execution

Why Strategy Execution Unravels

Itamar, , 1 Comment

I don’t reference a lot of HBR articles in this blog, but I came across this one, by Donald Sull (et. el) recently and it really struck a cord with me, since it talks about strategy execution first and foremost from an organizational perspective:

Why Strategy Execution Unravels – And What to Do About It

Sull and his co-authors make their case by debunking 5 strategy execution myths:

Myth 1: Execution equals alignment – alignment down the chain-of-command is a solved problem and most corporate processes to manage it (MBOs, tying bonuses to goals, etc.) are working well. The true, unsolved problem is around cross-departmental coordination:

“Only 9% of managers say they can rely on colleagues in other functions and units all the time, and just half say they can rely on them most of the time… When managers cannot rely on colleagues in other functions and units, they compensate with a host of dysfunctional behaviors that undermine execution”

Myth 2: Execution means sticking to the plan – strategy execution fails when companies “stick to the plan” too much, rather than seize fleeting opportunities  that support the strategy. Perhaps the most extreme case of this behavior, is disinvestment from opportunities that did not pan out as expected:

“Companies also struggle to disinvest… Top executives devote a disproportionate amount of time and attention to businesses with limited upside and send in talented managers who often burn themselves out, trying to save businesses that should have been shut down or sold years earlier”
Myth 3: Communication equals understanding – there’s a growing appreciation for the criticality of organizational clarity in driving strategy execution and the important role that internal communication plays in creating that clarity. However, internal communication initiatives often center around optimizing the wrong metric:
“Not only are strategic objectives poorly-understood, but they seem unrelated to one another and disconnected from the overall strategy… Part of the problem is that executives measure communication in terms of inputs, rather than by the only metric that actually counts – how well key leaders understand what’s communicated”
Myth 4: Performance culture drives execution – this issue is tied directly to the first myth. If the culture emphasized individual performance over collaboration and coordination, it gets in the way of removing the true roadblocks for execution:
“The most pressing problem with many corporate cultures, however, is that they fail to foster the coordination that, as we’ve discussed,  is essential to execution. Companies consistently get this wrong. When it comes to hires, promotions and non-financial recognition, past performance is two or three times more likely than a track record of collaboration to be rewarded“
Myth 5: Execution should be driven from the top – in complex organizations, effective execution requires dealing with a constant stream of tough trade-offs: should we invest the time in coordinating with another department at the cost of losing a fleeting opportunity? should we say “no” to a client request that’s misaligned with the strategy at the cost of losing revenue? The leaders closest to the situation are the ones who can respond the quickest and are best positioned to make the tough call:
“Frequent and direct intervention from on high encourages middle managers to escalate conflicts rather than resolve them, and over time they lose their ability to work things out with colleagues in other departments. Moreover, if top executives insist on making the important calls themselves, the diminish middle-managers’ decision making skills, initiative, and ownership of results”
At the end of the day, Sull and team paint a rather grim picture of a commonly used myth-driven strategy execution approach. But if we choose to look at the glass half full, they also outline the path for a more effective strategy execution approach:
  1. Build businesses processes that strengthen cross-departmental coordination and collaboration
  2. Orient execution effort around agility, and seizing strategy-aligned opportunities
  3. Measure the effectiveness of internal communications in driving the understanding of strategic objectives
  4. Create an organizational culture that balances individual performance and collaboration
  5. Provide middle managers with the necessary technical competency and organizational clarity to make the tough decisions themselves

 

 

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Why Strategy Execution Unravels