baseline”. A new private equity team doesn’t know how much time team members spend on sales compared to operations. The aim here is to get started, as opposed to crafting the correct theoretical proportion. You can adjust anything after you’ve started.
Keep it simple
To achieve effective measurement of your strategy implementation, avoid trying to do it all. It will become time-consuming and often confusing if you try to consider every piece of data you can. Select three to four metrics that are truly relevant to your strategy and provide you with the proper insight to make effective decisions. Introduce new metrics only when needed, and you have enough of a track record with which to work.
Every business should have its “critical number”. For one start-up we assisted, it was customer acquisition (as it will be for most start-ups). They were convinced about their offering and customer retention, but acquisition was costly and so therefore, cost per acquisition was their critical number for the beginning stages. The simplicity around tracking one number allowed for laser focus which the entire team could align behind.
For a start-up, its ever-changing environment often results in a similar change of strategic direction. Quite simply, a new strategic direction means a new way in which you measure your strategy implementation. When a shift in strategy occurs, it is important to re-evaluate how you measure it. Ask yourself whether the information you are working with is still relevant and enables you to make effective strategic decisions; if it is, great, keep going! If it’s not, well, then it’s time to re-evaluate and make some changes to the way you measure your strategy implementation.
For the start-up we mentioned previously, they reached consistency in their customer acquisition about 6 months in. At this point, it was important to re-evaluate the critical number that the team aligned behind. We helped them craft a plan for geographical expansion and closely tracked returning customers, which then guided decisions for the next season.
Although developing and implementing your strategy is the first step towards achieving goals, it needs to be accompanied by sound strategy implementation measurement to gain valuable insight into how your strategy is performing and how you need to adjust accordingly. At Step, under our Implementation and Execution Pillar, we have a team of consultants ready to guide you through tried and tested techniques to measuring your strategy implementation.