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• Power of Collaboration

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Background

A business book on leadership is only as good as an author's insight and experience can make it. Execution is the work of two authors well known and respected in the business community.

Larry Bossidy, former chairman and CEO of Honeywell International, has also been chairman and CEO of AlliedSignal, COO of General Electric Credit, Executive VP and President of GE's Services and Materials Sector, and Vice-chairman of GE. In 1998, Chief Executive Magazine named him CEO of the Year. He retired as Honeywell chairman in April 2000 but was brought back from retirement in July 2001, reclaiming the chairmanship until he retired again in June 2002 after getting the company back on track. In this book he's writing about ideas he's actually put into practice and seen work successfully.

Co-author Ram Charan, Ph.D. is an advisor to CEOs and senior executives, with experience ranging from start-ups to Fortune 500 firms. He has taught at the Harvard Business School and the Kellogg School of Northwestern University and has written several other well-regarded books on corporate boards, business growth, and executive leadership.

Execution: The Discipline of Getting Things Done

Early in the book, the authors define execution as:

A systematic process of rigorously discussing hows and whats, questioning, tenaciously following through, and ensuring accountability. It includes making assumptions about the business environment, assessing the organization's capabilities, linking strategy to operations and the people who are going to implement the strategy, synchronizing those people and their various disciplines, and linking rewards to outcomes. It also includes mechanisms for changing assumptions as the environment changes and upgrading the company's capabilities to meet the challenges of an ambitious strategy. In its most fundamental sense, execution is a systematic way of exposing reality and acting on it (p. 22).

A basic premise postulated by Bossidy and Charan is that execution is that discipline that bridges the gap between what a leader envisions for the company and the corporation's ability to achieve that vision. When a company handles the execution of a business plan competently, changes in the business environment won't have a disastrous effect.

Good execution means that there's no room for apology. Excuses like, "The business environment is tough right now" or "Our strategy will take time to achieve results" aren't allowed. The authors use the example of Johnson & Johnson, the company that pioneered the surgical stint, only to lose 95 percent of the $700 million market in 1997 and 98 because competitors stepped up with lower prices on superior technology. The defining difference between a company and its competitors is the ability to execute its plans.

As the authors see it, execution is "a specific set of behaviors and techniques that companies need to master in order to have competitive advantage. It is a discipline of its own." They continue by explaining the role execution plays in setting a company apart from its competitors.

Part 1: Why Execution Is Needed
When companies fail to deliver on their promises, the fault doesn't lie as much with the quality of the CEO's strategy as it does with the failure to execute that strategy well. Michael Dell is an example of a leader who made direct sales and a build-to-order model more than just a way to bypass retailers. It became central to his business strategy and left his competitors in the dust.

Execution is described as more than attention to details. To the authors, execution is:

A discipline that's integral to the business strategy
This means it supersedes the prevalent notion of "tactics." Instead, discipline includes rigorous investigation, questioning, follow-through, and accountability. It's "a systematic way of exposing reality and acting on it." In other words, the leader has to take off the rose-colored glasses and face the situation that currently exists, instead of focusing on the optimum outcome.

The major job of the business leader
Bossidy had the reputation of being a hands-on executive. By his account, he spent 20 percent of his time on the "people process," and twice that when he was rebuilding an organization. He taught his executives to consistently run the three core processes of people, strategy and operations with intensity and vigor.

A core element of an organization's culture.
It's not enough to casually introduce the concept of execution into the corporate culture. It must be integral to every activity, embedded in the reward system and in the behavior norms expected. While it should begin with senior leaders, it can be practiced at every level.
 

Part 2: The Building Blocks of Execution
A leader walks a fine- line between being in charge of execution and being accused of micro managing. The first building block of execution encompasses the Leader's Seven Essential Behaviors:

1. Know your people and your business

2. Insist on realism

3. Set clear goals and priorities

4. Follow through

5. Reward the doers.

6. Expand people's capabilities.

7. Know yourself (p. 57).

Although these would seem to be pretty much textbook leadership qualities, each of the behaviors is discussed with examples. As the authors point out, the behavior of the business leader is ultimately the behavior of the organization.

