One of the toughest challenges that CEOs face on a recurring basis is translating their strategy into execution and results. In fact, the inability of CEOs to successfully translate their strategy into execution and results is considered, by many, to be the major reason why CEOs fail. Witness a past Fortune Magazine article by Ram Charan:
“…You’d never guess it from reading the papers or talking to your broker or studying most business books, but what’s true at Compaq is true at most companies where the CEO fails. In the majority of cases - we estimate 70% - the real problem isn’t the high-concept boners [bad strategy] the boffins love to talk about. It’s bad execution. As simple as that: not getting things done, being indecisive, not delivering on commitments. We base our conclusions on careful study of several dozen CEO failures we’ve observed over the decades - through our respective work as a consultant to major corporations and a journalist covering them. The results are beyond doubt.”
The inability of CEOs to successfully translate their strategy into execution and results is considered, by many, to be the major reason why CEOs fail.
Charan’s findings were reinforced by noted business author Jim Collins who stated that, “Building a visionary company is about 1% vision and 99% alignment.” You can substitute “execution” for “alignment” in this case. The point is; for strategy to be of value it must be translated into real-world execution and concrete results.
The Strategic Execution Process
It is one thing for CEOs to understand that execution is the key to translating strategy into results. It is another thing for CEOs to be successful at translating strategy into execution and results. In most cases, the primary difference between CEOs who are successful and those who are not, is whether or not they adopt a comprehensive strategic execution process that is driven by them and their senior executives. For a strategic execution process to be comprehensive it should include tools and methodologies that help CEOs and their executive teams:
· Engage in regular and sound strategic thinking,
· Identify and set accountabilities for the company’s top priorities,
· Establish an executive meeting rhythm that drives strategic thinking and the accomplishment of the company’s top priorities,
· Create organizational clarity and alignment for all employees.
Sound Strategic Thinking
Sound strategic thinking is fundamental to successful strategic execution because it stimulates dialogue and debate about what is most important to an organization’s long-term success. It uncovers issues, reveals different perspectives and provides alternative scenarios, all of which lead to improved decision making and solid strategic execution.
The trap that many CEOs and executive teams fall into is believing that sound strategic thinking means coming up with a single “right” answer that goes into a box on a form. Or, that once an answer has been put intoa box that their task is complete. This approach wouldbe a mistake. Sound strategic thinking is not discrete; itis iterative because all organizations exist within dynamic marketplaces. The key is action. Do the best strategic thinking that can be done at the time, put the right people in place who can achieve it, andthen execute. As General George S. Patton, Jr. stated inhis book, War as I Knew It, “A good plan executed now is better than a perfect plan executed next week.”
Ultimately, strategic execution is about identifying the top priorities that an organization must address and accomplish. Top priorities are the three to five most important and impactful items that the organization must accomplish over the next three years, during the current year and within each quarter of the current year. Focusing on top priorities is what enables an organization to continually make progress towards its envisioned future.
Strategic execution is about identifying the top priorities that an organization must address and accomplish.
It is not uncommon to generate a lot of action items during strategic planning and then fail to prioritize which ones are the critical few. When this happens, there are no priorities because everything is a priority. Prioritizing requires tough discipline and facing the brutal facts.
If everything is important, then nothing is.
The importance of focus is emphasized in the following excerpt from Al Ries’ book, Focus:
“The sun is a powerful source of energy. Every hour the sun washes the earth with billions of kilowatts of energy. Yet with a hat and some sunscreen you can bathe in the light of the sun for hours at a time with few ill effects. A laser is a weak source of energy. A laser takes a few watts of energy and focuses them in a coherent stream of light. But with a laser you can drill a hole in a diamond or wipe out cancer. When you focus a company, you create the same effect. You create a powerful, laser-like ability to dominate a market.”
Executive Team Meeting Rhythm
The mechanism for driving strategic execution is a meeting rhythm that brings the CEO and his executive team together for annual, quarterly, monthly, weekly and daily meetings. The purpose of each meeting is to focus on accomplishing the organization’s top priorities and accelerating the growth of the organization. While the meeting rhythm structure is relatively simple, it requires a high degree of discipline.
Annual Strategic Planning Session
The meeting rhythm should begin with an Annual Strategic Planning Session. This session should be at least two days in length and be held at an off-site
location. During this session, the CEO and executive team engage in sound strategic thinking about how well they are executing their business strategies and achieving the targets that they set. They assess their long-term business assumptions and conduct a traditional SWOT analysis that provides them with a current understanding of their marketplace and their true capabilities as an organization. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
Strengths and Weaknesses are current internal issues, while Opportunities and Threats are external, future issues. During the SWOT analysis, the most important priorities in each category should be identified and agreed to.
The SWOT analysis moves the team naturally toward identifying their top three to five priorities and targets for the next three years. These priorities and targets should be platform issues that answer the question: What major areas does the organization need to address to move toward their envisioned future? Entering a new market, implementing a performance management process, launching a new product, improving quality dramatically and diversifying the customer base are examples of major areas.
