Consider one of the top best-sellers in the category of business improvement books, by Jim Collins: Good to Great: Why Some Companies Make the Leap… and Others Don’t. No doubt a popular book – but the frustrating part is evident in its title. It focuses on WHY companies are great – not HOW they got to be great.
Another book by Jim Collins: Built to Last: Successful Habits of Visionary Companies. Again, a best-selling book – yet it focuses on WHAT the habits are, not HOW your organization can develop these habits.
Perhaps therein lies one of the key problems surrounding strategy and execution: Strategy, while very important, is the WHY and WHAT. Execution is the HOW – and it’s much harder (but no less important) than strategy formulation.
So, why is execution so hard?
These research findings are both revealing – and very troubling:
- 90% of well-formulated strategies fail due to poor execution.
- 85% of leadership teams spend less than 1 hour per month discussing strategy.
- Only 27% of a typical company’s employees have access to its strategic plan.
- Only 5% of employees understand their corporate strategy.
- 92% of organizations do not measure performance indicators.
- 75% of business improvement (change) initiatives to solve these problems fail due to lack of sustainability.
The Balance of Strong Strategy – and Strong Execution
Strategy formulation is the WHY you do what you do, and the WHAT exactly it is you do (strategic position and competitive advantage). Remember however, that a flawed strategy, executed effectively can still lead a company to bankruptcy. (NOTE: More than several of the companies highlighted in Collin’s books indeed HAVE gone bankrupt – and are no longer “great” or for that matter, even “good”.)
What effective business leaders must do to achieve sustainable business excellence is to have a balanced blend of BOTH strategy and execution.
Three Barriers Preventing Effective Strategy Execution
For small and mid-size businesses, there are three primary barriers to executing strategy more effectively:
- Economics. While larger businesses can afford to invest significantly in resources like consultants, coaching, systems and software, small businesses simply cannot afford these expensive offerings – let alone the resources and expertise to integrate them into a single system.
- Expertise. While larger enterprises have access to resources, best-practices and expertise on individual disciplines like strategic planning, performance management, business intelligence, TQM, balanced scorecards, etc., small businesses lack the expertise, resources or understanding of how to tie their strategic goals to the day-to-day activities of their people.
- Human Factors. Both large and small businesses have the same fundamental challenge: they’re run by people. For the most part, they know the right things to do. But the fact is, they don’t always do them. Organizational behavior, attitudes, motivation, habits, resistance – many human nature factors can contribute to poor execution – and are certainly barriers to sustainable performance improvement.
Even more important is: how to address these barriers in such a way as to make performance improvement sustainable – year after year.
So…what is the solution? What is needed is a sustainable program for business excellence – one that is optimized for execution.
A Sustainable Excellence Program – Optimized for Execution
To achieve sustainable business excellence, a complete program – one that addresses the key barriers of economics, expertise, and human nature – is required.
The complete program requires:
- A repeatable methodology, based on proven best-practices, and optimized for execution.
- External (and internal) coaching to show organizations how to make performance improvement sustainable – year after year.
- Performance management software that gives people the tools to manage in real-time about competing priorities and selecting those that best align with the priorities of the organization.
- Leadership and manager training – how to equip people to communicate, collaborate and work together to agree on what the most important things are and to get them done. How to build teamwork and re-focus the team on a clear, updated direction.
The Benefits of a Sustainable Business Excellence Program – Optimized for Execution
Competitive advantage is the result of effectively executing strategy better than the competition.
A sustainable business excellence program – optimized for execution — helps to eliminate the barriers that prevent organizations from effectively executing their strategy, while creating a new culture of effective work habits and focused business processes.
A sustainable business excellence program bridges the gap between strategy and execution, and enables an organization to improve their performance — year after year.
The prize for closing the strategy-to-execution gap is huge – an increase in performance of anywhere from 60% to 100% for most companies. But this almost certainly understates the true benefits. Companies that create tighter synergies between their strategies, their plans, and, ultimately, their performance often experience a multiplier effect – similar to that of compound interest.
Over time, as they turn their strategies into more consistent execution, leaders in these companies become much more confident in their own capabilities and much more willing to make the commitments that inspire and transform their workforces. In turn, individual managers who keep their commitments are recognized and rewarded, reinforcing the behaviors and attitudes needed to drive any company forward.
Eventually, a culture of high accountability and high performance emerges. Before long, the company’s reputation among potential recruits rises, and a virtuous circle is created in which talent produces performance, performance brings about recognition and rewards, and rewards lead to even more talent.
In short, closing the strategy-to-execution gap is not only a source of immediate performance improvement but also an important driver of cultural change with a large and lasting impact on the organization’s capabilities, strategies, and competitiveness.
Interested in an excellence program focused on building organizations that execute? Contact us at Six Disciplines.