Strategy to Execution Gap: What Prevents Companies from Executing Their Strategies?
All together now: “All we have to do now is execute.” So speak executives and managers in high-tech executives throughout the land(s) every day. They are experiencing the strategy-to-execution gap and it sounds like a litany – because, for some mysterious reason, it’s so difficult to do. Though I have alluded to it occasionally in past editions, I have not previously presented an analysis of the reasons why technology organizations experience such difficulty executing even apparently straightforward decisions, whether it’s related to launching a new product, entering a new market, or putting a new alliance relationship into practice. So in this latest Back to Basics article, I shall explain what I see as the causes of the problem, then talk about one or two keys to enhancing the “actionability” of management’s decisions on a day-to-day basis.
Pick your favorites between these common causes of failed execution, which occur independently of the status of a company’s basic product and/or service deliverables:
- Dilettante attitude toward leadership and management: For many hard-worked and rushed executive teams, working out the strategy is, in relative terms, fun; planning in detail how to make it happen is not quite as fascinating, and making sure the work gets done is even less so. The prevailing creed seems to be something like this: “We’re smart enough, we obviously get it, so let’s just execute!” While the strategy eventually gets worked out, it is not usually validated with any degree of thoroughness among core constituencies (not just customers, analysts, and partners, but employees too!). This makes it difficult to pass it on to others in a sufficiently convincing way to get them to act on it.
- Execution is the next step after defining the strategy: I see most high-tech leaders think that execution is “obvious” as a next step after determining and communicating the strategy; it doesn’t occur to them that something may be missing. Unfortunately, when people don’t have an opportunity to understand the whys and wherefores of the executive team decision, they soon feel alienated, and this leads to a form of what I call ‘civil disobedience,’ in which each individual resorts to using their judgment of what they need to do in executing the strategy or plan.
- Decision-making “paranalysis”: Making tough choices between competing product and market opportunities is not the forte of technology executives; in a business normally characterized by being opportunity-rich but resource-poor, they want it all, and they want it now. So discussions on strategic issues can go on and on without reaching the conclusion, and ‘final’ decisions get revisited and/or revoked on a frequent basis – and therefore tend not to get acted on. This is one of the main causes of frustration for outsiders, who begin to see the company as purgatory to deal with. To use a simple though a profound statement by organizational guru Ichak Adizes, “Growing means moving from one set of problems to another”. Think how often you see organizations in which decisions are never final, and the same problems hang around forever, preventing the organizations from evolving to their full potential?
- Silos are the norm, so task execution predominates over customer-focused activities: My favorite definition of business processes states that they are about customers interacting with a company — either requesting something or receiving something from it. The snag is in the business processes – for example, the sale of a product or delivery of a service – happen only across functions, most technology companies are organized in deep “silos,” due in part to the intensity and focus required to get their basic job done. Unfortunately, by definition the only things that can get done within a functional or departmental silo are tasks, or in other words pieces of processes. In these situations, it takes personal heroism to work successfully across the silos, simply because it is not the normal form of behavior. But heroism is less scalable than institutionalized behavior, supported (as it has to be) by the daily example of the company’s leaders. So silos begin to exert themselves negatively, and they soon become an organizational vice, in more ways than one. That’s when you start to hear complaints from people in one functional silo against another, and the language very quickly becomes about ‘us’ and ‘them.’ For example, service or support people will complain about sales when they find they are expected to give a given service without having been previously consulted or forewarned at the time of the original sales contract; marketing rails against sales not knowing how to take advantage of the programs they have launched; development ignores requests from sales or customers for new functionality in the next release of the product, and just building the features they believe to be necessary; and, finance complains about everyone. Worse still can be the actual paralysis that occurs when a stalemate occurs over two or more departments not agreeing to get something important done.
Looking at this list of problems, it doesn’t make things sound too good for high-tech management teams. On the other hand, I have found that if you address these root causes, which are few, rather than worrying about all the many symptoms (i.e., the day-to-day things that go wrong because of these malfunctions), it doesn’t take long to achieve dramatic improvements in performance throughout the organization. I make my case that, but the single most important reason for the success of high-tech businesses may arguably be having a winning technology in hand, the second is undoubtedly the quality of the company’s leadership and management. So, while it’s okay to rely on the power of the product for success in good times, what about when things go wrong, and the business environment turns on you, or new entrants start to eke away at your competitive advantage in the market? What happens then? From my perspective as a strategy consultant, therefore, I can unhesitatingly assert that ineffective management style is the root cause of failed execution. So what should we do to avoid having to repeat the well-worn mantra, “All we have to do now is execute,” at every e-staff meeting, weekly sales conference call, or annual kick-off? Well, here are a few suggestions:
Tip #1 – ‘Dilettante’ leadership and management mentality: To cure this dilettantism, there are some simple measures to adopt, but the main advice I would offer is this: “Just get serious about managing the business!” If you think you can get by with only a high-powered product or market strategy, think again. Even in the most successful cases, no technology company can go more than three or four years without a major crisis if the executive staff does not pay attention to the basic details of managing the company as a business organization, rather than just as a technology development or product marketing organization. Among market-leading companies, just consider why Salesforce.com seems to move forward without missing a step. Marc Benioff may be somewhat of a dictator, but at least everyone in the organization knows who determines strategy (Marc Benioff) and who is there to execute (everyone else). What is the secret of Salesforce.com’s success in execution? Well, they take management seriously. At a simple level, all that’s needed is for management to put a bit of fundamental structure and simple good habits into its approach to strategy and operations: establish a culture wherein strategies are painstakingly communicated throughout the organization; carry out basic disciplines around meeting management, and start by having highly effective e-staff meetings and other routine meetings. To achieve this, make sure that meetings have a defined agenda, that they begin and end on time, and action items are always ‘certified’ by an agreed target date for completion and an accountable individual who has stated that they understand what they are signing up for, and are satisfied that they can finish the task by the agreed date. A corollary to this code is that when, as will on occasion happen, one or other action item cannot be completed on time, the task owner must be obliged to let their colleagues know ahead of time, to give their team-mates an opportunity to take the delay in stride before a problem occurs. At a higher level, it is important to give systematic coaching and mentoring for every career-oriented individual and to do a minimum of career and succession planning for key positions in the organization.
