5 Myths Of Strategic Execution (That You May Hold) : Part 2
By Louis Garguilo, Chief Editor, Outsourced Pharma
Two myths recently exposed, three to go. Let’s get right back to our myth-busting business.
The premise: When it comes to the performance and successful executing of your business strategies, you believe:
Myth 3: Communication Equals Understanding
Myth 4: A Performance Culture Drives Execution
Myth 5: Execution Should Be Driven From Top To Bottom
The task: Aided by years of research revealed in “The defining management ideas of the year from Harvard Business Review (2016),” walk back from these myths, and shed a new light on strategic business execution.
Myth 3: Communication Equals Understanding
The authors* of the HBR article, “Why Strategy Execution Unravels – and What to Do About it,” tell us executives believe “relentlessly communicating strategy is a key to success.” And these executives seem to be doing a fine job of it: “Nearly 90% of middle managers believe that top leaders communicate the strategy frequently enough.”
Unfortunately, frequency doesn’t lead to deeper understanding (or even retainment). Research shows only 55% of middle managers can name even one of their company’s top five priorities.
I’m certain this is where many of my readers are thinking, “Not at my company!” But stay with us … it gets worse: Just over half of top team members responding to surveys say they have a clear sense of how major priorities and initiatives fit together at their company.
Senior leadership doesn’t often recognize the depth of the problem. One reason is companies are accustomed to measuring communication “in terms of inputs (the number of emails sent or town halls hosted) rather than by the only metric that actually counts – how well key leaders understand what’s communicated.” We could postulate then that each level of management seeking clearer, individual confirmation from lieutenants and direct reports of understanding strategies, and how they might translate to day-to-day decisions, would improve performance throughout an organization (more in Myth 4).
Exacerbating the problem mentioned above of key personnel not understanding how initiatives fit together may stem from some habits of senior leadership itself. Our researchers provide the example of a tech company at an annual off-site executive meeting. Leadership meticulously laid out elements of their company’s strategy and objectives … and then introduced “11 corporate priorities … a list of core competencies, a set of corporate values, and 21 strategic terms to be mastered.”
Of course none of us has ever experienced something like this at our respective biotech, pharma or outsourcing service provider, right?
Myth 4: A Performance Culture Drives Execution
When business strategies frustratingly fail to translate into results, or drive day-to-day performance, executives often point to a corporate culture that somehow doesn’t support that performance. Fair enough. But the myth here is a bit subtler than our other four. While leadership and appropriate organizational structures to support performance always stand room for improvement in driving execution, this isn’t the issue here.
Actually, the research has shown that overall, companies do have robust performance cultures, yet still struggle to execute strategy. For example, organizations seem to do a good job in adequately considering performance when deciding who gets hired or fired, promoted or otherwise. “Past performance is by far the most frequently named factor in promotion decisions, cited by two-thirds of all managers. It also ranks in the top three influences on who gets hired,” the research asserts.
What’s lacking is that even cultures supporting strategic execution mostly fail to recognize and reward a number of other critical performance attributes, including agility, teamwork … and ambition. Our authors say “a company’s true values reveal themselves when managers make hard choices – and here we have found that a focus on performance does shape behavior on a day-to-day basis,” but the focus has to widen to a fuller range of performance attributes.
“Agility requires a willingness to experiment, and many managers avoid experimentation because they fear the consequences of failure.” Half the managers responding to a survey said “they believed their careers would suffer if they pursued but failed at novel opportunities or innovations.” What does that mean? A narrow emphasis on specific performance (and anticipated results) might impair enhanced performance that could better transmit strategy – and values – to production, customers and markets.
Some of you may be thinking, for example, that no manager at a CMO in charge of delivering API to a Big Pharma client is going to be “innovating” on the next batches. But of course that isn’t what we’re talking about here. In fact, when the companies in the largest segment of our industry are called “innovators,” this myth is indeed something to think about further.
Myth 5: Execution Should Be Driven From Top To Bottom
I’m even less sure this next myth prevails in our industry. Experientially many of us know our leaders understand execution itself isn’t driven from the top. Bio and Pharma leaders openly stress companywide leadership in public forums and the media.
CEOs recognize that with a heavier top-down emphasis, besides the fact that execution unravels when strong leaders depart (the authors use Larry Bossidy of AlliedSignal as an example), there are many drawbacks. Let’s innumerate these, and dispel this myth of top-down execution for those who do still hold it.
Particularly at larger and thus more complex organizations, effective execution “emerges from countless decisions and actions at all levels.” For example, screening a customer’s request against strategy could mean (correctly) turning away a new business opportunity. Or deciding not to team up with an adjacent business unit, for fear it would slow things down, may in fact ensure a timely opportunity is seized.
“Concentrating power at the top may boost performance in the short term, but it degrades an organization’s capacity to execute over the long run,” explain our authors. The degradation can actually be of the middle managers themselves, those who are the day-to-day translators of strategy to tactics. First, frequent intervention from above encourages middle managers' to constantly escalate decisions or conflicts rather than resolving them, “and over time they lose the ability to work things out with colleagues … if top executives insist on making important calls themselves, they diminish middle managers decision-making skills, initiative, and ownership of results."
Our authors also say that in large organizations, execution lives and dies with what they call “distributed leaders.” This group includes middle managers who run business units and critical functions, and also “technical and domain experts who occupy key spots in the informal networks that get things done.”
These distributed leaders – and not senior executives – represent management to most everyone at a company, and to most customers and partners. According to their direct reports, the distributed leaders do an admirable job: More than 90% say middle managers live up to the organization’s values all or most of the time, and the same percentage say they reinforce performance by holding team members accountable for delivering results.
An area where senior leadership can better assist these managers is with the issue of internal silos (see Myth 1). “Distributed leaders are asked to shoulder much of the burden of working across silos, and many appear to be buckling under the load,” as our authors describe the situation. Company leaders might try two things to help. First, put in place or continue to reinforce and measure structures, processes, and cultural attributes that more effectively promote cross-departmental cooperation.
The second is to do a better job of modeling. “One-third of distributed leaders believe that factions exist within the C-suite and that executives there focus on their own agendas rather than on what is best for the company.” Hopefully, this too is only a myth.
---------------
*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