Translating strategy into results

Strategy execution: what does this mean?  I pose this question – ‘What is execution?’ - to groups of executives who take our courses at the London Business School.  At first, it sounds deceptively simple.  You have worked out a strategy, so now it’s just about getting it done, right?  Surely the hard part is nailing the strategy in the first place.  Quite quickly, answers starting firing across the room: “getting it done,” “aligning goals,” “turning the plan into action,” “making it happen.”  We fill the board with these responses, mostly reflecting the idea of aligning objectives and implementing plans.

Then I ask the next question: ‘What is the most difficult challenge your company faces in executing its strategy?’  The room erupts into conversation – often boisterous, sometimes heated.  Interestingly, though, the challenges these executives are discussing are much more nuanced than those first responses, reflecting the whole range of issues they face every day as leaders in their organisations. 

So, what is execution, and what do we know about it?

First, we know that it matters.  Ask a CEO what is top of mind, and he or she almost always says execution.  Studies consistently show this ranks as the most pressing challenge for executives.  We also know that most companies struggle with it.  Recent works suggest that by their own admission, between 2/3 and 3 /4 of companies fail to get the intended results from their strategy.

Given how big of a deal it is, and that it is not going well, you would expect this to be a topic that receives significant time dedicated to it.  But when I started looking into this several years ago, I found that there is a huge gap between the amount of time we devote to developing strategy and that to which we devote executing it.  Even more, creating a chasm between the two is not only not useful, it can be disastrous.

After researching this topic and working directly with companies trying to do it effectively, I’ve realised that many of our common assumptions and related toolkits about strategy execution simply are not helpful enough.  For simple companies in stable markets operating in a single geography, existing tools and frameworks may be sufficient.  For complex organisations in fast-changing markets operating across multiple geographies, however, we need a better view of what execution means.

Below are a few of the most common myths, as well as my view on the realities, of strategy execution. 

1. “Execution is all about alignment”

There is a commonly held myth that the challenge of execution is about aligning activities and objectives up and down the company hierarchy, through things like KPIs and nested objectives.   While important, most companies are actually doing okay on this– sometimes a lot better than they think.  

I’ve found that the biggest thing that’s holding execution back is not alignment.  Instead, the real challenge stems from the need to coordinate, which is especially pronounced when trying to deliver exceptional customer experiences or integrated customer solutions.  Within complex organisations, coordination of activities across multiple functions, departments and units is critical to get things done.  And this coordination does not stop at the company’s boundaries; it extends beyond the firm to include key partners and stakeholders. While we have many tools to translate objectives and commitments into action going up and down the firm hierarchy, we have far less when considering how to translate commitments or promises made across the organisation into deliverable results for customers.  

2. “Execution is just implementing a plan”

Facing this coordination challenge, many organisations apply a less than ideal fix.  They try to craft a perfect screenplay of the work they need to do, and then script this out in detailed plans that describe in painful detail who needs to do what and by when.  For delivering projects, like a Boeing 787 Dreamliner on time, detailed Gant charts are certainly helpful.  When executing strategy in the real world, however, you face a problem.  And that problem is that in the real world, things change all the time.  As the Prussian Field Marshal Helmuth Von Moltke famously said: “No plan of operations can extend with any certainty beyond the first encounter with the enemy’s main body.”   Or as former heavyweight boxer Mike Tyson said a bit more bluntly, “Everyone has a plan ’til they get punched in the mouth.” 

We create these plans at the outset of our strategic journey, and by definition on day one we know least about what the world is going to look like as the strategy evolves through time.  Adjusting to local circumstances as markets shift is the very essence of executing strategy in volatile markets.  

This does not mean plans, or planning, should be disregarded, but rather that we need to do more to specify clearly the bounds, or parameters, of the strategy, within which distributed leaders can adapt, rather than detailing every aspect of every possible plan.  Leaders striving for more effective execution should ensure that strategy is clear enough that key leaders throughout the organisation know what lies within bounds of strategy and what lies outside of it, and avoid the temptation to specify every possible action and reaction in great detail.

3. Execution is one size fits all

So strategy execution is about simultaneously doing three things at once - aligning activities and resources with strategy, coordinating across functions, business units and geographies, and adapting to local circumstances and changes.  This begs the question of how to find the perfect balance across these three.  This is hard, if not impossible to do, as these dimensions are often competing with and pulling against each other.  While balance is difficult, it is also unnecessary.  One cannot find a perfect balance, but one also does not need to.  Execution is never one-size-fits-all.  Different companies need different amounts of alignment, coordination, and adaptation depending on their strategy, and in some part, their history.  In 3-Dimensional Execution, or 3DX as I refer to it, different strategies will fall at different intersection points across these three.  The figure below represents what I consider extremes of strategies that fall primarily into one of the three dimensions, but most companies fall in between these.  What is key, though, is that companies “find their fit,” across them, and then adapt their execution approach appropriately. 

4. Strategy and execution are distinct from each other 

When organisations fail to achieve their desired results, executives often write off the failure to a great strategy brought down by poor execution.  But failure to execute is always partly, if not wholly, due to the way the strategy itself was conceived.  Desiring effectiveness in execution over strategy can be just as damning.  Many command that ‘effective implementation of an average strategy beats mediocre implementation of a great strategy every time,’ ? This is ever-popularised by comments from leaders on their preference for superior execution, such as JP Morgan’s CEO Jamie Dimon, who noted “I’d rather have a first-rate execution and second-rate strategy any time than a brilliant idea and mediocre management.” 

What this misses is that strategy and execution are interdependent. We simply cannot talk about strategy and then execution, yet unfortunately too many continue to do so.  We teach these as distinct in our MBA and executive education courses, dedicate varying times to one or the other, and usually elevate one piece from the other (strategy usually wins).  Thinking we can separate strategy from execution is one of the biggest myths of execution in volatile markets, and the word “effective” cannot be applied to either without the other.  

Strategy is fundamentally about choices; discrete choices about how a company creates and sustains economic value.  When clearly articulated, a strategy for execution provides guidance to key leaders in the organisation in making necessary trade-offs and resource allocation decisions, and help in resolving conflicts across units while still allowing the needed flexibility to adapt to changing circumstances.  A failure to execute often stars here, with a failure to make those choices themselves (and thus also failing to make it clear to people what these choices are). A good strategy should enable people to make good decisions without somebody telling them what to do.  Unless those choices have been made, people won’t be able to make any decisions at all, let alone good ones, when decisions matter.

5. “You need the CEO if you want to execute”

Too often when I talk to leaders and managers about execution, they express the desire for their CEO to get more involved, to really understand what the issues are.  There seems to be a prevailing idea that to really make execution work, you need someone on the senior team to swoop down and help solve all the problems. 

Executive teams are responsible for helping to define strategic boundaries, guide company-wide adaptation, manifesting through their actions and behaviours what it means to have an execution culture (described in my next blog), and, critically, developing and building a key cohort of managers distributed throughout the organisation.

It is these managers, whom I call “distributed leaders,” who are the real heroes of execution.  In complex organisations, hundreds of decisions and actions at multiple levels of the organisation make strategy execution happen.  The leaders closest to these choices are in the best place to make these tough calls as well as to build a shared understanding of a situation which is often in flux.  Execution lives and dies with this group, defined as the set of managers and leaders distributed throughout the organisation who are critical to executing strategy.  

Part two of the blog will look at devising a framework to help execute strategy effectively within your organisation.