Harvard Business Review talks up strategy execution

Grant Crow Jun 2015

The Harvard Business review March 2015 edition carries an article titled “Why Strategy Execution Unravels – and What To Do About It”. One of the lead comments references a study of 400 global CEOs and the fact that execution excellence was ranked the most important challenge by them. Execution headed a list of 80 issues. This post explores the article and takes issue with some of HBR’s conclusions.

The article points out that, relative to the reams of information written on strategy formulation, Strategy Execution has not received the same level of attention. We know (and HBR acknowledges) that execution matters. The article goes on to talk about 5 execution myths and suggests alternative ways to approach execution. The first of these “myths” is that execution equals alignment. HBR state that their research shows that the vast majority of managers have a limited number of clear, specific, and measurable goals and the resources to achieve them. Yet despite this, the same companies are struggling to execute.

So, the HBR view is that having the stated elements in one’s personal goals represents sufficient alignment. I think this is nonsense. I think it’s quite possible for all managers to have a limited number of SMART goals and the necessary resources, but for these collectively to lack alignment. In other words, if all of these goals were put in one place and linked to the company strategy, there is highly likely to be a series of disconnects including certain goals working contrary to others. There’s a big difference between individuals having SMART goals and the same individuals having goals directly linked to initiatives that must be delivered to achieve components of the strategy.

The review does identify that cross-functional collaboration on goals is generally very poor and this helps to make the point. If a key initiative is cross-functional, then the various contributors to that, need to be identified and their respective roles relative to that project agreed. At that point, (provided the resulting goals are SMART) we have alignment. Without this intervening step, we have a strategy and we have individuals with SMART goals. We don’t have alignment on execution. In some ways, the HBR approach reflects an HR orientation to execution. Most HR performance management processes and systems place emphasis on SMART goals in the belief that this solves everything.

Where we do strongly agree is on the second “myth” – that execution means sticking to the plan. There’s a clear realisation that agile approaches to strategy execution are required. That doesn’t mean that this is commonplace in industry yet, but it will move in this direction. According to HBR “Strategy Execution consists of seizing opportunities that support the strategy, while coordinating with other parts of the business on an ongoing basis”. In order to be agile though, executives need to know exactly where they are relative to their plan, what’s working and what is not, and in real-time. Additionally, the organisation needs good sensors into its environment so that relevant environmental changes can be picked up.