Measuring your business strategy’s success is vital to strategy execution.
Despite its importance, research by SurveyMonkey shows that only 35 percent of business owners set benchmarks or goals. Among those who set them, 90 percent consider themselves successful. Of those who don't, only 71 percent report the same.
If you want to achieve organizational objectives and avoid common strategic planning pitfalls, here’s why it’s important to evaluate your strategy.
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Evaluating your strategy can help your organization achieve its goals and objectives while highlighting necessary adjustments for long-term success.
Its benefits include:
- Ensuring organizational alignment
- Establishing accountability
- Optimizing operations
Assessing your business strategy is an ongoing process. To ensure it’s set up to succeed, you must evaluate it pre-, during, and post-implementation. Here’s how to do so.
How to Measure Your Strategy’s Success
1. Revisit Goals and Objectives
Every business strategy needs clearly defined performance goals. Without them, it can be difficult to identify harmful deviations, streamline the execution process, and recognize achievements.
After establishing goals and objectives, plan to revisit them during and after implementing your strategy. According to Harvard Business School Professor Robert Simons in the online course Strategy Execution, the best way to do so is by comparing them to critical performance variables—the factors you must achieve or implement to make your strategy succeed.
For example, if your company’s value comes from customer loyalty, one of your critical performance variables could be customer satisfaction. When customers no longer receive value from your products or services, that could impact your company’s bottom line.
The best way to verify critical performance variables is by analyzing them against your strategy map—a visual tool outlining the cause-and-effect relationships underpinning your strategy. Those variables should also receive high importance on your balanced scorecard, which translates your strategy into goals and objectives.
By taking these steps, you can identify performance measures worth reviewing.
2. Review Measures
Evaluating business performance requires measures—quantitative values you can scale and use for comparison—and they must tell the right story.
According to Strategy Execution, you should ask three questions when reviewing measures:
- Do they align with my strategy?
- Are they objective, complete, and responsive?
- Do they link to economic value?
For example, if you want to improve your company’s brand loyalty, metrics worth monitoring include the number of new customers, average purchases per customer, and the number of social media followers.
A balanced scorecard can provide a holistic view of your business performance measures—ensuring all your employees are on the same page.
“You can have the best strategy in the world,” Simons says in Strategy Execution. “But at the end of the day, what everyone pays attention to is what they're measured on. So, you need to be sure that measures throughout the business reflect your strategy, so that every employee will devote their efforts to implementing that strategy.”
3. Supervise Monitoring Systems
While balanced scorecards are powerful diagnostic control systems—formal information systems used to monitor organizational outcomes—they don’t provide visibility into all measures of success. That’s why you need additional systems to streamline strategic plans’ evaluation.
For example, you can use customer relationship management systems’ analytics tools to generate reports that align with business goals and objectives. To boost customer loyalty, you can automate reports on:
- Purchasing patterns
- Purchase frequency
- Customer survey scores
“But to ensure that these systems are effective, you need to invest considerable time and attention in their design,” Simons says in Strategy Execution. “You must not only spend time negotiating and setting goals—as we've discussed—you must also design measures for these goals and then align performance incentives.”
4. Talk to Employees
Employee feedback and buy-in are other useful tools for measuring success.
For example, creative software company Adobe is known for its loyal employee base. That was put to the test when the company shifted to a subscription-based model, launching Adobe Creative Cloud.
Company leaders briefed employees on strategic changes and how they provided value to customers. They also encouraged employees to contribute ideas and feedback throughout the transition. With minimal internal pushback and a boost in collaboration, Adobe knew its strategy would succeed and ensure relevance in a constantly evolving market.
“The best businesses motivate their employees to be creative, entrepreneurial, and willing to work with others to find customer solutions,” Simons says in Strategy Execution.
Related: How to Create a Culture of Strategy Execution
5. Reach Out to Customers
Customer feedback is a key measure of your strategy’s success. According to a recent report by Zendesk, 73 percent of business leaders believe customer service directly links with business performance—with 64 percent attributing customer service to positive business growth.
Feedback can also reflect how well initiatives align with customer needs and expectations when it comes to value creation, making it important to consistently seek out ways to monitor attitudes toward your company and its strategy.
In Strategy Execution, Tom Siebel, CEO of C3 AI, shares his thoughts on customer satisfaction when measuring success.
“Everything that's important to the business, we have a KPI and we measure it,” Siebel says. “And what could be more important than customer satisfaction?”
Unlike your company’s reputation, measuring customer satisfaction has a more personal touch in identifying what they love and how to capitalize on it.
“We do anonymous customer satisfaction surveys every quarter to see how we're measuring up to our customer expectations,” Siebel says in the course.
Your customer satisfaction measures should reflect your desired market position and focus on creating additional value. When customers are happy, profit margins tend to rise, highlighting why this should be the final step in measuring your strategy’s success.
Success Is within Reach
Measuring your strategy’s success is a continuous process that requires understanding your company’s goals and objectives.
By taking an online strategy course, you can develop strategy execution skills to measure performance effectively. Strategy Execution provides an interactive learning experience featuring organizational leaders who share their successes and failures to help you apply course concepts and excel in your career.
Want to learn how to measure your strategy’s success? Explore Strategy Execution—part of the Experienced Leaders curriculum in our yearlong Credential of Leadership, Impact, and Management in Business (CLIMB) program. It comprises seven courses to help you build the skills and knowledge to grow as a leader in the modern business world. Download our CLIMB brochure to learn more.
