Why strategy execution fails?

Strategy execution excellence always fails in great organizations. Below is a summary of an article by Donald and Charles Sull and Rebecca Homkes in HBR drawing on research and insights with managers in more than 250 companies. Read carefully to understand the causes of strategy execution gaps.

At the end of the article, comment what you will change to improve to facilitate strategy execution excellency in your organization.

  1. Titles and alignment leads to effective execution

This is a myth. Giving people titles and then aligning the strategy to the hierarchy does not always lead to effective execution. When execution falters, leaders tend to assume there’s a problem with alignment—the processes linking strategy to action up and down the hierarchy. So they tighten the screws on that.

a) But in most companies’ alignment isn’t broken, and misguided efforts to fix it make matters worse.

b) As managers track more and more metrics and demand progress meeting after progress meeting, employees start to feel micromanaged.

c) That stifles creativity and collaboration, putting even more of a drag on execution.

d) Managers then press harder on alignment. It’s a classic downward spiral.

e) All these are worsened when the Directors start going directly to Supervisors and jumping over their managers. This break in separation of powers, leads to poor governance and eventual strategy execution failure.

As a leader, you must create a discipline of execution through encouraging effective communication and coordination across different departments.

Share your targets to your directs reports. Let them do the same to their direct reports; and then proceed similarly down the chain. The reporting and performance management should also follow the same route. Execution will falter once you have a Director going directly to the team on the factory floor for a report on their performance! If you did not give them the targets, how do you evaluate their performance?  In brief:

a) A failure to coordinate across the business departments kills execution: Just half of managers say they can count on colleagues in other functions and units to keep commitments.

b) Managers compensate with a host of dysfunctional behaviors such as letting promises to customers slip.

c) So to get better at execution, we need better systems for managing across the organization.

  1. Execution Means Sticking to the Plan

The second myth is that good execution means always sticking to the plan.  You won’t execute effectively if you stick to the workplan. You must stick to the scorecard performance outcomes and targets.  The plan should be expected to change as times change!

a) Organizations spend huge amounts of time and energy mapping out who should do what and with what resources. Remember, you can’t anticipate every event.  No workplan can anticipate what will be done.

b) In volatile markets we are operating in today of VUCA (volatile, uncertain, complex and agile) age, managers and employees need to be agile—and that’s not easy.

c) Sometimes people move too slowly to seize opportunities or head off threats.

d) Other times they react quickly but lose sight of company strategy.

The solution

The key to solving this problem is to keep reallocating resources. This will make you be great at execution.

a) Dividing up funds, people, and managerial attention isn’t a onetime decision.

b) If we make adjustments as needs change, we’ll be quicker to kill failing initiatives.

c) And we’ll do a better job of shifting people across units to support strategic priorities.

d) However, for this to happen, there must be total respect and collaboration across the different pillars to discuss what is most critical. You must keep re-allocating resources continuously to attain execution excellency

You need to know that agility ≠ Chasing Every Opportunity. That is right. Being agile doesn’t mean chasing every opportunity that comes along.

Strategic focus is key: Without it, resources go to the wrong projects, and key initiatives don’t get what they need to win big. That is why, to master execution, you must be damn great at monitoring the scorecard.

  1. Communication Equals Understanding

Now let’s turn to the third myth—the idea that everyone will get your strategy if you talk about it enough. That is not true. Here’s a mind-boggling statistic: Just half of top management team executives say they have a good sense of how their company’s strategic priorities fit together.

Research shows that people who say they understand how strategic priorities fit together as follows:

  • 54% of C-suite executives
  • 32% of their direct reports
  • 16% of team leaders and frontline supervisors

And matters are even worse further down in the organization, as this slide shows. When communications about strategic priorities reach team leaders and frontline supervisors, only 16% feel that they have a good grasp of how priorities fit together.

Part of the problem is that leaders focus on the quantity of messages—the number of e-mails, meetings, and so on. And not the quality of the messages. Consistent communication of the scorecard and change management required to deliver it.

They add to the confusion by changing their messages and diluting them with peripheral concerns. To execute strategy effectively, focus on the bigger picture and make sure all staff understand it.

Consider what happened at one tech company’s annual off-site.

Senior leaders went to great pains to communicate the company strategy and objectives to the managers in attendance. But they also introduced:

  • 11 corporate priorities (which were different from the strategic objectives)
  • a list of core competencies
  • a set of corporate values
  • 21 new strategic terms

Not surprisingly, the managers were baffled about what mattered.