The organization’s three-year top three to five priorities are identified first, and then the top three to five priorities for the upcoming year are set. The priorities for the upcoming year should have a consistent line of sight with the three-year priorities. Within the upcoming year’s priorities, the CEO and executive team should clearly establish the number one priority that must be accomplished by the organization.
Once the upcoming year’s top three to five priorities are established, the team then sets their top three to five priorities for the first quarter of the upcoming year. As with the annual priorities, the number one priority for the quarter should also be identified. To make sure that each quarterly priority receives appropriate focus, each priority should be assigned to one executive team member who is then accountable for leading the team’s effort to accomplish each priority. This accountable team member is not expected to do all the work. The work should be delegated across the executive team and throughout theorganization. The accountable team member’s job is to make sure the priority is being addressed and that it is accomplished. This team member is responsible for reminding the executive team of their decision to make this item a priority, and ensuring that the necessary time and resources are committed to complete the priority.
The right philosophy is that you cannot “eat an elephant in one bite.” The way to achieve one year goals is “bite-size” pieces one quarter at a time.
Quarterly Planning Sessions
The executive team meeting rhythm should also include three Quarterly Executive Team meetings between each Annual Strategic Planning Session. These sessions should be held for a full day, ideally at an off-site location. During these sessions, the CEO and the executive team assess how well they accomplished their priorities for the past quarter and what may have been learned, determine and set accountabilities for their priorities for the upcoming quarter and recalibrate their annual priorities, if needed. The number one priority and the top three to five priorities for the new quarter should be set within the context of the annual priorities and targets.
The question that should be asked is:
“Based on what we know today, what are the most important and impactful things that the organization needs to accomplish in the next quarter to accomplish its annual priorities and move closer to attaining its envisioned future?”
Monthly Team Meetings
In the months between each Quarterly Executive Team meeting, the CEO and the executive team should carve out at least one half day each month to have a Monthly Executive Team meeting. These meetings should focus on the current quarter’s priorities with updates from the Accountable Team members. The questions asked during these meetings should address the following: How are we going to accomplish our current quarter priorities? What resources do we need to accomplish our current quarter priorities and? What kind of progress have we made toward accomplishing our current quarter priorities?
To keep the CEO and executives grounded in reality, it is often appropriate to include middle management in all or part of the Quarterly and/or Monthly Team Meetings. This approach helps develop the organization’s future executives by giving them a chance to work alongside the executive team on the execution of strategic priorities. This can also accelerate the completion of the current quarter’s priorities since more individuals would be involved in the strategic thinking process.
Weekly Team Meetings
During the weeks between each Monthly Executive Team meeting, the CEO and the executive team should conduct Weekly Executive Team meetings. These meetings should last from sixty to ninety minutes maximum, depending on the needs of the organization. This meeting is about alignment, the one time each week when everyone on the executive team has common information. The key question should be: “What’s up with our customers, suppliers and employees that we all need to know about?”
During these meetings, the CEO and the executive team need to have the most current employee and customer data available. This might include typical sales, operational and financial data. The data should provide an accurate picture of the organization’s performance and should be collected and disseminated prior to the meeting so the meeting can be spent debating and talking about the conclusions the team is drawing from the data. The agenda should also include thirty minutes to work on one of the quarter’s priorities. The specific topic should be selected in advance, at a prior Weekly or Monthly Executive Team meeting.
Once defined, it is important to carry the discussion to a conclusion. The team should knock out one topic in each Weekly Executive Team meeting. The team should not attempt to spend a few minutes on a number of different topics that cannot be brought to conclusion, because there isn’t time to fully debate and resolve them.
The Daily Huddle
During the days between the Weekly Executive Team meetings, the CEO and executive team should come together for a ten to fifteen minute Daily Executive Team Huddle. The Daily Executive Team Huddle should be a stand-up meeting that is held at the same time and in the same location each day. Those in remote locations should participate via telephone. The Daily Executive Team Huddle provides the CEO and executive team a specific opportunity to identify “what’s up and where they are stuck.” No problem solving should occur during the Daily Executive Team Huddle. Any problem solving should be handled off-line. The Daily Executive Team Huddle is preventive in nature and typically helps the team avoid a major problem once or twice every week.
The Daily Executive Team Huddle should be a stand-up meeting that is held at the same time and in the same location each day.
Functional Team Meeting Rhythms
Just as an Executive Team Meeting Rhythm helps the CEO and the executive team become and stay aligned, Functional Team Meeting Rhythms help the rest of the organization become and stay aligned. They do this by bringing the functional teams that report to executive team members together into Monthly, Weekly and Daily Meetings that focus on supporting the accomplishment of the priorities that are established during the executive team’s Annual and Quarterly Strategic Sessions. In addition, the Meeting Rhythms help create clarity throughout the organization on who they are, where they are going and what they are going to do to get there. They also help the organization continually move closer to achieving their envisioned future, because the entire organization is aligned around and focused on strategic execution.
