3 minute read
“Good idea, bad execution” is a saying all of us have heard on more than one occasion, but recently, we've been curious about understanding and defining what moves great ideas into great companies, or project, or achievements - i.e. what defines successful execution.
Largely attributed to Michael Porter’s work in the 1980s, there is now a clear and widely accepted definition of strategy. It is not surprising that organizations spend a vast amount of capital and time devising strategies to improve performance. However, an often overlooked extension of strategy is execution, of which, far less is known about in a practical sense. There is often some confusion surrounding what strategic execution involves, and how to enhance capabilities. Execution involves assessing firm capabilities, synchronizing people with strategy, and linking rewards to outcomes, making people accountable for the delivery of strategy.
While strategic execution is seemingly linked to “doing” in an organization, our client experiences support the notion that there is a need to go beyond simple understandings or productivity, efficiency, and the emulation of best practices. Evidence reveals that roughly two thirds of organizations struggle to implement strategy. In a study of 275 portfolio managers, the ability to execute strategy was found to be more important than the quality of the strategy itself. The inability to execute strategy has also been named a key reason for executive and company downfalls, with many observers recognizing that strategy gets you to the starting line, but it's execution that gets you to the finish line. It was T.S. Eliot who acknowledged the ‘knowing-doing’ gap in 1925, citing that “between conception and creation falls the shadow.” The best companies don’t necessarily always have the best ideas – they are good at implementation, converting the process of doing into an opportunity for learning. While it is not surprising that organizations spend a vast amount of capital and time devising strategies to improve performance, there is far less known about how to execute successfully.
Execution is best defined as the systematic process of rigorously discussing the ’hows’ and ‘whats,’ and tenaciously following through. In a sense, execution is the carrying out of a strategic plan, going beyond operational effectiveness and improvements, and subsequently linking strategy to all aspects of a firm’s activities. However, every organization can succumb to barriers of execution, particularly:
- Lack of flexibility: When asked about the greatest challenge companies will face in executing strategy over the next few years, a third of managers cite difficulties adapting to changing market circumstances.
- Ineffective leadership: A 2013 HBR study of nearly 700 executives found that only 8 percent of leaders are effective at both strategy and execution. This is also supported in our own work, whereby we studied successful characteristics of CEOs at a financial firm. Findings revealed that the top 10 CEOs by company returns across 20 years, were those that excelled in both strategy and execution.
- Fear of failure and rejection: As “ego and fears of embarrassment prevent an objective and honest appraisal of performance”, execution can be hindered by team members’ insecurities and lack of confidence.
In order to better understand strategic execution, Viewpoint has teamed up with Mount Royal researcher Simon Raby and BIG, to research strategy and execution. If you are an organizational leader, entrepreneur, or somehow involved in strategy in your organization, consider participating in our survey. We'd love to learn more about your strategy and execution experience, and in return, you will have access to our findings and execution understandings.
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This work has been funded by Viewpoint Foundation.