The Execution Challenge
Table 1.1 previously listed eight areas of obstacles or challenges to strategy execution. Or, to put it positively, there are eight areas of opportunity: Handling them well guarantees execution success. Based on the discussions with managers involved in the strategy execution interviews, I have rearranged the key issues to include the points raised by the managers and to present a logical approach to development of a process for making strategy work. Emphasis, that is, is on a logical flow of execution steps or activities.
Inability to manage change effectively, for example, was shown in Table 1.1 to be the largest obstacle to the effective execution of strategy. But logically something must precede change attempts. Decisions and actions must have been taken and new factors introduced before change can occur. In effect, there must be something to change before change can occur.
Keeping this in mind resulted in a plan for the flow of material that follows. Again, the emphasis is on a logical, step-by-step approach to the decisions vital to making strategy work. The areas relating to successful strategy execution are as follows:
- Developing a model to guide execution decisions or actions
- Understanding how the creation of strategy affects the execution of strategy
- Developing organizational structures that support strategic objectives and foster information sharing, coordination, and clear accountability
- Creating and using incentives to support strategy execution processes and decisions
- Developing effective controls and feedback mechanisms to enable the organization to assess performance and adapt to changing conditions
- Understanding an organization’s power or influence structure and using it for execution success
- Knowing how to create an execution-supportive culture
- Exercising execution- biased leadership
- Managing change effectively, including culture change
Having a Model or Guidelines for Execution
Managers need a logical model to guide execution actions.
Without guidelines, execution becomes a helter-skelter affair. Without guidance, individuals do the things they think are important, often resulting in uncoordinated, divergent, even conflicting decisions and actions. Without the benefit of a logical approach, execution suffers or fails because managers don’t know what steps to take and when to take them. Having a model or roadmap positively affects execution success.
Strategy Is the Primary Driver
It all begins with strategy. Execution cannot occur until one has something to execute. Bad strategy begets poor execution and poor outcomes, so it’s important to focus first on a sound strategy.
Good people are important for execution. It is vital to get the “right people on the bus, the wrong people off the bus,” so to speak. But it’s also important to know where the bus is going and why. Strategy is critical. It drives the development of capabilities and which people with what skills sit in what seats on the bus. If one substitutes “jet airplane” for “bus” above—given today’s high-flying, competitive markets—the importance of strategy, direction, and the requisite critical skills and capabilities necessary for success are emphasized even more.
Strategy defines the arena (customers, markets, technologies, products, logistics) in which the execution game is played. Execution is an empty effort without the guidance of strategy and short-term objectives related to strategy. What aspects of strategy and planning impact execution outcomes the most is a critical question that needs answering. Another critical question deals with the relationship between corporate- and business-level strategies and how their interaction affects execution outcomes.
Choosing an Organizational Structure
Structural choice must support an organization’s strategy. Different structural forms have different benefits (and costs), and these must be matched with a chosen strategy. A strategic emphasis on becoming a low-cost producer, for example, logically demands a structure that fosters or enables low cost, for example, via standardization, repetition, and volume of services performed by structural units. The need is to understand the demands or needs of a given strategy and choose a structure that best meets the requisite demands.
Coordination and Information Sharing
Knowing how to achieve coordination and information sharing in complex, geographically dispersed organizations is important to execution success. Yet managers are often motivated not to share information or work with their colleagues to coordinate activities and achieve strategic and short-term goals. Why? The answer to this question is vital to the successful execution of strategy.
Clear Responsibility and Accountability
This is one of the most important prerequisites for successful execution, as basic as it sounds. Managers must know who’s doing what, when, and why, as well as who’s accountable for key steps in the execution process. Without clear responsibility and accountability, execution programs go nowhere. Knowing how to achieve this clarity is central to execution success.
The Power Structure
Execution programs that contradict the power or influence structure of an organization are doomed to failure. But what affects power or influence? Power is more than individual personality or position. Power reflects strategy, structure, and critical dependencies on capabilities and scarce resources. Knowing what power is and how to create and use influence can spell the difference between execution success and failure.
Incentives, Controls, Feedback, and Adaptation
Strategy execution processes support organizational change and adaptation. Effective incentives are at the forefront of this support. Incentives tell people what’s important. They fuel motivation and point managers in the right direction for strategy execution. Incentives support both strategic and short-term objectives, and successful execution and change would be impossible without them.
Making strategy work also requires feedback about organizational performance and then using that information to fine-tune strategy, objectives, and the execution process itself. There is an emergent aspect of strategy and execution, as organizations learn and adapt to environmental changes over time. Adaptation and change depend on effective execution methods.
As important as controls and feedback are, they often don’t work. Control processes fail. They don’t identify and confront the brutal facts underlying poor performance. Adaptation is haphazard or incomplete. Understanding how to manage feedback, strategy reviews, and change is vital to the success of strategy execution.
