Three out of every five companies rate their organization as weak in strategic implementation. When you dig into potential barriers to implementation, there is a general lack of understanding of various aspects of the game, resulting in inevitable managerial justifications – “poor leadership,” “inadequate talent,” “lack of process excellence”. This article outlines three key steps to building the right execution system: 1) good strategy, 2) proper organization and 3) effective management. With these three ingredients, human ingenuity can be overcome and employees can collectively deliver on the strategic goals of the company.
Tactics in Greek (Strategy) Means “general art” and, since ancient times, refers to the ability to achieve a complex war goal. In the modern business world, common “battles” may include executing a digital transformation strategy, winning the war for talent, or disrupting yourself before others do so. Whatever it is, it is the only strategy that can be implemented. As Thomas Edison famously noted, “Without implementation, vision is merely an illusion”.
While it is difficult to differentiate a flawed ambition from a flawed execution, we know that most companies are not better than the latter, with one in three employees out of every five companies rated their firm as weak in execution. Many leaders think their strategy is “right” but lament that implementation is a problem. We still have to meet a leader who reports that his strategy is wrong but he is the best at executing. Similarly, when you dig into potential barriers to implementation, there is a general lack of understanding of various aspects of the game, leading to inevitable managerial justifications – “poor leadership,” “inadequate talent,” “lack of process excellence” or the ever-popular “culture eating strategy for breakfast.”
As a company designer, we are familiar with the desire of many executives to address the challenges of execution, and suggest three key steps to building the right execution system:
1) Achieving strategic clarity
The first challenge is to master both of them Yes And Should Will be executed. It is difficult to determine which strategy is the best strategy for a given environment and depends on a large number of factors, including the industry and the competitive landscape. Although the adequacy of your strategy is beyond the scope of this article, a well-executed strategy will suit your aspirations and your strengths. So, two important questions to ask are:
Is your strategy set at the right level of ambition?
We can argue that there are two major flaws with respect to strategic ambition: Type 1 error, which is essentially false optimism is an unrealistic or overly ambitious strategy, which is “How can it work?” That prompts the question. And Type 2 error, irrational pessimism, ambitious or overly pedestrian technique that triggers a “meh” response. Type 1 defects are currently very popular in the world of unicorns and activist hedge funds, but this is currently a matter of fashion and risk appetite, not to mention the fact that such lofty aspirations can be rewarded with large investments. Both errors should be avoided.
Do you know what capabilities are essential to your strategy?
The next step in strategic clarity is needed – understanding what it takes to execute a strategy. The first step is to clearly identify the necessary organizational capabilities required for the new strategy – building competencies that others cannot easily imitate. The second step is to see if you can expect to build these capabilities. Established companies are more conservative than entrepreneurs here (there is a reason. One way to achieve this clarity is the pre-mortem exercise, which allows executives to identify the soft bottom of their strategy and therefore the risks of their major execution.
2) Achieve organizational clarity
Once you select the right level of ambition and understand the key competencies needed to achieve it, you can orient your organization toward the key challenges to implement it. The operating model provides you with a high-level model of how your strategic pursuits will be assigned to the executive team. Three questions are helpful in building your operating model:
Have you specified which component of your strategy is the most important?
While operational options are specific to each strategy, we can cluster the major options facing each firm across two axes, which collectively create high-level organizational units:
- What is An important subset of strategic goals, Based on your ambition, should your organization achieve that? How best to group them? In general, complex organizations consist of several different business units, grouped by geography, product type or customer type – how can you make this logic for your strategy?
- What Strategic capabilities Do you need to cut in these groups? How are these shared resources grouped and managed?
When done properly, all the key strategic goals and capabilities have clear owners and reach a level of “mutually exclusive, collectively” clarity.
Have you built the right communications between these key components?
After making important organizational choices, the key Interdependencies Must be identified and actively managed. Different business sub-goals create differentiation Trade-offs It has to be managed. Clear Administration How scarce resources are allocated and shared support and capabilities are critical to bringing together the entire organization.
There is a greater emphasis on proactively and explicitly managing these trade-offs – the whole art of strategy is to balance different subcultures to achieve a distant goal.
Did you assign the right talent to the right roles?
Your executive team drives your operational model – your key leaders have important sub-goals of your strategy and they must have the task.
The first is the task Build the right characters. Roles are a large group of goals, decision rights and incentives. The second is the task Map executive talent into key roles. It is best to build the operating model you need, and then check if your current talent fits your needs. You can make some risky bets and manage with some gaps, but if the gap is too large, you will need new talent or a new strategy.
3) Building a management system
Once the strategy and operational model has been set, they need to be implemented in countless routine decisions. You need a management system for that. In the process, they become the main custodians of the death penalty Managers – Hierarchy is an important tool for implementing a complex strategy across a large number of individuals. The hierarchy is not terribly fashionable these days, as top-down tactics are wrong and leaders are badly told stories that cause them to lose trust in all kinds of organizations.
We believe that new approaches to management (such as agile, customer-focused, empowered employees) are an understandable response to top-down command and control style management. The rationale for such an old-fashioned system is bureaucratic, which can best be described as an obsession with process over form and effectiveness over function. To this end, British historian Robert Conquest’s third law of politics is still correct: “The simplest way to describe the behavior of any bureaucratic organization is to assume that it is controlled by the enemy’s cabal.”
However, we believe that the idea of hierarchy and management degradation goes too far – any complex strategy requires organization and structure to achieve collective coordination. The concepts of self-organizing communities and markets and the collective intelligence they create are the right models for many of the outcomes we care about in the world, but they are not good enough to implement complex strategies. In other words, you don’t go to Normandy Landing with a bottom-up process as usual.
Our approach combines the management hierarchy with two key conditions, which successfully adapt the strategy to local conditions and avoid bureaucracy:
How did you empower your staff?
Your strategy and operating model is intended to provide sufficient clarity across the organization on what to expect from each employee and how they can support them to achieve what they want. Beyond that, employees need significant latitude to adopt these goals, and the means necessary to adjust to local specifics. Good management systems clearly ensure that there is sufficient accountability and flexibility in their design to avoid the “bureaucratic trap” and enable adequate levels of empowerment. One example is Ritz-Carlton’s famous $ 2,000 rule, which states that employees can spend that amount to make a customer happy without asking for executive approval.
How did you build a self-correcting response in your system?
The importance of local context and the value of collective intelligence, customer feedback, and employee feedback indicate the need to build a feedback loop that enables executives to quickly understand and respond to local developments. Simply put, executives need to understand quickly and clearly what is working well and what is not, and be in a position to share best practices quickly. Take Ford’s example, where he encountered a new CEO culture where problems are usually not reported at the executive table and certainly not overtly explored and deeply conveyed. By establishing a business review process, the leadership team was able to focus collectively on strategic elements that were not working and resolve them quickly and efficiently, thus creating an important link to successful execution.
In sum, collective action, that is, large-scale cooperation, is a major competitive advantage for humanity – to shape imagination and make it a reality. For that, three things must come together: 1) good strategy, 2) proper organization and 3) effective management. With these three ingredients, human ingenuity can be overcome and we can achieve our best together – make our dreams come true.