EXECUTION ALL-STARS

--- Five Famous Companies That Bridged the Execution Gap (and How They Did It)

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BY BY RICK LEPSINGER

Once upon a time, not so many years ago, strategy was king. Leaders spent countless hours planning how best to achieve their company's goals.

Strategy discussion dominated the attention of senior executives and the advice doled out from consultants and management gurus. Experts of various stripes weighed in on how to put strategic planning processes in place and transform employees at all levels into strategic thinkers.
Naturally, leaders assumed all this strategizing would pay off. Yet, for too many organizations, the results promised to flow from these well-crafted visions went unrealized.
Quite simply, they couldn't execute.
Now, strategy's hey-day has passed. The business world has shifted its focus to execution-- execution of plans and initiatives and the consistent delivery of results. If an organization can't execute, nothing else matters: not the most solid, well thought-out strategy, not the most innovative business model, not even the invention of technology that could transform an industry.
Thomas Edison famously said, "Vision without execution is hallucination." It's true, and as the hallucinations of countless business leaders have proved, knowing what you want to do or where you want the company to be in three to five years may be less than half the battle.
So what's the problem? Why--given all the buzz about having a clear and compelling vision and a realistic and feasible strategy--can't some leaders seem to execute? This is a question I pondered for a very long time. My work with senior teams made me curious about why--despite having a sound strategic planning process in place and teams made up of smart, experienced professionals--many organizations still struggled and were unable to get things done and deliver results.
It seemed obvious there was a gap between planning and execution. Moreover, while much had been written on the need for leaders to improve their ability to execute, I could find very little information on what causes this gap and why it exists in some organizations but not in others.
So, my company Onpoint Consulting set out to gather specific information on what it takes to effectively execute plans and initiatives. We designed a study to answer three questions:

  • Is there a gap between an organization's ability to formulate a vision and strategy and achieve business results?
  • What differentiates organizations that are more effective at execution from those that are less effective?
  • What can leaders do to enhance their organization's ability to close the strategy-execution gap and achieve business results?

    We expected some percentage of leaders to report a gap between their organization's ability to formulate and communicate a vision and strategy and its ability to deliver results. Anecdotal evidence suggested that the number was fairly substantial. And our suspicions were confirmed: nearly half of the 409 leaders we surveyed (49%) believed there was a strategy-execution gap in their organizations.
    But here's what really surprised us: only 36% of leaders responded positively to the question, "I have confidence in my organization's ability to close the gap between strategy and execution." Said another way, a staggering 64% of leaders who indicated there was a strategyexecution gap at their organization lacked the confidence that it could be closed.
    To provide further insight, we segmented survey respondents into four categories:

  • True Believers: Those who believe that their organizations are executing effectively and are not struggling with a strategy-execution gap.
  • Doubters: Those who reported a gap and lack confidence it can be closed.
  • Optimists: Those who reported a gap but are confident that the gap can be closed.
  • Uncertain: Those who did not report a strategy-execution gap but who did indicate that they lack confidence in their organizations' ability to effectively execute.

    We found that only 42% of those who participated in the study were "True Believers." This finding--coupled with the high percentage of leaders who don't believe their organizations can close the gap--underscores the magnitude of the strategy-execution problem.
    Right now you may be thinking, Okay, so if my company has an execution problem what can we do about it? What's the secret to ensuring effective execution--and consequently, gaining people's confidence that the organization is capable of achieving its intended business results?

    If you're like many leaders, you've bought into the conventional wisdom about strategy execution. It goes something like this: communicate an inspiring vision and realistic strategies, make sure you have an engaged and committed workforce with the skills to do the job, and focus on the customer to ensure success. Admittedly, it sounds good, but all evidence indicates that something is missing from the equation.
    It's true that these baseline practices are necessary and relevant. Unfortunately, they are not sufficient to ensure successful implementation. Most of the organizations in our study--those afflicted with a strategy-execution gap and those who aren't--have these practices in place.
    So here's the question: If these baseline factors are prerequisites for successful execution, what is it that puts organizations over the top? What sets the best apart from the rest?
    We discovered that there are five factors that set apart the organizations with the best performance results and those more effective at execution. I think of them as "The Five Bridges" because they help companies traverse the gap between strategy and execution. To see what the bridges look like in action, here are a handful of well-known companies that execute exceptionally well.

