How to measure your business strategy's success

Jan. 4, 2024 - Harvard Business School

---

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.

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 a 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.

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. 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.

2.     Review measures

Evaluating business performance requires measures — quantitative values you can scale and use for comparison — and they must tell the right story.

• 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. “You can have the best strategy in the world,” says Harvard Business School Professor Robert Simons 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 and analytics tools to generate reports that can align with business goals and objectives. To boost customer loyalty, you can automate reports on:

• Purchasing patterns

• Purchase frequency

• Customer survey scores

4.     Talk to employees

Employee feedback and buy-in are other useful tools for measuring success. “The best businesses motivate their employees to be creative, entrepreneurial, and willing to work with others to find customer solutions,” Simons says.

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.

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. Unlike your company’s reputation, measuring customer satisfaction has a more personal touch in identifying what they love and how to capitalize on it.

Measuring your strategy’s success is a continuous process that requires understanding your company's goals and objectives. A thoughtful review of your strategy not only clarifies your organization’s path to its goals but also reveals the adjustments needed to sustain long-term success.

Read the full article here.