CEOs and business-unit leaders may envision strategic opportunities, and then find their aspirations frustrated by an organization that can't seem to execute those strategies.

From a shared-services perspective, CIOs and other shared-services leaders may wonder why their departments aren't contributing more to enterprise strategies. The more insightful may wonder why their organizations aren't working with business colleagues to generate business strategies enabled by their technologies and services.

Let's start with the assumption that your organization is filled with good people. Sure, not everybody is a super-achiever. But most staff are reasonably smart, sincere, loyal, and competent.

So what's getting in their way?

We Don't Have the Time or Resources

It may be that existing budgets only fund operations -- more of the same, but not much that's new.

If this is the case, people don't have the time or money to implement strategic initiatives. If they try to (without sufficient funding), they'll do a poor job. This introduces risks to strategy execution. And as they divert resources from current operations, they put the short-term viability of the enterprise at risk.

Some might think that improving operational efficiencies, or eliminating some lower-value services, will free up resources for strategic initiatives. There are two problems with this hope:

• Savings may be absorbed by current operations -- business volume growth, long-needed quality improvements, less overworking of staff, being more responsive to all the small service requests that may be valued but not strategic, etc. In short, savings are often absorbed into the system.

• More importantly, there is absolutely no reason to believe that the resources released by efficiency gains will be sufficient to fund new strategies. Savings of a few percent on operations may pale in comparison to the needed investments in strategic initiatives.

Of course, improving operational efficiency is good. But it's not the right source of funding for strategic initiatives.

The real impediment is a traditional budget process that funds groups based on their spending forecasts, typically projections of prior years' spending.

Even if a few strategic initiatives are explicitly funded, a traditional budget process typically considers only the "tip of the iceberg" -- the direct costs, but not the many services that the initiative will require from support functions. Those supporting functions that don't receive incremental funding become the bottleneck that constrains strategy execution.

The solution is "investment-based budgeting." Organizations should submit budgets for what they propose to deliver (projects and services), not just what they propose to spend. Each deliverable should be costed at its full cost including all needed members of the team and all indirect costs burdened by the initiative.

With this new format for budgeting, executives can see the true enterprisewide cost of each strategic initiative, and either fund it adequately or let it go.

An investment-based budget includes both strategic projects and all ongoing services. If any low-value services can be eliminated, the savings will be apparent. But this zero-based approach doesn't constrain strategic efforts to the limited savings from operational efficiencies. Each deliverable (strategic and operational) stands on its own merits.

An important added benefit is that everyone comes out of the budget process with a clear understanding of what is (and is not) funded. This ensures that resources are applied as intended, and funding for strategic initiatives doesn't get absorbed into the system.

We're Too Busy (With Less Important Things)

A closely related impediment is the process by which priorities are set.

When budgets are given to managers to pay their bills, each manager is left to set priorities for his/her group. Teamwork breaks down when I need your help, but my highest priority is your lowest. This alone can impact strategy execution.

Sure, executives may highlight a few strategic initiatives. But then managers are caught between the day-to-day demands of the current business and those new projects. With internal customers demanding services, managers often give in to the pressure and then find their groups have insufficient time for new projects. Charles Hummel described the "tyranny of the urgent" over the important. [1967]

The antidote is a demand-management process that deliberately decides what deliverables (ongoing services and new projects) each group is to produce.

This requires a shift in thinking about budgets and governance. Consider the business-within-a-business paradigm, where each group is an entrepreneurship that's funded to provide its products and services to customers (inside their organizations, throughout the enterprise, and externally).

In this context, we give organizations budgets to "buy" their products and services, not to pay their expenses. (You give your grocery store money for food, not to pay its rent, electricity, and compensation costs.) Budgets are money put in escrow with organizations to pay for deliverables throughout the coming year. They create a checkbook of funds to spend on the organization.

Whether you call it "governance," "demand management," or "priority setting," someone has to decide what checks to write. That someone should be a representative of the internal customers, not the supplier organization.

When internal customers are empowered to decide what an organization's budget pays for, they will naturally buy what they most need and do without lower-payoff deliverables. Internal customers won't be able to innundate support groups with small requests without the approval of the executives who drive this demand-management process.

And as the group accountable for delivery of a strategic initiative "buys" what it needs from the rest of the enterprise, strategic alignment ripples through every supporting function.

We Didn't Know We Should (Not Our Jobs)

Strategic thinking should not be limited to the top few executives. Ideas should be bubbling up from all over the enterprise, from the people closest to the challenges and opportunities in every aspect of the business.

There are cases where staff don't know that they're supposed to be thinking about strategies for their own businesses within a business.

There are two probable root causes:

1. The organization's structure may define jobs based on roles, responsibilities, tasks, and processes, rather than lines of business. When that's the case, staff are correct -- strategic thinking for a business within a business is not in their job descriptions.
   More on the problems with roles and responsibilities....

2. Even when jobs are defined as internal lines of business, people may not know how to be entrepreneurial. This is a matter for culture. A good culture prescribes behavioral principles (not just values), including principles of entrepreneurship.
   More on culture....

Remember, in a business-within-a-business organization, everybody is an entrepreneur responsible for both today's business and the viability of his/her business in the future.

We Don't Know How

There are cases where leaders just don't know how to come up with viable business strategies.

This calls for the introduction of methods of strategy formulation, teaching leaders how to analyze their current situations, recognize threats and opportunities, and decide strategic goals and initiatives.

Shared Services: It's Nobody's (or Everybody's) Job

A shared-services organization (such as IT) needs a sales force.

I know this sounds odd. But consider "counselor selling." The role of Sales in this context is not to maximize revenues (an expense to the rest of the company). Rather, it's to help internal customers achieve their goals by employing the products and services of the shared-services organization.

You might call this function "business relationship managers" or "business liaisons."

Such a function should be trained in methods to discover those strategic opportunities -- a diagnostic process that begins with internal customers' challenges, and derives how shared services can help. An excellent example of such a discovery method is Mary E. Boone's "needs assessment method." While her description is canted toward IT, it should be applicable to any shared service.

This Sales function is the spearhead of strategic value, including the discovery of business strategies enabled by technologies which otherwise would not be possible (as in the concepts of a digital enterprise).

However, if the customer-liaison function is not a distinct group within a shared-services organization, and instead is a part-time job for senior managers of other functions, then nobody will have sufficient time to study such methods nor to spend talking to internal customers about their business challenges. This, of course, is a problem with the organizational structure.

Removing the Obstacles

Strategic thinking is not a one-time exercise. It's a continual process of assessing and updating strategies in light of ever-changing challenges and opportunities.

Therefor, senior executives must do more than come up with a great strategy and then personally drive its implementation. A more important challenge is to build an organization that continually thinks about strategies and is capable of execution.

This article described a few common systemic obstacles which executives can fix. Once those barriers are removed, staff can (and will) contribute far more to the enterprise's strategies, and the resulting strategic initiatives will get done.

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