Many organizations struggle to translate strategic plans into tangible outcomes. Research suggests that while 90% of companies develop detailed strategic plans, 7 out of 8 large corporations fail to achieve their targeted growth due to ineffective execution. A key issue is that 95% of employees in a typical organization do not understand its strategy, and many businesses fail to link strategic objectives to budgets or performance incentives. This execution gap significantly impacts financial performance, prompting leading global organizations to establish an Office of Strategy Management (OSM) to align strategic ambition with operational execution.

What is an Office of Strategy Management?

An OSM is a corporate-level function overseeing strategy implementation across an organization. Unlike a traditional strategic planning department that primarily formulates plans, the OSM ensures effective execution by coordinating planning, budgeting, performance management, and communication. It acts as a CEO’s “chief of staff” for strategy, ensuring alignment between business unit initiatives, budget allocations, and key performance indicators.

Key Responsibilities of an OSM

Kaplan and Norton, who pioneered the OSM concept, identify nine key processes that an OSM should integrate:

1. Strategy and Scorecard Management – Translating the strategy into a strategic map or balanced scorecard and maintaining performance metrics.
2. Organization Alignment – Ensuring business units and support functions align their objectives with the corporate strategy.
3. Strategy Communication – Educating employees at all levels about strategic objectives and how their work contributes to achieving them.
4. Strategy Reviews and Reporting – Conducting regular strategy review meetings to track progress and adjust execution efforts.
5. Strategic Initiative Management – Overseeing and monitoring the progress of cross-departmental strategic projects.
6. Planning and Budgeting Integration – Aligning financial resources with strategic priorities to ensure initiatives receive adequate funding.
7. Workforce Alignment – Ensuring HR processes such as incentives, performance appraisals, and training support strategic objectives.
8. Best-Practice Sharing – Facilitating knowledge-sharing across business units to drive consistent strategy execution.
9. Cross-Silo Coordination – Breaking down organizational silos by integrating different functions into a cohesive strategic execution process.

By coordinating these processes, the OSM transforms strategy execution from a disjointed effort into a managed and structured process that aligns policies, budgets, and employee actions with strategic goals.

Global Companies Implementing OSMs

Numerous global organizations have established OSMs to enhance strategy execution.

• Chrysler Group (Automotive): Amid financial distress in 2001, Chrysler’s OSM played a crucial role in translating turnaround strategies into measurable objectives. The OSM ensured alignment across business units and tracked execution, helping the company recover from losses and achieve profitability by 2004.
• Canon Inc. (Technology): Canon’s OSM emphasized strategy communication and alignment, ensuring employees at all levels understood the company’s goals. By democratizing strategy, the OSM helped overcome decentralization challenges, improving execution consistency.
• KeyCorp (Financial Services): After implementing the Balanced Scorecard, KeyCorp established an OSM to institutionalize strategy execution. The OSM ensured that strategic objectives influenced operational decisions at all levels, contributing to sustained financial success.
• Suzano Petroquímica (Chemicals): Suzano’s OSM quickly integrated strategic objectives into operations, aligning budgeting and performance measurement with corporate goals. This approach helped the company maintain a competitive edge in a volatile market.
• Hilton Hotels (Hospitality): Hilton’s OSM managed the company’s global strategy execution, ensuring consistency in customer service initiatives and brand positioning. This contributed to growth in revenue per available room and customer loyalty.
• U.S. Army (Public Sector): The Army’s Strategic Readiness System functioned as an OSM, ensuring military readiness through strategic planning, performance tracking, and cross-command coordination.

How an OSM Improves Financial Performance

A well-functioning OSM significantly enhances financial outcomes by converting strategic goals into concrete results. Key benefits include:

• Translating Strategy into Action: Organizations like Chrysler have credited their OSMs with enabling the effective execution of cost-cutting measures and growth initiatives, leading to financial turnarounds.
• Efficient Resource Allocation: By aligning budgets with strategic priorities, OSMs help companies invest in high-impact projects while minimizing resource wastage.
• Proactive Course Correction: Regular strategy reviews enable leadership to identify and address execution issues before they impact financial performance.
• Driving Innovation and Growth: By maintaining a long-term focus on strategic objectives, OSMs facilitate innovation, new product development, and market expansion.
• Enhancing Shareholder Value: Companies with dedicated OSMs, such as those in the Balanced Scorecard Hall of Fame, have demonstrated sustained financial success and superior shareholder returns.

Enhancing Strategic Execution Effectiveness

An OSM significantly improves execution effectiveness through:

• Organizational Alignment: Ensuring all departments and employees work toward common strategic goals.
• Continuous Strategy Management: Closing the loop between strategy formulation and execution through regular reviews and feedback mechanisms.
• Integrated Management Processes: Aligning planning, budgeting, and HR functions with strategy to prevent misalignment.
• Execution Discipline: Ensuring rigorous tracking and follow-up on strategic initiatives to maintain focus and accountability.
• Effective Communication: Bridging the knowledge gap by ensuring employees understand and engage with the company’s strategic vision.
• Breaking Down Silos: Encouraging collaboration across business units to facilitate seamless execution of cross-functional initiatives.

Case Studies: OSMs in Action

Several organizations have demonstrated the effectiveness of OSMs:

• Chrysler: The OSM facilitated a disciplined execution of turnaround strategies, leading to a financial rebound.
• Canon USA: The OSM improved alignment across decentralized operations, ensuring strategy execution consistency.
• Hilton Hotels: The OSM maintained performance excellence across a global hotel network by driving consistent strategy execution.
• Suzano Petroquímica: A rapid OSM implementation helped align corporate strategy with day-to-day operations, improving financial performance.
• U.S. Army: The Army’s Strategic Readiness System functioned as an OSM, enhancing strategic alignment and operational readiness.

Insights from Research and Reports

Research by Kaplan and Norton underscores the critical role of OSMs in successful strategy execution. Their studies show that organizations with OSMs achieve higher performance targets and sustain competitive advantages. However, the effectiveness of an OSM depends on strong leadership support, integration with existing management processes, and a clear mandate to drive execution.

Conclusion

The Office of Strategy Management is a critical function for organizations seeking to bridge the gap between strategy formulation and execution. An OSM ensures that strategic initiatives translate into measurable business success by providing structure, accountability, and alignment. Companies across industries, from automotive and finance to hospitality and public sector organizations, have demonstrated the transformative impact of OSMs on financial performance and operational excellence. As global competition intensifies, the ability to execute strategy effectively will continue to differentiate industry leaders from laggards.

Take Your Business to the Next Level

Visualise Solutions is a boutique strategy consultancy firm based in Leicestershire, UK. Transform your business with our strategic advisory services, focusing on innovation, strategy formulation, and execution. Utilise our expertise in strategy, business model innovation, OKRs, and balanced scorecards.

You can learn more about us by contacting us now.

By Andrew Constable MBA, XPP, BSMP

Keywords: Business Strategy, Innovation, Leadership

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