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This chapter is from the book

The Results: Obstacles to Successful Strategy Execution

Table 1.1 summarizes the main points that emerged from the original research and that managers discussed and analyzed in the period 2005 to the present. Taken together, the data suggest clearly why the execution of strategy is such a difficult task, one that deserves dedicated managerial attention.

Table 1.1. Obstacles to Effective Strategy Execution

1

Inability to manage change effectively and overcome resistance to change

2

A poor or vague strategy

3

Not having guidelines or a model to guide strategy-execution efforts

4

Trying to execute a strategy that conflicts with the existing power structure

5

Poor or inadequate information sharing between individuals or business units responsible for strategy execution

6

Unclear communication of responsibility or accountability for execution decisions or actions

7

Lack of feelings of ownership of a strategy or of execution steps or plans among key employees

8

Lack of understanding of the role of organizational structure and design in the execution process

The importance of managing change to enable effective strategy execution comes across from the data immediately.

Inability to manage change effectively clearly was seen as injurious to strategy-execution efforts. Managers cited the fact that execution or implementation often involved new methods or approaches—new structures, incentives, coordination methods, controls and information sharing—and that managers often resisted these changes, preferring to operate as they always had. Resistance to change, then, had to be confronted and overcome to achieve positive execution results.

Although culture was not mentioned explicitly in the item, the discussions with managers placed culture at the core of many change-related problems. To many of the respondents, “change” and” “culture change” were synonymous. To other managers, culture change was a subset of change management that doesn’t always come into play, but when it does, always deserves additional, separate attention. Suffice it to say presently that handling change effectively, including culture change, is central to effective execution attempts, and discussions in later chapters address this issue.

Another change-related issue raised by managers dealt with the speed of change when implementing new aspects of the execution process. Should managers do everything quickly, at once, or focus on slower, more deliberate change activities? This is an important issue that only arose in discussions because managers read between the lines and raised important issues derived from their own experience but not addressed directly by the data in the survey instruments.

Trying to execute a strategy that conflicts with the prevailing power structure clearly is doomed to failure according to the managers surveyed. Confronting those with influence at different organizational levels who disagree with an execution plan surely will have unhappy results in most cases. The underlying question in need of attention deals with the use and support of the power structure. How does one gain influence or use the power structure to foster and aid strategy execution efforts? This issue certainly requires explication later in the book.

Poor sharing of information or poor knowledge transfer and unclear responsibility and accountability also can doom strategy-execution attempts. These items suggest that attempts at coordination or integration across organizational units can suffer if unclear responsibilities and poor sharing of vital information needed for execution is the rule. This makes sense because complex strategies often demand cooperation, effective coordination, and information sharing. Not achieving the requisite knowledge transfer and integration certainly cannot help the execution of these strategies.

These items also raise the issue of why managers are motivated not to share knowledge or accept responsibility for execution decisions and actions. Whether this is caused, in part, by poor information-sharing resources or poor communication about who exactly is accountable for critical action items and decisions is an issue in need of additional discussion in later chapters.

Having a poor or vague strategy certainly detracts from implementation or execution success. Discussions with managers revealed a number of underlying problems. First, a poor strategy creates uncertainty about how the organization plans to compete and, consequently, how to execute the weak or unclear plan. Second, an unclear or poor strategy fosters problems as to what skills or capabilities a company must invest in and develop to make strategy work. Third, managers stressed that the uncertainties and problems mentioned detract from managers’ confidence about their ability to compete successfully against foes in the market whose plans and approaches to execution are more clear, certain, and attuned to the prevalent market and competitive conditions. A lack of confidence and distrust of approaches to strategy and the resources and capabilities surrounding it can only lead to poor performance according to the managers interviewed in this research.

Another a issue that came up repeatedly is the need for a model or plan to guide execution efforts. What should the flow of decisions and activities look like? What is the logic that underlies sound approaches to execution? If execution is to be a solid, controlled effort and not a haphazard or idiosyncratic approach to making strategy work, what should this effort look like? This is an important issue in need of attention.

Many managers, especially those in higher-level positions, raised questions about the role and impact of organizational structure in the implementation or execution process. While managers responded to the survey, saying that structure was important, many admitted in discussions that they didn’t quite know why! They wanted more information about the choice of structure, the costs and benefits of different structural options, how often and why structure should be changed, and whether structure was helpful for, or a hindrance to, strategy execution efforts. The lack of knowledge about structure was surprising, but it did suggest clearly the need to cover the topic in greater detail.