The Right Culture
Organizations must develop execution-supportive cultures. Execution demands a culture of achievement, discipline, and ownership. But developing or changing culture is no easy task. Rock climbing, whitewater rafting, paint-gun battles, and other activities with the management team are fun. They rarely, however, produce lasting cultural change. Knowing what does affect cultural change is central to execution success.
Leadership must be execution-biased. It must drive the organization to execution success. It must motivate ownership of and commitment to the execution process.
Leadership affects how organizations respond to all of the preceding execution challenges. It is always at least implied when discussing what actions or decisions are necessary to make strategy work. A complete analysis of execution steps and decisions usually defines what good leadership is and how it affects execution success, directly or indirectly.
Execution or strategy implementation often involves change. Not handling change well spells disaster for execution efforts.
Managing change means much more than keeping people happy and reducing resistance to new ideas and methods. It also means knowing the tactics or steps needed to manage the execution process over time. Do managers implement change sequentially, bit by bit, or do they do everything at once, biting the bullet and implementing change in one fell swoop? The wrong answer can seriously hamper or kill execution efforts. Knowing how to manage the execution process and related changes over time is important for execution success.
These are the issues that impact the success or failure of strategy-execution efforts. Coupled with the issues previously mentioned (longer time frames, involvement of many people, and so on), these are the areas that present formidable obstacles to successful execution if they are not handled properly. They also present opportunities for competitive advantage if they are understood and managed well.
The last words, “managed well,” hold the key to success. Knowing the obstacles or potential opportunities is necessary but not sufficient. The real issue is how to deal with them to generate positive execution results. The major significant point or thrust of this chapter is that execution is not managed well in many organizations. The remainder of this book is dedicated to correcting this woeful situation.
Applications and Special Topics
This edition of Making Strategy Work expands the applications section significantly. The critical issues for successful execution just noted can be applied to real-world issues and problems that enhance the value and utility of the present approach to strategy execution. While examples from different types of organizations and industries appear throughout the book, a more dedicated approach to making strategy work is offered in a new and expanded applications section. The topics are
- Making mergers and acquisitions work. This chapter appeared in the original edition of this book but is updated in the current revision.
- Strategy execution in service organizations. This new chapter also includes discussion of government service agencies or organization, as well as not-for-profit organizations. Many managers requested that this chapter be added to the revision of this book.
- Making global strategy work. A more in-depth analysis of global execution issues is offered in this new chapter. Again, managers asked for this coverage of execution in the global arena.
- Project management and strategy execution. This new chapter presents an overview of a useful tool for the ongoing management of the execution process. It represents the application of a well-known tool to the strategy implementation challenge.
The Next Step: Developing a Logical Approach to Execution Decisions and Actions
So where and how does one begin to confront the issues just noted? Which execution problems or opportunities should managers consider first? What decisions or actions come later? Why? Can an approach to strategy execution be developed to guide managers through the maze of obstacles and problematic issues just identified?
The next chapter begins to tackle these questions. It presents an overview, a conceptual framework to guide execution decisions and actions. Managers need such a model because they routinely face a bewildering set of decisions about a host of strategic and operating problems, including those dealing with execution. They need guidelines, a “roadmap” to steer them logically to execution success.
Priorities are also needed. Tackling too many execution decisions or actions at once will surely create problems. “When everything is important, then nothing is important,” is a clear but simple way of expressing the issue. Priorities must be set and a logical order to execution actions adequately defined if execution is to succeed.
Having a model, finally, also facilitates a “simultaneous” view of planning and doing. All execution actions cannot be taken at once; some must precede others logically. A good overview or model, however, provides a “big picture” that enables managers to see and anticipate execution problems. Execution is not something that others should worry about later. Planning requires anticipating early on what must be done to make strategy work.
Development of a logical overview is a step that has been ignored by practitioners, academics, and management consultants alike. Execution problems or issues typically have been handled separately or in an ad-hoc fashion, supported by a few anecdotes or case studies. This is not sufficient. Execution is too complex to be approached without guidelines or a roadmap.
Managers cannot act in a helter-skelter fashion when executing strategy. They can’t focus one day on organizational structure, the next on culture, and then on to “good people,” only to find out that strategy is vague or severely flawed. They need guidelines, a way to see and approach execution and the logical order of the key variables involved. A roadmap is needed to guide them through the minefields of bad execution decisions and actions. Managers require a “big picture” as well as an understanding of the “nitty-gritty,” the key elements that comprise the big picture.
The next chapter tackles the essential task of providing this overview by showing the order and logic of key execution decisions. It also begins to confront the obstacles identified in this chapter as it lays out this sequence of decisions or actions. These decisions and actions simultaneously define the areas needing additional attention in later chapters of this book. Having a model of execution is vital to making strategy work, so let’s take this important and necessary step.