Businesses run on strategies and well formulated strategies can help businesses achieve competitive advantage, higher sales and optimum performance.
However, just like the future, strategies are not set in stone.
Best laid strategies designed for an uncertain future have the very real possibility of failing to yield the desired results.
To excel, a business must analyze the effectiveness of its strategies and the best way to do so is with the help of a strategy-execution loop.
Strategy-Execution Loop
A feedback loop is a system that collects information from one part of the system and uses this output as the input for the next system.
You can say that a feedback loop is like a chain of cause-and-effect that forms a loop.
When you take this feedback loop and use it to implement a strategy plan to achieve organizational goals, we call it a Strategy-Execution loop.
The Strategy-Execution Loop, a type of feedback loop that collects information about the results of the strategy implemented and relays the results to management who in turn can use the information to learn and make possible alterations in the strategy to achieve desired results.
Stages of Strategy-Execution Loop
While, a Strategy-Execution Loop can be customized depending on the needs of a business, it typically consists of certain basic stages.
Here’s a peek into the stages of the Strategy-Execution Loop:
Stage 1: BUILD- Formulate your Strategy
The very first stage is the formulation of a well-defined strategy by analyzing the internal and external environment impacting the organization.
This stage can also be referred to as the “building” of the strategy.
At this stage the strategy is created based on multiple factors including market research, the proposed product and the prospective target audience.
When creating a strategy, it is common to start with a few assumptions regarding the market, your product, your tactics, etc.
In the “BUILD” stage, you identify these assumptions and create hypotheses around them that are put to the test in Stage 2.
Stage 2: IMPLEMENT- Do the work
This is the action stage. The formulated strategy in Stage 1 is shared with relevant stakeholders to ensure proper understanding and resources are allocated to support execution of the strategy.
Stage 3: MEASURE
Once the strategy is implemented, the results need to be monitored to ensure that we are moving towards the desired objectives.
Using both quantitative and qualitative methods for measuring the feedback loop results in getting apt results.
Stage 4: INCORPORATE- Feed the Feedback
This stage is extremely important as many startups reach Stage 3 where they have a lot of data but they fail to use this data to learn and bring about meaningful changes in their strategy.
We use the feedback gathered from customers, employees and other stakeholders, and use it to make changes to the existing strategy.
It is important to identify areas of improvement andS use that knowledge to enhance future strategy execution efforts thus promoting learning and adaptation within the organization.
The results arrived at through this stage are then put through the same four stages of execution creating a loop.
This Strategy-Execution Loop is a continuous cycle that organizations iterate through to ensure successful strategy implementation and achieve their desired outcomes.
Get it Right- How you can use the Strategy-Execution Loop
Getting the strategy execution loop right is crucial for continuous improvement and success of your business strategies.
You can follow these 3 steps to ensure you create the correct strategy execution loop for your business:
Step 1: Get the right data:
The initial step of the strategy execution loop involves collecting relevant data and information that can help assess your performance.
To ensure collection of correct data you must –
a. Define the objective:
Before collection of the data you must identify and lay down the purpose of data collection. Clarity of end goal will enable collection of relevant data only.
b. Identify data source:
The next step is to identify the source of data. Depending upon the required results you can choose to source your data from internal sources like customer feedback or external sources like market research.
c. Collect data:
Collect accurate and complete data through methods like interviews, observations, surveys, etc.
d. Verify Data Quality:
Check for errors, inconsistencies and bias that could affect the reliability of your analysis.
Step 2: Analyze the Right Data
Once you have collected the appropriate data, the next step is to analyze it. This involves:
a. Creating data buckets:
Segregate the data into data buckets with similar data being placed in a single bucket to enable better data analysis. Data buckets can be created by:
i. Input data creation:
Collect data in the form of feedback and review of the execution through processes like surveys, discussions, reviews, interviews, etc.
ii. Creating data buckets:
The raw data collected will be beneficial only when it can be analyzed; however, analysis of input data can be done effectively only when the bulk data collected can be segregated into recognizable data sets or data buckets.
