09 Stronger strategy implementation with a digital twin
Kim Warren 
A digital twin model plays out how the whole business system works and will likely perform into the future - just what strategy implementation needs
This is a big one! So ...
And we see many business failures, short-comings and mis-steps, and research finds that strategic plans and initiatives mostly fail to deliver their promised outcomes. Why?
Well, maybe the strategies themselves are wrong - OR - the strategies could be OK, but the implementation fails.
Typical implementation guidance
We might hope that business school MBA programs and executive courses would by now have equipped generations of executives with the skills needed to implement strategies well, but the outlines of typical courses suggest some short-comings. (Scan the contents of books on the topic and guidance from consulting firms and you will find much the same):
Too narrow scope: "Strategy" concerns more than the overarching plan for the organization. It includes significant initiatives such as entering new markets, making acquisitions, or managing process improvement programs. Then, functions also need strategies, and we need strategies to tackle smaller short-term issues too.
Poor help on how to build action plans: Successful implementation needs detailed, quantitative, and timed action plans (TAPs) - what to do, when, and how much, across all relevant actions and decisions. Yes, action plans have to evolve, but if we don't know how to do it in the first place, adapting it is going to be a challenge!
The wrong time-perspective: Strategy is presumed to happen in big chunk of time, e.g. with quarterly progress reviews. But real-world conditions unfold on a much faster time-clock, and we can - and do - respond much faster too. (I recall a huge competitive threat to a division of GSK that played out over just 10 weeks! Not much use for a 5-year quarterly plan there - they needed to know what to do about pricing, promotion, customer-offers and sales effort every day, in light of what their rival was doing and their progress in stealing customers!)
A focus on "process": Courses, books and consulting advice often imply that the TAP either exists, or is simple and quick to create - so the real challenge must lie in the process of getting people to comprehend, embrace, and execute the required actions. But if the TAP is no good, getting buy-in and action is always going to be tough, and won't work even if people do engage. (Staff disrespect for leaders' plans is one of the top reasons that initiatives stall).
These short-comings reflect a failure to recognize two key realities:
... that strategy gets implemented by the continuous stream of large and small decisions and actions across all parts of the business,
... that those decisions and actions are acting on a living, interacting system, whose behaviour and performance is not obvious or intuitive.
How to figure out the action plan?
Common tools and methods offer little help. Most "business model" approaches and frameworks are qualitative and descriptive, offering no path to the quantified, timed action plans we need. Financial models fail to capture how those financial outcomes arise from the actual working parts of the business system, and the ubiquitous spreadsheet and spreadsheet-like tools we rely on simply cannot handle the interconnectedness of a real-world enterprise.
In other fields where we need to understand and manage complex systems, we simulate reality - how an aircraft flies, how a drug molecule works, how a factory system functions ...
"Impossible!", people say of business cases - there's too much randomness, too much detail, and too much uncertainty from human behaviour. Not true!
We can simulate how a business functions and performs - it's not even especially complex or demanding. To find out more
Categories: : business models, strategy