We frequently hear the argument that business success is largely a matter of effective implementation. When results are lagging, many CEOs are likely to crack the whip and demand that their organizations implement more vigorously. “Getting it done”, they will claim, is the missing factor. “We all know that implementation is the hard part.”
Is this diagnosis true, or is it a cop-out? To stimulate a discussion about this widespread assumption, I like to pose this question in my seminars: “Which is more important, strategy creation or strategy implementation?” What follows is often an animated conversation that treats these factors as binary alternatives. Of course this is a trick question. But trick questions can play a useful role; they help us identify false choices. The real answer is that strategy creation and implementation are mutually interdependent. Therefore the more important element is the one that’s missing, because it destroys the other one.
So much for a conceptual understanding of this issue. Let’s look at some hard evidence.
- When IBM suffered a near death experience in the 1990s, was their problem bad strategy or poor execution? Clearly it was a bad strategy. Contrary to the needs of their customers they were aiming to sell different parts of the IT infrastructure in isolation from each other. Lou Gerstner came to their rescue by introducing the idea of integrated solutions, which was the basis of IBM’s turnaround.
- When General Motors descended into bankruptcy in a 30 year march to the bottom, was this bad strategy or poor execution? Again, the answer is clear. Bad strategy. They were simply not building the cars their customers wanted and their product line up was cluttered and confusing. These strategy deficiencies allowed Toyota to eat their lunch.
- Were the travails of Nokia and Blackberry simply a matter of poor execution? Hardly. Apple outsmarted them with a superior customer offering.
- A compelling example comes from the military sphere. In the initial stages of the American revolutionary war against the vastly superior British army, the American forces under George Washington were close to defeat. They were huddled together in the north of Manhattan wet, cold, dispirited and seemingly out of options. Their prospects looked bleak. Over and over they asked themselves the question, “How will we win”? In the give and take of this existential debate, the right answer came to Washington. “Winning is the wrong objective. Our task is not to lose”. With this simple switch in strategy, they harried the British forces with sporadic raids followed by swift withdrawals to avoid taking losses. It worked. They outlasted the British and eventually prevailed with the help of the French.
There is no doubt we can also find examples where poor execution was the problem. It is probably true that Kodak’s failure to prevail with digital cameras was such an example, as is the New York Times’ inability (thus far) to create a truly profitable digital newspaper business or Kellogg’s failure to create a sustainable success with their Kashi acquisition.
Peter Drucker offered this assessment. “Most business issues are not the result of things being done poorly. Businesses fail because the assumptions on which the organization has been built and is being run no longer fit reality. These assumptions involve markets, customers, competitors, technology, and a company’s own strengths and weaknesses”.
Supporting this viewpoint is a survey of 336 organizations by Right Management Consultants which showed that 2/3 of employees do not know or understand their company’s strategy.
It is futile to argue whether Drucker was right or wrong in his assertion that most business failures are the result of poor strategy. The main point is that we will inevitably encounter failures on both sides of the strategy divide. It is therefore dangerous to make the unexamined assumption that implementation is automatically the problem when we run into difficulties. There needs to be a deeper diagnosis of root causes.
Here is a set of questions I find useful in diagnosing a performance problem:
1) Do we have a clear understanding of our customers’ most important needs, and the nature of the external environment in which we must compete for advantage?
2) Do we have a Winning Proposition that offers our customers a compelling reason to choose us?
3) Have we defined the 3-5 Key Priorities necessary to achieve our Winning Proposition?
4) Have we articulated our Winning Proposition and Key Priorities in a simple and compelling leadership message that lives in the hearts and minds of our employees?
Clear answers to the above questions are the necessary preconditions for effective implementation. These answers are by no means easy or obvious. They require the kind of intense mental engagement demonstrated by George Washington in his hour of crisis. But when this hard work is done and clear answers are in place, we find that implementation inevitably becomes easier.
We come back to the point that strategy creation and implementation are mutually interdependent. We need to get away from the false choice between the two. The real challenge is making them work together.
“Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind”.