I always thought that my role as a good CEO was to be a pessimist and surround myself with optimists. It was my job to figure out what could go wrong – with our products, the markets, our clients, the dynamics of the industry, or the world – and my brilliant team would develop solutions that would protect, preserve and grow our business. It mostly worked. We had fail-safe systems within fail-safe systems. We had telephone trees to alert each other for every power outage and blizzard at one end of the “disaster” spectrum and we had plans in place for key employees to work remotely in the event of fire, flood and – unfortunately – terrorist attack.
We knew that the digital age would affect our core markets and started developing products, services and partnerships that guaranteed our continued growth well before the impact of digital media was truly felt.
If you do a search on “Plan B” you get pages of information on alternative contraception until you finally get to a definition of “alternative plan of action if the original plan should fail.” That’s what I’m talking about. Businesses and business people should always be thinking about plan B.
Many years ago I sat in a large corporate meeting consisting only of senior executives listening to a team of even more senior executives describe the launch of a new corporate strategy. The strategy, change of organizational structure and the concomitant business targets were developed with the assistance of a large, well-known management-consulting group. The changes were dramatic. The targets were aggressive. The implications of the structure shifts impacted every one of the 150+ executives sitting in the room and some would win and some would lose.
After we listened to the presentation, someone on the stage asked the inevitable, “Are there any questions?” One of my colleagues asked, “ Yes. This all sounds very good. You’ve done a fine job explaining why we need to do this and I’m sure we will all work hard to accomplish what you’ve laid out before us, though it is a complex and difficult task in the time you’ve allotted. But just in case…what is plan B? What do we do if we don’t meet these targets?”
Our leader responded, “There is no plan B. We will do this. It is what is required of all of us.”
Not surprisingly, what followed was years of missing promised targets, reductions in staff, and deteriorating financial performance. Most recently a senior executive stated, “Economic development does not yet meet our expectations ….. We will continue to consistently implement our strategy.”
Failure to successfully execute strategy is not uncommon. Respondents to a recent Wharton study said they achieved only 63% of their expected results from their strategic plan. One of the most thorough articles I’ve read on this subject is by Donald Sull, Rebecca Homkes and Charles Sull: “Why Strategy Execution Unravels – and What to Do About It” (Harvard Business Review, March 2015). While studying 400 global CEOs they found that executional excellence was the number one challenge facing these executives and, with further study, they’ve identified a number of widely held beliefs about strategic execution that are just plain wrong.
· Myth 1- Execution equals alignment: This usually means translating strategy into objectives and cascading those objectives down the hierarchy, measuring progress and rewarding performance. This study found that alignment is sound within a business unit but not across functions and business units. When managers can’t rely on other functions and units, they engage in a number of dysfunctional behaviors that undermine execution.
· Myth 2 – Execution means sticking to the plan: This usually means following a precise roadmap that often prevents agility and successful resource allocation adjustments to reflect changing market conditions.
· Myth 3 – Communication equals understanding: Too often top executives measure communication in terms of number of outputs. They don’t often take the time to really make sure employees understand what is happening.
· Myth 4 – A performance culture drives execution: often executives blame the lack of a performance culture on the failure of execution. Companies really need to be clear about what is performance and make sure they are consistent and reward the right kind of behavior.
· Myth 5 – Execution should be pushed from the top: concentrating power and culture at the top may drive performance in the short term but decisions need to be made at every level of an organization. Too much focus on the top and people feel helpless. This encourages middle management to escalate everything upward rather than resolving anything. Real execution is the responsibility of the leaders of critical businesses and functions who will do their best, even when they don’t understand all that is expected of them.
Strategies fail. Sometimes the strategy itself has not taken into account the dynamics of the market or the changing nature of an industry. Sometimes the strategy is sound and the execution fails. What is frustrating for all of us is that the well-known management-consulting firm will still get paid a hefty sum. The senior executives who failed at strategic execution might have options that vest when a company is broken up and sold. They will be just fine, and off to run their next company. It is the employees who – at worst have lost their jobs, at best have lost their passion for their work– are the real losers here. I hope they have a plan B for their careers.
“In my private sector career, two of my favorite sayings were, ‘Strategy is easy and execution is really hard,’ and that we should ‘run at criticism.’ “ John Delaney