The data buckets can be organized by identifying the types of data and their attributes and defining criteria for grouping.
These data buckets are then regularly maintained and updated to ensure that they remain aligned with business needs.
iii. Analyzing data buckets:
Analyzing data buckets involves extracting and examining the data derived from the organized data buckets to gain insights and make informed decisions.
By defining the objective of data extraction, organizations can apply chosen analysis techniques to uncover relevant insights within each bucket.
The analyzed data and insights collected from the buckets can be presented in a clear and concise manner through data visualizations, charts, graphs, or reports to effectively communicate the key findings from each data bucket.
b. Clearing the Data:
Review the data to identify any missing values and other anomalies.
Data cleaning will help eliminate unwanted and unnecessary data and create a better data pool for analysis.
c. Reviewing the Data:
Gain an insight on the data collected through techniques like statistics and data visualization to Identify trends, correlations, and patterns.
Data visualization simplifies complex insights, providing a concise overview of trends and correlations crucial for informed understanding.
d. Testing the theory:
Formulate a theory that explains the trends and issues being faced by the business and use the theory to test whether the results match with the theory formulated by you.
e. Analyzing the Root Cause:
The fifth and final step of analysis is to review the analysis process and identify any issues that may have arisen and delve deeper to determine the underlying cause of the problems faced.
Step 3: Incorporate the right changes
After analyzing the data and identifying areas for improvement, the next step is to incorporate the changes by:
a. Making an action plan:
Create a clear plan outlining the action to be taken to take advantage of opportunities and to fix problem areas in your business strategy.
b. Testing initial hypothesis:
Once you have an action plan in sight put your initial hypothesis to test.
The strategy hypothesis that aligns with the data collected will no longer be a mere assumption but will instead be a part of the final strategy, while the hypothesis that is disproven by the actual data will then be altered and fixed to ensure alignment with the gathered data.
c. Allocating resources:
Allocate the required technology, budget and manpower to implement the changes necessary from the input of the feedback loop.
Advantages of a Strategy-Execution Loop
Strategy-Execution Loop is extremely essential for any business- whether it is created from the inputs derived from the customers or internally from the business itself.
Here are the top benefits you can reap from implementing the Strategy-Execution loop:
1 Strategy-Execution Loop helps to collect data on your business performance and strategy and helps to better analyze the needs of the businesses’ customers and clients.
2 It helps to keep a check on the effectiveness of strategies formulated by the business.
3. It helps in timely alteration of strategies to enable businesses to adjust to changes in internal and external environments.
4. It helps facilitate market penetration as businesses are able to mold products to better suit the sense and sensibilities of the users.
5. It helps to save the business from unnecessary financial burden by preventing businesses from executing unsuitable strategies.
6. Customer oriented feedback loop helps to keep the customers engaged and help build loyalty towards the business as they can see their issues being addressed.
Example: Amazon’s change in product packaging is a great example.
Amazon customers expressed concerns about receiving large packages for small items, leading to unnecessary waste and potential damage to products. They raised concerns about environmental impact and the inconvenience of dealing with bulky packages.
Amazon took notice of the feedback and introduced “Frustration-Free Packaging” for eligible products. They started using packaging materials that were not only more eco-friendly but also minimized excessive packaging, making it easier for customers to recycle.
They communicated this change to their customers through direct communications and updates on their website.
As part of their ongoing feedback loop, they monitored customer responses to the new packaging initiative and used the customer feedback to fine-tune the packaging process further, making additional improvements based on ongoing customer input.
By actively listening to customer feedback and taking action to improve packaging, Amazon showed customers that their opinions mattered, leading to increased loyalty and trust.
Conclusion
“It is very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better.”
-Elon Musk
It is evident that a Strategy-Execution Loop has an immense effect on the success and failure of strategies which in turn determine the future of a business.
A Strategy-Execution Loop makes businesses more self-aware and aids in making informed decisions about their strategies.
How has feedback loop impacted your business strategies?
Share your experience with us in the comment section below.
