In This Issue:
Strategy versus Execution: Strengthen the Strategy to Improve Execution
They say execution matters so much more than strategy. Yet, although execution often gets the credit for business success, my extensive research into business histories finds strategy is more crucial. Nonetheless, conventional wisdom generally accepts the view that execution is what counts. But, is this view really warranted?
An interesting article on this is "The Execution Trap" by Roger Martin in the July-August 2010 issue of Harvard Business Review. The article describes the widespread perception that execution's importance far surpasses that of strategy. Then, it says the prevailing view that execution matters more than strategy is flawed.
My research agrees with Martin that execution gets too much credit for success. So, I posted comments agreeing and pointing out my report "What Will You Do with All Those Good People?" which tells how strategy's role in success tops that of execution oriented factors like people and corporate culture.
In this newsletter, based upon my 20+ years researching business success and failure, I offer my perspective on strategy versus execution, and combine it with my thinking on the implications of Martin's article. First, I'll make some points to keep in mind:
• None of this means that execution is unimportant; it only means that execution is less critical than generally thought.
• According to my research, strong strategy drives success. That's why strengthening the strategy is so beneficial. But, if a strategy is so bad that it doesn't fit at all, the best way to strengthen it is to abandon it and replace it with an appropriate strategy.
• Since Martin's article challenges conventional wisdom, it is important to identify his key points, understand their implications, and incorporate them into how strategy is viewed. For now, encouraging a different kind of thinking about strategy and execution may be the article's goal. Then, ways to apply the new thinking can emerge, whether based on Martin's examples or on other approaches.
That said, rather than judging Martin's examples and metaphors, it is better to recognize valuable key points he seems to raise or imply. As I see it, Martin's key points seem to be:
1. Do not be misled into thinking that execution is so much more important than strategy; it isn't.
2. Strategy and execution should be integrated.
3. Do not overemphasize execution per se, but instead do more to strengthen the strategy so execution improves.
The first point is based upon the beginning of Martin's article, where he makes a good case that execution per se is not as critical as generally believed. My extensive research into success and failure patterns agrees and finds that the successes generally have a strong strategy, while weak strategy characterizes failures. My research finds this to be true even when there is a strong leader who had an excellent track record of successful execution.
According to my research, when these leaders with demonstrated execution capabilities embark upon disastrous strategy (and unfortunately they do), the strategy typically fails. When failure becomes apparent, the strategy is eventually terminated. Better execution does not salvage such strategies, which are so ill-suited to the organization. These failed strategies must ultimately be abandoned.
I did not look at whether leaders with the strongest execution abilities abandon ill fated strategies a bit sooner, thus cutting the losses. But, I do find that these ill fated strategies can do financial damage, even when leaders have a prior history of successful execution.
As I see it, Martin's second key point is to integrate strategy and execution. I see this as an approach with precedents in other business disciplines. For example, before integrated marketing was popular, distinct specialties like direct response marketing (which aims for an immediate response, often to mailings or infomercials) were treated as distinctly separate from marketing specialties entailing image oriented, heavily television based advertising. Although these distinct specialties differ markedly, they are in related areas and have benefited from being integrated so they tie together effectively.
Likewise, since strategy and execution are related, integrating the two helps foster success. Similarly, completely separating strategy from execution invites failure. This goes beyond buy in, but also occurs when elements of the strategy are just not suited to the conditions under which the strategy will be executed.
The third key point I see Martin making seems to be the underlying theme of his entire article. This theme seems to be: stop overemphasizing execution, but instead find ways to strengthen the strategy, then execution goes more smoothly. As I see it, he advocates strengthening the strategy by integrating it with execution and by empowering capable employees in the ranks to help shape stronger strategy. He offers an excellent example: a top performing bank teller who comes up with a market segmentation strategy that greatly improves service. However, Martin does not actually use the phrase strengthen the strategy, but as I see it, the phrase describes what he seems to be saying.
Keep in mind that the major benefit of Martin's article is not necessarily to specify exact methodology for what he proposes. The article strives to change the prevailing thinking away from the belief that execution is what matters, toward an emphasis on strengthening strategy by integrating it with execution. While Martin's approaches are one way to strengthen the strategy, other options are possible, some perhaps yet to emerge.
Finally, I'd like to offer some additional thoughts about strengthening the strategy. A good time to strengthen the strategy is upfront, as part of strategy development. Strategy created in a vacuum, without a good understanding of what it is really like in the trenches is likely to have weaknesses that hamper execution. So, understanding potential execution strengths and pitfalls, such as corporate culture or such as what really happens on the front lines, is important input to the strategy process. It should be included in efforts to identify the strengths and weaknesses that guide strategy development, such as SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis.
Doing so helps prevent what one comment on Martin's article described as "culture eats strategy for lunch". Doing so also helps avoid the disconnect between doers and the vision described in a comment Tim Johnson posted on Martin. And, since doing so can have immense benefits, it's not surprising that a comment posted on Martin seems to advocate this approach.
Furthermore, to improve execution, strategy must be clearly defined so those who execute it understand what it means. This goes beyond merely communicating strategy effectively. It entails defining the key pieces of the strategy well enough to keep execution from derailing. The danger is that a vague strategy may come from above, and no one down below can make it work. Or, that it's defined at lower levels, but will not fit successfully into the organization's overall strategy. But, for strategy to succeed, someone has to define it well enough, in a way that actually can be executed. Whether the defining comes from above, from lower levels (possibly as part of execution), from both, or via consultants, unless strategy is adequately defined, it can easily fail.
Of course, it helps tremendously to have a strategy that reflects business success patterns, a strategy that suits the organization and lets companies make Winning Moves. Since such a strategy is stronger, it enables execution to go more smoothly. And, strengthening the strategy to achieve better execution is absolutely essential.
La Grange Park, IL