The common mistake leaders make is failure to focus on the key issue. TMT must focus on communicating the scorecard and leave the flexibility of the workplan to the managers. They are the ones to execute it. A director should be more concerned about the outcomes and NOT pay so much focus on the inputs. All you have to do, is set clear risk appetites to provide limits within which managers must work to deliver the outcomes.

That is the secret to performance management and strategy execution.

Please remember, to become a great leader you must:

a) Instead of worrying about the amount of communication, leaders should focus on helping people grasp what they’re saying. Focus on the quality NOT quantity.

b) As a leader, you must structure and lead discussions throughout the organization about what the strategy is and what it means for directors, managers and their teams. Stop focusing on small details. It will keep you unclear.

c) As a leader, you will head off a lot of misunderstanding if you stick with the core messages and keep it simple and consistent.

d) Often, less is more.

e) Stop listening directly to anyone who is NOT your direct reports. And if you do so, have your direct reports in attendance. People will stop listening to their immediate reports once they know that the overall boss will listen to them anyway! It is another way of saying, they don’t matter!

4. A Performance Culture Drives Execution

There is a general problem that many leaders tend to focus too much on “hitting the numbers.”

When execution fails, many leaders think a weak performance culture is to blame.  But most companies are good at rewarding employees who hit their numbers. If anything, they focus too much on performance, which makes people play it safe. Employees tend to (i) make conservative commitments; (ii) favor surefire cost cutting over risky growth and (iii) milk existing businesses rather than try new models.

All these behaviors undermine execution.

The solution is to reward behaviors that support execution.

  • Organizations need to look beyond “hitting the numbers.” And reward behaviors that support execution—such as:
  • Which employees are passionate and very ambitious to drive growth and see the organization succeed, albeit the challenges present. If someone works hard, even by walking, chances that they will even do more when a new car arrives are high. However, if a staff cannot do anything because there is no car, chances they will do anything with a new car are low!
  • How fast and swift are the employees in responding to issues and making turnarounds. If someone spends an entire day to submit a report, it is a red flag. If someone comes late to work, it is a red flag that they are not agile. It is easy to see a great person based on their behaviors.
  • Experimentation; often this leads to innovation and new ideas! Which staff are always coming up with new ideas and submitting them to the organization leaders through the platforms for collaboration available like email, group chat, web portals and via email to the top leaders!
  • How staff freely share information to keep all colleagues on the same page. Be worry of staff who only want to communicate to one person. Unless it is very confidential, it is critical to promote collaboration and communication across the departments.
  • If performance comes at the expense of these skills, it’s counterproductive.

At your organization, what behaviors should be supported on your team and how they could be encouraged?

  1. Execution Should Be Driven from the Top

Get is clearly that execution fails because many people think that the Board or TMT should drive execution.

That’s a problem because it doesn’t encourage middle managers to develop their decision-making skills, show initiative, or “own” their results. In a top-down culture, they’re more inclined to escalate conflicts than to resolve them—so they may lose the ability to work things out with colleagues in other units.

Top-down won’t work for long.

Take the example of many Uganda’s family businesses.

As the owner of the business is also the CEO, they will personally monitor the performance of managers several levels below them. This is a stereotypical heroic leader—perched atop the org chart, driving execution himself.

This approach can work—but only for a while.

As long as the founder / CEO is at the helm, the organization may show positive growth. But when the founder retires, things falls apart. Why?

The loyalty risk. Many people perform because they are loyal to the founder / CEO and no other person. You find people are in the organization, but have no real power to take decisions and be personally held for them.

The Solution is to have frontline managers make the tough calls.

Consider the many decisions and actions that are crucial to execution. They often involve hard trade-offs.

For example:

a) synching up with colleagues in another unit might slow a team down and cause it to miss an opportunity

b) screening customer requests against strategy might mean turning away business

As a leader, ask “Who’s in the best position to make these tough calls? The leaders closest to the situation. Execution should be driven from the middle—with guidance from the top. Senior leaders can help by modeling teamwork and adding systems to facilitate coordination.

If our beliefs about execution are flawed and lead to destructive patterns, what needs to change? The starting point is to redefine execution. Let’s view it as “seizing strategic opportunities while coordinating across the company and adjusting as needed.”

Framing execution this way can help us avoid pitfalls like rewarding performance alone and failing to adapt.

And we’ll get better at what really makes a difference—coordination, agility, and reallocating resources to our biggest strategic bets.

Ends.

 

 

 

 

 

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