The second building block is Creating the Framework for Cultural Change. Unless change is linked to improving business outcomes, it isn't going to happen. The only time cultural change becomes real is when it's linked to execution. Your people have to know the behavior changes that will effect the change and there have to be rewards attached to achieving desired results. If they come up short, you give them additional coaching, withdraw the rewards, offer other jobs or cut them loose. This is how to get things done.

Their third building block is: The Job No Leader Should Delegate--Having the Right People in the Right Place. While many leaders say "people are our most important asset," very few become involved in the process of choosing the best candidates for their leadership needs. Michael Dell out-flanked the far larger competitor, Compaq, because he had the right people in the right jobs. They knew how to execute his business model and did it brilliantly.

Many leaders don't have the courage to confront poor performers and take decisive action. They may have a certain comfort level with a long-time co-worker. They may want loyal and non-challenging executives who will support them without question. The authors feel the right person will be a doer, decisive on tough issues, inspiring to their team, able to get things done through other people's efforts, and will follow-through until the plan is executed. They also believe that performance assessments are essential and have to candid, honest, and aimed at correcting performance deficiencies as much as praising accomplishments.

Part 3:  The Three Core Processes of Execution: People, Strategy and Operations
People: Bossidy and Charan make it very clear that people are more important than strategy or operations processes. A good people policy provides in-depth evaluations, gives a framework for finding and developing new leaders, and fills the pipeline with men and women ready to implement a strong succession plan. In good companies, top executives get personally involved in hiring. They know their top 200 to 300 people.

Strategy: The goal of the Strategy Process is to win customers and sustain a competitive advantage while leaving enough money on the table to satisfy shareholders. The ideal strategy isn't a compilation of numbers extrapolated out for the next decade. Instead it's an action plan designed to attain objectives. This means it must be linked to the people process. Without the right people in place, the organization won't be aligned to achieve goals.

When a business unit creates its strategy, it's effectively laying out a roadmap with plenty of leeway for maneuvering. While staff members can research data and analyze it, it's up to the leaders to develop strategy. At least nine questions should be asked when putting the plan together. These address the external environment, existing and potential customers, the competition, short and long term balances, the identifiable milestones during execution, critical issues and the business' ability to make money on a sustainable basis. Great CEOs encourage vigorous strategy debate among key people and are wary of those who defer to them. They make certain strategies are in sync with realities of the economy, marketplace, competition and company resources.

Bossidy points out that a good strategic plan has to be translatable into the operating plan sometime in the future. He gives solid information on how to handle a strategy review so it becomes a learning, coaching and idea exchange meeting that drives forward the plan's execution.

Operations. This makes the link between Strategy and People. The authors compare the way many companies translate strategic plans into operations to being asked to drive 317 miles in 5 hours and 37 minutes without spending more than $16 on gas and without being given a map. There is no way to meet those projections without knowing exactly where you're going, the road you're going to take to get there, as well as what weather and traffic challenges you'll be facing. The goal isn't realistic and the results will be predictably flawed.

A good operating plan breaks down long-term goals into short-term targets. These should reflect not what happened last year, but what actually can be achieved in the future. An operating plan is a total responsibility that threads through people, strategy and operations and translates into assigning goals and objectives for the next year.

By following the supplied guidelines it should be a relatively painless exercise to build an operations budget within three days and then build the operating plan. In every phase of the operation, synchronization between all the different elements of the business - products, plants, dealers, suppliers, ad agencies, etc.--is essential for excellence in execution and for energizing the corporation.

Conclusion
The authors contend the heart of a working business reflects the interaction of the three processes of people, strategy and operations. It's the duty of each leader to master not only the individual processes but to understand how they link together if they are to be able to differentiate their company from their competitors. This is the foundation for the discipline of execution that's central to strategy conception and execution.

While this may not be groundbreaking information, the book is full of solid advice that had stood the test of execution at some of the leading companies in the United States. Sometimes it's useful just to have these concepts reiterated by front-line people who can give useful examples of how they work.
 

View from the Lighthouse on Execution
Like many business books, Execution made perfect sense when I read it, in fact much of it seemed obvious. So I found myself asking two questions, "What's different about this approach?" and "If it's so clear, why do so many CEOs and companies struggle with execution?"

