Elomaa, who previously headed Taaleri PLC and is now company chairman of the board, said that the cost of delay is rarely calculated by Finnish companies, but that “being behind schedule or failing to execute costs a lot.”
“Companies instinctively know that time is money, but no one calculates exactly what it costs to delay by a year,” Elomaa said. “The value that should have been created during that year of the strategy execution period is lost and every month of delay can easily cost millions of euros."
For Elomaa, delayed strategy execution happens when a company implements its plans too slowly or when a company doesn’t react fast enough to changes in the market. Increasing digitisation, globalisation and climate change, he said, are major forces that affect the market and they require action.
To avoid slow execution there needs to be better alignment among executing management at companies in Finland and better resource allocation.
“The problem of a lack of common view is something I’ve seen many times,” said Elomaa. “Members of top management interpret the strategy in different ways and then wonder why the strategy is delayed. Added to that, is the failure to allocate the necessary resources for the execution.
“Corporate strategies are broad and large-scale, which means there is often a gap between planning and execution. Things become difficult when the focus is on both complex and simple things at the same time,” he said.
According to Elomaa, this lack of alignment and misunderstanding about execution capability leads to wasted time, but there is no clear understanding of how costly the delay is and no managed approach to calculating the cost. “The way for companies to improve strategy execution is to ensure that everyone in top management understands the strategy in the same way.”
Trailmaker, he said, is an antidote to the overarching issue of delay and resource allocation because “it helps companies achieve a common view and ensures strategy is concrete enough to be communicated to all their employees.”
“What we do at Trailmaker is important because the process we use with customers reveals bottlenecks in strategy execution. For example, it might reveal that capital or human resources are not sufficient to implement the strategy. Trailmaker brings in tools to ensure there is transparency about the execution and a common view of priorities.
“I want to move us away from this idea that delay is normal and there is always next year. It costs companies far too much.”
TRAILMAKER is a concept for faster strategy execution:
• Concrete common view and commitment
• Identified capability needs
The typical delay in strategy execution costs companies at least one year, and 90% of strategies fail in the execution stage, says Senior Advisor Juhani Elomaa. “Companies instinctively know that time is money, but no one calculates exactly what it costs to delay by a year.”
In the past years, powerful megatrends have started to impact our daily life. Climate change, the environmental impact of plastic usage and new energy sources are well known topics for all of us. For large corporations, these forces create major opportunities but also major threats. Opportunities, because those making the change fast enough will be on the winning side. And threats because whoever cannot change fast enough will soon be left behind. The race against time is on. A gold rush for some, Titanic for others.