The scene is typical.
The inflection point between strategy and execution starts when we are methodically laying out revenue projections. We are in the ‘war room’ for months to design, vet and discuss revenue projections. We look at how to increase occupancy and rates, decrease the distribution costs, and look at market changes within our accounts or the competitive set to get us to the answer.
Then, commercial teams of sales, marketing, and revenue management start crafting action plans to get there. It makes sense. And it is an approach that most people take. Then why do most teams fail in this gap from strategy to execution?
The gap
The divide acts as a silent saboteur. You may have crafted an inspiring roadmap, but without proper design and execution, it's just an artful document. Our teams often find themselves in limbo where brilliant strategies fail to materialize due to ineffective execution.
It has cost organizations over $1 trillion in overlooked revenue and productivity loss. Within hospitality alone we see millions of dollars of overlooked revenue in even smaller hotels because of the strategy to execution gap.
Yet, each of these teams that we worked with walked away from that war room thinking they nailed it.
In teams where this gap exists, consider that:
- Only 8% of marketing strategies were focused on the most valuable customer or segment.
- 78% of tactics or actions didn't have an overall connection revenue.
- 6% of tactics were focused on customers or accounts, leaving 94% focused on internal processes.
- 50% of mid-management teams couldn't recall a single strategy of how they were illustrating a disconnect from the vision.
Bridging the gap between strategic planning and effective execution in sales and commercial — sales, marketing, and revenue management — strategies can be elusive. Management teams struggle to realize their ambitions as they grapple with aligning their sales and marketing teams and their resources to support their vision and plans. Addressing this critical missing link is essential to thrive and achieve their objectives.
Strategy to execution blockers and what the best do differently
Several hurdles contribute to this disconnect.
The need for due diligence in strategy: Strategies often stumble when broad concepts must be transformed into actionable steps, highlighting the gap between high-level vision and ground-level operations.
In real life: A hotel team was charged to increase price by 7%, yet it was far above their aspirational competitor that had more awareness and defined themselves as customer service and undeniable quality. The teams put up supporting tactics that were feel-good moments to a strategy that felt good but lacked viability.
What is the best way to do something differently? Articulate clearly the overall vision of how you will drive the revenue goal. Ensure that it mathematically works. Pressure test if the strategy defined gets you to that vision. Test if it achieves all parts of the revenue goal. Does it increase the volume and the price that you desire? Does it support or conflict with other business goals, such as cost of sale or carrying costs? Having the correct overall strategy that directly cascades off the financial/revenue goal is mission-critical and sets the tone for your team's effectiveness and efficacy. Leave behind strategies that are inspirational but lack the reality needed.
Our toxic love affair with activity over impact generates a false sense of productivity: Yesterday's operational mindset of looking at output has debilitated us from moving to an impact mindset of value creation. Leaders tend to value how much work teams have done instead of the work's results.
In real life: Another team got further down the path than most. They had translated their financial revenue vision into their strategy. And then it took a turn. In the excitement, they missed the step designed to crystalize how to make that vision happen, which was missed entirely. There was no bridge between how they would achieve that goal and their actions. They went directly to what they were going to do. What was the result? They did a lot. They reported everything they did and put it on PowerPoint presentations. But the work was scattered, and they didn’t achieve what they set out to do.
What is the best way to do something differently? Embrace the "Do Less, Make it Mean More" mentality. A maniacal focus on "straight-line effectiveness" looks at where we should put our time to get the greatest impact. Have a zealous approach to challenge and debunk what you have always done and question if the supporting tactics or actions do indeed move you in the desired direction.
Lack of clarity of which tactics or actions get us closer to the goal: This is related to the two prior points. When there is a need for more clarity within the strategy, and the tactics or actions are focused on activity vs. impact, then, inevitably, there is a void of metrics that call out what is effective in getting closer to the desired result.
In real life: As an example, the team didn't have a clear strategy; they only had the revenue goal they wanted to hit and tactics they had continually used. In this case they wanted to increase revenue within the group demand segment. There wasn’t a strategy of how we connect the revenue goal of occupancy and ADR attributed the group lift. There were only actions that the team had done before: trade shows, FAM trips, reaching out to global sales. The only metric left was the outcome of either hitting their target or not and the completion of those activities; they needed to know whether what they were doing was working as well as it could be. Did they increase revenue? Well, sure, but much opportunity was left on the table, and it took far longer than needed.
What is the best way to do something differently? Orchestrating micro-metrics of the supporting tactics or actions related to the strategy is a game-changer. Teams can quickly see how those actions are connected to the plan and the larger revenue goal. These micro-metrics illustrate the agility to evaluate, and shift focus to a different path. Teams can embrace an iterative mindset rather than burning time and energy.
Absence of accountability on the right things: There is a belief that if we hold people accountable, we are masters at execution. Best-of-class leaders understand what to hold their teams responsible for.
In real life: The leaders of both teams had one-on-one calls and team meetings, during which they asked for updates on their actions. However, they rarely discussed which tactics were affecting the vision. Only once did a leader ask, "Are we doing the right things to get us there?"
What is the best way to do something differently? Best-of-class leaders focus on four things:
- Remember that the revenue target or financial goal is an outcome of the right strategy, not the strategy itself.
- Maniacally focusing on the strategy rather than completing tasks.
- A "straight-shot" tactical approach to strategy achievement.
- What will the micro metrics of tactics/actions tell us if we are getting you to strategy?
Kate Burda is CEO and founder of Kate Burda & Co., a consultancy focused on improving revenue performance.
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