One thing that stood out for me is that Bossidy is clear that his approach is a system and a discipline. This means that all the components are interrelated and interdependent--you can't randomly select one or two or even a few of the activities or approaches that he recommends and expect to get systemic and lasting results, even though you may get isolated benefits. You have to do them all, and the discipline part is about doing them unfailingly, rigorously, and well. Put another way, you have to execute the execution process at the same time that you're executing the strategy. This amounts to a second full-time job that requires a level of knowledge about and experience with organization behavior, design, and dynamics. Most senior executives have mastery of some technical or professional discipline(s) and they know how to "run the business" which means that they understand the intricacies of strategy, financials, tactics, measurement of results, etc. But many of them are much less intimate with the organization and people side of the business. Bossidy's approach demands that they devote a significant amount of their time, energy, and attention units to these other things.

We know that when execution is executed, it works: Bossidy has clearly proven that with his own track record, most recently at Honeywell. But one of Bossidy's most frequently quoted statistics is that over the last three years, close to 40% of the top 2500 CEOs have been removed as a result of their failure to execute, so we know that it's either not being done or not working in a lot of places. I think this is a stunning and worrisome statistic, and especially tragic when you think of it in terms of the impact to people and organizations, and the costs of other resources not well utilized.

As for why so many struggle with execution, Bossidy believes that the main reason that many CEOs can't or don't execute is because they are unable or unwilling to make the critical connection between their strategy and how their companies operate, the market's performance, and the impact of constantly changing customers' needs. In my experience working with senior executives, I'm more inclined to come down on the "unable" side; most desperately want their people, organizations, and companies to succeed (as well as they themselves). They work very hard, most have integrity, they want to do the right thing. The sheer size and complexity of corporations today, in the face of rapid and continuous consolidations, and in the context of the global economic, business, and political environments is staggering. Creating an operational engine for delivering strategic results under these conditions is daunting, and it is increasingly the exceptional person who can do it.

Although they don't specifically talk about Organization Design, good design shouldn't be taken for granted, nor should it's importance be underestimated. Elements of their execution system both comprise and assume good design. The design of the organization, when done deliberately and consciously, is a fundamental way to connect strategy to operations and to enable results. For example, Bossidy puts enormous emphasis on both the "People" and "Rewards" elements of design. He says, "I devote...an inordinate amount of time and emotional energy to hiring, providing the right experiences for, and developing leaders--between 30 and 40 percent of my day for the first two years and...20 percent later," and expects the same from his direct reports. (This is consistent with Collins' finding in Good to Great, that "getting the right people on the bus" is the most important thing. See our newsletter on G2G at http://www.coastwiseconsulting.com/nl_5.htm.) He's just as rigorous in assessing and following up on performance, and he compensates and rewards people accordingly. He's also emphatic that clearly linking rewards to performance is the linchpin to changing behavior in organizations and a way to create an execution culture.

Especially in the extraordinarily difficult conditions in which we find ourselves, it's obvious that creating a system, a discipline, and a culture of execution is an essential ingredient in delivering results and being successful. With 40% of top executives not making it--with immeasurable consequences to their companies and employees--there is real urgency in finding ways to do it differently.

Like most things organizational that aren't going well, Dilbert also weighs in on the topic of execution. In a recent strip, we see the disembodied arm, hand, pointing finger, and voice of the pointy-haired boss' boss who tells him, "You've got to focus on execution!"

So PHB goes to Catbert, the evil HR director for a consult, saying, "I think he wants me to execute people." And Catbert replies, "Make it look like an accident."

The final panel shows PHB in a staff meeting with Wally and Alice who are clearly distressed as he says to them, "From now on, my staff meetings will be two hours long."

Not what Bossidy has in mind, is my guess.

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Resources

Execution: The Discipline of Getting Things Done
Larry Bossidy and Ram Charan. Crown Business, 2002.
Click here to buy this book:

What the CEO Wants You to Know: How Your Company Really Works
Ram Charan. Crown Publishing Group, 2001.
Click here to buy this book:

Here's a link to a long summary of Execution: http://www.bizsum.com/execution.pdf

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