Every employee should have quarterly goals that tie to departmental goals and ultimately company goals.
Also fundamental to successful strategic execution is the CEO’s and executive team’s ability to create alignment throughout their organization. Organizational alignment is critical because it is what drives successful strategic execution. Without organizational alignment business strategies are less likely to be executed as planned. Organizational alignment is important because successful strategic execution is more about dealing with qualitative challenges than quantitative ones. It is more about the soft stuff than the hard stuff. It is about establishing a high level of trust, encouraging constructive conflict, keeping to commitments, holding each other accountable and staying focused on getting results. The very things that if not done well can lead to what Patrick Lencioni refers to in the title of his best-selling book as “The Five Dysfunctions of a Team.”
The key driver of organizational alignment is smart and healthy teamwork. The smart things are functional such as manufacturing, distribution, sales, marketing, finance, etc. The healthy things deal with people. Organizations that perform the smart and the healthy things well experience less politics, less confusion, higher morale, higher productivity and lower turnover. Most CEOs spend more of their time working on the smart things because it is easier than the healthy things. This happens because the smart things are more about quantitative challenges and the healthy things are more about qualitative challenges.
Smart and healthy teamwork occurs when CEOs and executive teams are able to establish cohesive leadership and organizational clarity. Cohesive leadership is never tolerating “C” players on the executive team. It is also about putting the success of the company above that of an individual. Organizational clarity is about getting everyone on the same page relative to what the company stands for, where it is going and how it going to get there. The things that a company stands for are referred to as its core ideology, which consists of a company’s core values and core purpose. Where a company is going is referred to as its envisioned future, which encompasses what it can be best in the world at and what it will look like when it gets there. The how is about a company’s market positioning, which includes its mission, markets, value proposition and brand promise.
Organizational alignment is the “secret sauce” that is key to successful strategic execution. It is the smart and healthy teamwork, cohesive leadership and organizational clarity that CEOs and executive teams need to create in order to execute their business strategies.
As previously stated, to get results from strategic planning, CEOs and executive teams need to use a comprehensive strategic execution process. The goal of this process is to produce concrete results that move the organization toward its envisioned future, using the tools and methodologies highlighted in this paper.
One:The right people for a company are those whose personal core values synch with the organizations core values. When a comprehensive strategic execution process is in place, it will become clear as to which team members are right for the organization and which are not. Team members will rise or fall with the increased discipline and accountability that a strategic execution process brings.
“A” players not only expect but seek to be held accountable for their work.
Two:Reaching agreement does not mean that you have to reach consensus. Encourage constructive conflict and encourage all team members to share their perspectives. Once there has been robust debate, identify the viable options and then determine what best works for the organization. Everyone should be able to live with and support whatever is agreed to. If not, they might not be the right people for the company. One thing should be consistent: the CEO should have the final decision-making authority and should act on it when required.
Three:CEOs should consider using a trusted, independent advisor to help guide the company’s strategic execution process. Some CEOs and executive teams can be very disciplined and lead such a process effectively themselves. Others may be disciplined and effective, but would benefit from having an outside perspective as they discuss opportunities and make decisions on priorities. Still other CEOs and executive teams may need an outside influence to hold them to the discipline of the process. In any case, the CEO needs to be a content participant in strategic planning, not a facilitator. And his primary job in executive team meetings is to mine for conflict and assure that the toughest issues are surfaced and dealt with first.
Bad news and tough issues are not like wine; they don’t get better with age!
Jim Collins offered the following point, during an interactive Q&A session a few years ago:
“Some of the companies that went from good to great used outside advisors, while others did not. The great companies who did use outside advisors used them in a very specific way that is different from how good companies did. The great companies did not use outside advisors to tell them “what to do” or “how to do it.” In short, they did not let outside advisors do their thinking or make decisions for them. Instead, the great companies used outside advisors in one or both of the following capacities:
1. To give them the “brutal facts”-an assessment of the current reality for the organization, and/or
2. To be a part of the “council” working alongside the executives on some periodic basis to help them wrestle with questions and issues.
A council is a group of top people who engage in debate around strategic issues and help the CEO and executive team make the best decisions.
Take for example the Wells Fargo CEO who asked a partner from McKinsey to work with his organization on long-term strategy, as part of their “council”. The partner from McKinsey agreed and began lining up a team from McKinsey to work with Wells Fargo. The Wells Fargo CEO called the McKinsey partner back and stated that there was a misunderstanding. Wells Fargo did not want McKinsey, they wanted him. From that point on, the McKinsey partner worked with Wells Fargo over a number of years as part of their “council.”
This story highlights, at a philosophical level, the value of an independent advisor. An independent advisor should not tell you what your strategy ought to be. An independent advisor should provide a reflective, objective viewpoint. They should bring a higher level of discipline and accountability to the entire strategic execution process.
The job of an advisor is to teach an executive team how to fish, not catch fish for them.
The following books and articles contain valuable tools and methodologies that are essential to a successful strategic execution process:
Also see the Resources page at www.alampi.com.