There were also consistent mentions of issues around communication, buy-in, incentives, and controls in the best approaches to strategy execution. Table 1.1 makes no direct mention of incentives, for example, but managers constantly raised this issue in the discussions subsequent to the original research and data collection. Their interest and comments suggest strongly that incentives are implied in a number of areas in Table 1.1, even if not explicitly mentioned. The incentives to cooperate, share knowledge, accept responsibility, and support change programs are vital to execution success. Incentives, like communication and buy-in, must be an integral part of execution-related programs.

One other critical issue was raised fairly frequently by managers in the discussions of execution that took place in the time from the original survey research in 2005 to the present. Like the issue of incentives, which underlies much of what is being said in Table 1.1, so too this additional issue is a vital force affecting execution success or failure.

The issue is: Leadership and the need to create an execution-based culture in the organization.

Discussions with managers and executives constantly mentioned the issues of sound leadership and its connection to building an organizational culture based strongly on execution success. Their thoughts closely mirrored those in the 2012 study by Kaplan, Klebanov, and Sorensen cited previously. Successful leaders, it was emphasized, focus on the “details” of integrating strategy and short-term, operational goals. They create a culture based on performance, with incentives to support operational excellence. They demand the acceptance of responsibility and clear accountability in the process of goal attainment. Having leaders with charm, charisma, or social skills helps, but alone these characteristics don’t create the performing organization. It’s the focus on execution and results that matters.

The need for leadership that creates a climate of effective performance, then, is a critical ingredient in the quest to make strategy work. Leadership in some general sense may be important, but leadership in the more specific role of creating a widespread culture of execution based on clear performance standards, accountability, and a concern with integrating long- and short-term objectives clearly is the key to success.

The phenomenon of leadership and its relation to an execution-based culture is implied by the survey results in Table 1.1. This concept appears in various forms and places later in the book, as we flesh out the conditions for making strategy work.

Execution Outcomes

The survey research, coupled with data derived from years of working with managers in the period after 2005, provides strong evidence of what are seen to be the outcomes of both good and poor execution. Focusing first on the positive, Table 1.2 summarizes the positive outcomes most commonly attributed to sound execution processes. Interesting, too, is the fact that managers linked the benefits to the possible attainment of competitive advantage. Solid execution, that is, can lead not only to more effective performance against an organization’s own goals, but also to significantly better performance against others in the same industry or market space.

Table 1.2. Benefits of Sound Execution: Possible Contributions to Competitive Advantage

  • Lower costs
  • Faster response to customers and markets
  • Appropriate structures, incentives, and controls: Focusing attention on the right strategic and operating issues
  • More effective and efficient coordination
  • Clear responsibility and accountability
  • Effective management of human resources
  • Increased ability to manage change and adapt to external shocks

The benefits in Table 1.2 are self-explanatory. The one that perhaps needs some clarification is the third one noted on structures, incentives, and controls. Managers, in effect, are saying that an emphasis on strategy, supported by an appropriate structure, set of incentives, and control mechanisms, increases managerial focus on the right things, strategically and operationally, and facilitates change and adaptation. The process might be shown as follows:

Organizational structure and incentives support a chosen strategy, and effective controls provide feedback about performance, allowing the organization to adapt and retain its market or customer focus. The process is ongoing, allowing the organization to focus on learning in a continuous cycle of performance, evaluation, learning, and adaptation. More will be said in subsequent chapters about the relationship among these factors and how they affect performance, adaptation, and making strategy work.

Managers in the original surveys and in the post-survey discussions identified some of the results of poor execution. In addition to “not achieving desired execution outcomes or objectives,” managers noted a few additional results of poor execution methods as being highly problematic. These include the following:

  • Employees don’t understand how their jobs contribute to important execution outcomes.
  • Time and money are wasted because of inefficiency or bureaucracy in the execution process.
  • Execution decisions take too long to make.
  • The company reacts slowly or inappropriately to competitive pressures.

These are not trivial issues. Execution problems can cost the organization dearly. Time and money are wasted, and a company can face serious competitive setbacks because of an inability to respond to market or customer demands. Execution problems must be addressed, but which ones and in what order?

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