    EXECUTION SUPERSTAR: PROCTER & GAMBLE
    Bridge #1: The Ability to Manage Change

    A few years back, P&G hit a home run with its Mr. Clean Magic Eraser. What makes it relevant to Bridge #1, however, lies in how the product came to fruition. The organization had a track record of developing new products in-house. With the Magic Eraser, it broke from that model. An employee discovered the prototype in Japan, and rather than limiting itself to internal ideas, P&G saw an opportunity to license a product that already existed and tap into its own organizational competence to add value. Its plan to use ideas that had been developed outside the company worked due to P&G's openness to change and its ability to execute flawlessly.

    EXECUTION SUPERSTAR: IBM
    Bridge #2: A Structure That Supports Execution

    IBM set out to become a "globally integrated enterprise." The key? It put in place a structure that best supports this strategy. Historically, IBM created mini versions of itself in each country where it operated. As it turned out, this was inefficient and expensive. Now the company sets up shop wherever it finds the right talent at the right price: for example, global IT service delivery in India, global supply chain in China, and global financing back office in Brazil. IBM also redesigned business processes and automated work with software to help coordinate these activities.

    EXECUTION SUPERSTAR: GOOGLE
    Bridge #3: Employee Involvement in Decision Making

    When Google started out, it was easy to keep all of its employees involved--primarily because there were so few of them. However, now that the company has expanded to thousands of employees, leaders have had to find ways to ensure that everyone has a voice. One way they keep their ears open to grassroots ideas is by allowing engineers to spend at least one day a week working on their own pet projects. The company also uses smaller teams to develop new concepts--sometimes assigning only three or four people to a team.

    EXECUTION SUPERSTAR: COSTCO
    Bridge #4: Alignment Between Leader Actions and Company Values and Priorities

    James D. Sinegal, president and CEO of Costco, is one of the best and most consistent examples of a leader whose behavior is aligned with the organization's values and priorities. Costco operates with razor-thin margins yet manages to maintain solid earnings through its membership fee and its Spartan approach to costs. The fact that the CEO "walks the talk" is at least partially responsible for Costco's success.
    In an environment of razor-thin margins, store managers need to be obsessively focused on details. Sinegal models that behavior every time he visits a warehouse store. He quizzes store managers about the sales of each department, what they are doing to move merchandise, and the process of individual items. Here's another way Sinegal signals the importance of keeping costs low: his office overlooks the parking lot of the Costco across the street and he has folding chairs for visitors. He answers his own phone and does not have an entourage like many successful senior executives. His salary and bonus total about $450,000. Now there is someone who lives the values and keeps the organization's priorities front and center every day.

    EXECUTION SUPERSTAR: CISCO
    Bridge #5: Company-wide Coordination and Cooperation

    To help ensure cross-organizational cooperation, Cisco, led by John Chambers, changed the compensation system so that people were paid not only for hitting their targets but also for how effectively they collaborated with their peers. Technology has also played an important role in facilitating teamwork. Cisco has installed 120 telepresence centers (a new high-end video conferencing system) across the company and uses social networking to bring together employees from around the world.

    Today, most leaders understand that a well thought out and energizing vision and a realistic strategy are critical to success. They appreciate the need for highly engaged employees with the skills required to do the job, for high quality products and services and for listening to the customer. Yet, even when these core factors are in place, many organizations are still not able to deliver consistent results. Although essential, these factors are clearly only prerequisites. If other companies can build and maintain the Bridges that close the execution gap, so can yours. Of course, you won't bridge the execution gap overnight, and once built, the Bridges won't be self-sustaining. Still, getting this "construction project" underway is a step in the right direction.


    Richard Lepsinger is author of Closing the Execution Gap: How Great Leaders and Their Companies Get Results (Jossey-Bass/A Wiley Imprint). He is also president of OnPoint Consulting. He has coauthored four books on leadership including Flexible Leadership: Creating Value by Balancing Multiple Challenges and Choices, The Art and Science of 360° Feedback, The Art and Science of Competency Models: Pinpointing Critical Success Factors in Organizations, and Virtual Team Success: A Practical Guide for Working and Leading from a Distance. For more information, visit www.onpointconsultingllc.com