Post by Susan M. Sanders, Vice President, Strategic Planning and Human Resources, Hospitality Ventures Management Group
Most companies do a fair job of creating a Strategic Plan that defines the most important objectives, initiatives and measures for the organization over a three-year outlook, but unfortunately, they fail to recoup the time, money and thought leadership invested in the process because they fail to execute the plan due to largely controllable mistakes.
According to The Conference Board’s annual CEO insights report, strategy execution keeps CEOs of organizations of all sizes up at night. The ability of senior leadership to implement the Strategic Plan is a top CEO concern year-over-year. It is not difficult to understand why, given the reality that most organizations fail to execute their Strategic Plans. While lots of research exists on this topic, the Balanced Scorecard Collaborative has reported that up to 90 percent of companies fail to properly execute their strategic plans. From my experience, it is not that the plans are bad plans; it is that they are poorly implemented.
This failure is primarily due to only two reasons:
1. Strategic planning is treated as an annual event vs. an on-going process.
2. Resistance to change is underestimated or not understood and subsequently not identified and dealt with.
This blog focuses on the first issue, treating Strategic Planning as an event.
At HVMG, we recently undertook a three-year strategic planning endeavor and learned a lot about ourselves through the process. However, the learning didn’t stop with the strategic planning retreat; it is a continuous process as we integrate our successes and short-falls into our bi-monthly strategy review process. We believe the management practices and routines that surround strategy development and execution have made us a stronger, more focused and nimble organization—and most importantly—one that is armed to quickly react to property performance issues and changes in the marketplace because we are constantly monitoring our results and making corrections as the environment changes.
I’ll explain the tangible benefits we’ve realized a little later but first let me share our experience. This is broken into a series of nine-steps; four of these lead up to the development of the Strategic Plan and the five following this are all about execution and implementation; the ones most often missed. A blog could be written on each of the nine steps so I’ll do my best to be brief here.
1. Know thyself. Even if you have defined Mission and Vision statements, revisit them. Interview investors, brand leadership in your portfolio, GMs and other stakeholders to find out what you’re good at (or not), what your market differentiators are and what these key people really think of you. At HVMG, what we learned through our key stakeholders resulted in a change to our Mission and Vision statements as well as a company rebranding exercise. As a 10-year-old company, our intent was not to change our well-established culture; our focus was to better define and communicate it.
2. Develop a balanced set of 4-5 Strategic Objectives that are the company’s top priorities for the next 1-3 years. Leverage the things you’re really good at (i.e., your market differentiators). It is very difficult to do this if you are not clear on who you are, what you are good at, what your most important stakeholders value about you and what they want from working with you.
3. Assign ownership at the Strategic Objective level. Then, you’ve got someone who’s responsible for each major Objective and you can begin to build the key components to success—how are we going to get there, who will work on it, timelines, budget, etc. Also, it’s an excellent way to ensure that everything you’re working on is important to move the organization forward and part of the Strategic Plan. If a new project comes up mid-year and it’s not aligned with the Strategic Plan, a good question to ask is why are we doing this? In some cases the plan needs to be adjusted; in other cases the new project should be shelved for the time being to work on higher priorities.
4. Establish Key Performance Indicators (KPIs) at the Strategic Objective level. The hotel industry is fraught with many sources of data from external and internal sources. With hundreds of metrics to choose from, it’s easy to get trapped into focusing on too many or the wrong ones. At HVMG, we focus on seven KPIs and compare the results against budget and last year to monitor results across our hotel portfolio.
As stated earlier, most organizations do a decent job getting to this point. However, the next five points are critical to successful Strategy Execution:
5. Visible sponsorship of the Strategic Plan through management routines led by the CEO. Nothing gets more attention than what the CEO is visibly focused on. The CEO must lead the management routines that drive and support the Strategic Plan. In our case we meet monthly as an Executive Team and deep-dive into the KPIs, monitor performance, determine what’s working or not working and change our plans accordingly. As well, we have a bi-monthly Strategy Review where we meet with the Strategic Objective owners and review progress against their strategic initiatives. Where things are not on-track, we go through the timelines, discuss resources and budgets, and identify where help is needed.
6. Make it someone’s job to implement the Strategic Plan. By having a Senior Leader who reports to the CEO responsible for the implementation of the Strategic Plan, the organization develops discipline and a capability around it. This process starts with the articulation of the Strategic Plan, is enabled through management practices and routines and is fueled through continuous improvement. In addition to understanding the mechanics of Strategic Planning, this leader must also be keen to organizational dynamics and managing resistance to change.
7. Address results and issues in real-time. Reward and celebrate success as it happens. As well, the early detection of performance issues means that difficult conversations are had early and often; don’t avoid the difficult conversations.
8. Communicate results company-wide. Being transparent and completely visible helps eliminate silos. HVMG now publishes our KPIs on a monthly basis so all our hotels know where they stand. We’ve found it to be a motivator as people are naturally competitive.
9. Follow up. It is important to monitor progress against plans both in the established management routines and on an informal day-to-day basis. Where progress is not being made or results are not improving, understand why and adjust the plan according.
HVMG has seen numerous benefits from our Balance Scorecard development and implementation over the past 18 months. Here are a few highlights.
Better outcomes in our portfolio. We’ve been able to more quickly—and deliberately—turn around underperforming hotels as a direct result of the management routines and practices developed over the past 12 months.
Better allocation of resources. Through our focus on KPIs and monthly reviews, we’ve been able to prioritize all of our resources and activities. We run a lean organization and do so effectively because priorities are defined and understood.
Improved communication across the company. Communication was once viewed as a problem with our General Managers; now, they say it’s one of HVMG’s strengths.
Improved communication & decision making within our Executive Team. With our entire Executive Team attending monthly KPI reviews and bi-monthly strategy reviews, we constantly work through issues and ask each other the tough questions. With all the right people in the room, we also can more readily analyze the inherent tradeoffs involved in most significant decisions, resulting in smarter actions.
There is simply too much at stake not to expect results from your Strategic Planning efforts.
Susan M. Sanders is Vice President, Strategic Planning and Human Resources for HVMG. She has worked in a consulting capacity for The Coca-Cola Company, Coca-Cola Enterprises, Marriott International and Intercontinental l Hotel Group. She has also held leadership positions inside of Starwood Hotels and Resorts, The Ritz-Carlton Hotel Company, Lodgian, Inc. and Impac Hotel Group. She serves on the Industry Board for Georgia State University’s Cecil B. Day School of Hospitality and Marriott International’s Franchise Healthcare Council. Sue holds MBAs from Columbia Business School and London Business School and a Bachelor of Science in Marketing from Florida State University. She is also a Six Sigma Master Black Belt.