5 Myths Of Strategic Execution (That You May Hold)
By Louis Garguilo, Chief Editor, Outsourced Pharma
A lot of what you know about executing on your business strategies may be wrong. Sorry to have to break it to you so suddenly.
But that’s the building conclusion from studies summarized in, “The defining management ideas of the year from Harvard Business Review (2016).” Again, sorry to say, but reading through the five “most pernicious myths” does call to mind many of the operational challenges we experience in the drug outsourcing industry.
According to the article’s authors (Donald Sull, Rebecca Homkes, and Charles Sull*), one recent study of more than 400 CEOs found “executional excellence” the number one challenge facing corporate leaders in Asia, Europe, and the U.S., heading a list of some 80 issues, including innovation and top-line growth. Other studies demonstrate that up to three-quarters of large corporations struggle to implement their strategies.
Below is a discussion of the first two of five myths (next three in a following article), and some better suggestions for facing challenges with strategic execution.
Myth 1: Execution Equals Alignment
According to our authors and years of research, managers across industries typically say effective execution is accomplished by translating strategies into objectives that are “cascaded” down the hierarchy. They then measure progress and reward performance. “In the managers’ minds, execution equals alignment, so a failure to execute implies a breakdown in the processes to link strategy to action at every level in the organization.”
Here’s the good news: The majority of companies have put the time and effort into this … and their processes are indeed sound! For the most part, strategic alignment (beginning with Peter Drucker in the 1950s) is well established, and best practices nicely set in place.
So where does the breakdown in execution occur? With your colleagues.
While over 80% of workers surveyed say they can rely on their boss and their own direct reports all or most of the time, only 9% of managers say they can rely on colleagues in other functions and units all the time, and about half say they can rely on them most of the time. So instead of the positive flow mentioned above, what then cascades is “a host of dysfunctional behaviors that undermine execution,” such as duplicating efforts, failing to coordinate, delaying deliverables, passing up on further opportunities … all rushing to conflict between functions.
Similar to our industry (for example, see the OutsourcedPharma.com article Breaking Down Silos In The Field of Pharma), executives and managers already realize a lack of cross-functional cooperation – pesky silos – is a major issue. Over 80% of companies our authors studied have a formal system for managing commitments across silos, including cross-functional committees and centralized project management.
Unfortunately, only 20% of managers believe these systems work well all or most of the time. Over 50% of managers want more structure in the processes to coordinate activities across units rather than more structure in the management by aligned objectives system. Something for both biotechnology and pharmaceutical sponsors, and service providers, to continue to work on.
Myth 2: Execution Means Sticking To The Plan
No executive or manager wants to hear it said aloud, although the wise already recognize the truth: “Unfortunately, no Gantt chart survives contact with reality.”
In other words, particularly in our pharmaceutical outsourcing industries, which are driven by real business needs to meticulous planning, timing, and thus execution, companies need to groom and empower employees who can adapt to change, and at times take advantage of new realities on the ground (or in the labs and plants).
Our authors, though, inform us that of the companies they’ve researched, a lack of agility registers as a clear obstacle to effective execution. A third of companies say difficulties adapting to changing circumstances is the greatest challenge they face in executing strategy over the next few years.
Perhaps of the five myths, this one of Gantt-chart supremacy hits closest to home. From Big Pharma sponsors down to virtual start-ups, flexibility is an increasingly important factor, starting with when deciding what outsourcing service provider to work with. Conversely, for service providers, the flexibility of customers has become vital as well. Both sides recognize the pressures of an increased pace of drug development and manufacturing. Both know materials don’t always arrive on time, scale ups are not always as robust as advertised, commercial quantity forecasts can vary widely … and the result of one clinical trial or FDA decision can terminate an entire program in a day.
Actually, because this is the stark reality of our industry, I’d wager that on this front, bio and pharma companies, and the CROs and CMOs, could teach a thing or two to companies in other industries. Somehow, most of the time, the balance between staying on schedule and adapting to change is maintained.
When it doesn’t work well, though, perhaps because of reacting too slowly or just plain badly to forces driving changes in production planning, the Harvard Business Review article notes “a seemingly easy solution would be to do a better job of resource allocation … In volatile markets [that’s us!], the allotments of funds, people, and managerial attention is not a one time decision; it requires ongoing adjustment.”
Let’s focus on this point for a moment: Often, a restricting factor in resource allocation in our industry is our basic unit of measurement: the FTE (full time equivalent). How many times have we heard:
a) CROs/CMOs asking sponsors to allow for a scale up of FTEs on projects; or
b) sponsors being told their service providers don’t have the FTEs available immediately?
Perhaps we need to think again about sponsor-provider relationships built largely around FTEs. Getting back to our authors, they inform us that only 20% of managers say their organizations do a good job of shifting people across units to support strategic priorities. In our industries, those respondents would most likely be the project managers trying to overcome process development challenges, or meet new demands for increased material quantities (at advanced timelines).
Project planning and nailing down the Gantt chart is a necessity in the outsourcing of drug development and manufacturing. Just don’t nail too securely, and don’t “nail” the other side when they ask for some flexibility.
Stay tuned for these remaining myths in our next article:
Myth 3: Communication Equals Understanding
Myth 4: A Performance Culture Drives Execution
Myth 5: Execution Should Be Driven From Top To Bottom
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*Donald Sull is senior lecturer at the MIT Sloan School of Management, and author of Simple Rules: How to Thrive in a Complex World
Tebecca Homkes is fellow at London Business School’s Centre for Management Development, and London School of Economics Centre for Economic Performance
Charles Sull is cofounder and partner at Charles Thames Strategy Partners