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EXECUTION – The biggest challenge for business

05-Nov-2009

In this article written for the Executive Briefing section of The Economist, Stephen Lynch, Chief Operating Officer at business execution consultancy RESULTS.com, argues that having a sound strategic plan to create your company’s future success is vital, but most firms still struggle with execution – the discipline of getting things done.

Click on this link to view the abbreviated article in The Economist – or read the full article below:

Economic events and major trend shifts in the competitive forces that shape industries have caused many companies (indeed whole industries) to completely rethink their business models and strategic plans.

To their peril, many firms let their strategic planning efforts lapse into a meaningless exercise in goal setting – getting better at doing more of the same - only to find out the assumptions under which they have been operating their business are no longer valid. 

To remedy this, it is crucial to use a disciplined thought process to assess how economic and industry dynamics are likely to play out, and then create an effective strategic plan to confront this reality.  Strategic planning should be an ongoing process (ideally updated quarterly) – not annual event.

Many business leaders realize the need to make profound changes to their company strategy – but then become incredibly frustrated when they share their vision for the future and don’t achieve the implementation traction they desire.  
Having the right strategy is only the first step. “Execution is the major job of the business leader” – according to Larry Bossidy and Ram Charan in their book “Execution – the Discipline of Getting Things Done”.  

Suppose for the purposes of this article, that a company has gone through rigorous, disciplined strategic thinking process.  They have involved key managers and team members in the process and obtained buy in.  They have crafted what appears to be an effective strategic plan to set the firm up for future success in the industry.  

Far too often, this plan fades from view when managers go back to being busy in the business with day-to-day operations and fire fighting.  Strategic action priorities specified in the plan often get put on the back burner in favor of the urgent needs of the moment.

According to Harvard Business School professor Robert Kaplan, 90% of strategies fail due to poor execution [1].  This is because companies execute their strategy in fits and starts, and few companies are good at aligning their current activities to their long term strategic priorities.  

Consider also the following alarming research:

Only 27% of employees have access to their company strategic plan [2] 
Only 5% of employees understand their company strategy [3] 
92% of organizations do not measure Key Performance Indicators [3]

Balancing strategic planning and business execution is easier said than done.  Being able to effectively craft, communicate, then execute a winning strategy, is a core competence that can determine who will ultimately dominate an industry category.  

Yes, you still need to manage your day to day operations, sell your products and services, look after your customers, handle problems and fight fires.  That’s called “doing your job” - that’s table stakes. The secret to effective leadership is being able to simultaneously devote sufficient time and attention to implementing the key action priorities that will ensure your longer-term strategic objectives will be achieved.

Interestingly, while we can recall 7 digit phone numbers, studies on working memory show that people can only remember, pay attention to, and manipulate 3 or 4 pieces of complex information at most.  

We have written previously about the need for leaders to be able to clearly articulate the top 3 things the company is working on.  If they can’t, they are not leading well.  These findings have implications for effective strategic leadership.  By this we mean that ideally everyone in the company should know:  

• What are the top 3 strategic moves the company needs to make over the next 3-5 years in order to position the company for future success in the industry?
• What are the top 3 actions the company must execute in the current quarter?
• What are the top 3 actions each key individual must personally implement in the next quarter?

Being able to get clearly communicate strategic action priorities to this level of granularity and align key staff to their achievement is rightly considered a major accomplishment for many firms.  It is then usually left up to individual managers to ensure these actions are carried out each quarter.

Our studies of highly effective companies and leaders – those who are true masters of business execution, reveal that one or more additional success habits are incorporated to drive business execution excellence:

Weekly Action Priorities.

Effective leaders ask their direct reports every week, “What is the #1 thing you are going to do this week that will contribute toward your strategic action priorities for the quarter?”

The intention is for staff to publicly articulate their #1 strategic action priority for the week.  These are not the ‘business as usual’ tasks that are done every week.  Rather, this is the one specific action that will move their area of the business forward and ensure their quarterly action priorities are completed by the end of the quarter.

This is not to be confused with micro-managing.  Effective leaders use this technique as a way to train their people to prioritize and focus on achieving what is strategically important every week – as well as ‘doing their job’.

Each person’s #1 action priority for the week is documented and staff are held accountable by their peers for carrying out this action at the next subsequent weekly team meeting. 

Business Execution Software.

Many business intelligence tools try to do too much.  Simple, elegant software solutions are available that express strategic plans in simple language that staff at all levels can understand.  These tools break strategic plans down into quarterly and weekly action priorities for staff to carry out and check off when they are done.  These tools then drive the execution of strategic priorities via things like email reminders, SMS texts and outlook synchronization and can greatly increase the focus and effectiveness of teams.  

Leaders are then able to feel more in control of where their business is going and can see in ‘real time’ what their people are working on in terms of the execution of strategic priorities. This frees business leaders to focus on supporting their people, rather than hounding them to get things done. 

External Accountability.

Even leaders need to be held accountable for the overall strategic execution of the firm.  External parties are often better able to challenge the leader’s assumptions, present alternative options and play devil’s advocate – more so than the leader’s colleagues and subordinates are.   This can help leaders to better think through the implications of their strategic decisions.

Many leaders benefit from having an external, objective 3rd party they can confide in – someone who will push and guide them, as well as deliver incisive analysis and brutally honest feedback.  Too often leaders can fall into the trap of ‘chasing butterflies’ and continually be changing direction.  Being accountable to someone else for getting implementing a strategy greatly increases the likelihood of it being done.

[1] (R. Kaplan and D. Norton, Harvard Business School Press, The Strategy-Focused Organization, 2001)
[2] (Strategy & Leadership Journal, May/June 1999)
[3] (Renaissance Solutions Survey, 1996)

 
Stephen Lynch

Chief Operating Officer - Global Operations
RESULTS.com

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