Tip #2 – Execution is “obvious”: Between definition of the strategy and its execution, there is an important step that is frequently omitted called, in Hamm’s vernacular, “structure.” This is a prerequisite for effective execution because it is where people get to understand why this strategy was chosen over another, and why it is likely to be more successful than other alternatives. Hamm further explains that people (especially smart, motivated people like those in high-tech companies) have an “insatiable” need to know why or why not, and they will make one up before they can bring themselves to go into execution mode. Executives who ignore this do so at their peril because they are usually headed for one more mission that won’t get properly carried out.
Tip #3 – Decision-making ‘paranalysis’: In general, I have found that every healthy organization needs to have a simple code to guide decision-making, from the information-gathering and opinion-consulting stages to the definition of strategy, policy and/or associated actions. First, the leadership team (of one or more) needs to own up to the leadership style that will prevail in the company: if it is some dictatorship, benevolent or otherwise (a la Oracle, Microsoft, CA, or Salesforce.com), the boss needs to make this clear, preferably by their words as well as their deeds; if it is more of a club, or a parliamentary democracy, or whatever, leaders should say what type of regime they will be running. Unfortunately, this is a lot to ask of headstrong tech leaders, because they don’t necessarily find it convenient to declare unequivocally how they work (and, surprisingly enough, they may not know). So let’s assume that because we are living in a relatively democratic age, the prevailing leadership style is some form of democracy. In most cases, a three-phase decision-making process can work extremely effectively: there should be an initial consensus-building phase, followed by a decision phase, followed in turn by an execution phase, when it should be verboten to debate, or pull back on, the decision already made. The key is to signal clearly which phase you are in as you go through each decision-making process, then to make sure that once the decision is made, there is no going back – except in truly exceptional cases when new circumstances may cause the original decision to be reviewed.
Tip #4 – Silos are preventing successful product or service response to customers: To allow technology organizations to execute business processes in service to their markets, functional groups need to be regularly organized into cross-functional project teams. This allows them to stay functionally organized to fully develop and nurture necessarily specialized skill sets, while acting ‘virtually’ when it’s time to get something done to serve their customers or other outsiders, such as partners and even suppliers. The simplest ‘virtual’ forum is a single cross-functional meeting. From there, groups can be brought together to achieve a mission that extends beyond a single meeting, such as a go-to-market initiative, or even a single customer implementation. Alarmingly, it is in the latter two cases that so many enterprise software and other technology companies seem to fall down. Once you appoint or otherwise choose a cross-functional team, it is essential to set it up for success, using a number of “obvious” techniques, such as these:
- Provide a clear mission, bounded by time for completion and/or agreed to milestones
- Make sure that each relevant functional area is adequately represented on the team
- Encourage the team to choose a leader and agree on how they will work and communicate
- Caveat on the topic of “ownership.”
It has become commonplace for companies to use the term ‘ownership’ to show who is responsible for getting agreed priorities executed. Unfortunately, however, companies often find that the expected execution does not occur, despite one or more people being identified as “owners” of the action item, execution plan, or another deliverable. Why should this be? Well, it may have something to do with the conditions under which the team or individual is asked to work. For the individual(s) tagged as owners of a specific action to complete their agreed task, a few conditions must exist:
They need to be authorized to do what’s necessary, without constantly deferring back up the hierarchy for permission to do what’s needed;
- They need to have the required skills and know-how to act effectively;
- They need to be accountable for the outcome in the agreed time frame, with rewards and penalties accruing to those who do not perform the agreed task;
- At the first sign that the deliverable will slip, or that it is not feasible, they need to tell the group to which they are accountable, to avoid the letdown of only letting people know after the fact when it may be too late to agree on a substitute action plan.
An additional point is that, before accepting a task or action item, the individual(s) in question must have agreed that they see a way of adapting it to their workload without causing extreme overload or burnout; otherwise, the valiant individual may accept the task as part of their professional attitude, and only later discover that they cannot do justice to it – at which point the organization may have lost valuable time to resolve the issue. Furthermore, wherever possible, it is better to identify one individual as a task owner, even if a team has been allocated the responsibility of performing the work required to complete the action item(s).
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