“I’d rather have a first-rate execution and second-rate strategy any time than a brilliant idea and mediocre management” – Jamie Dimon current CEO and chairman of JPMorgan Chase & Co. Dimon was named in Time Magazine’s 2006, 2008 and 2009 lists of the world’s 100 most influential people.

We had an interesting debate ‘for’ and ‘against’ the above in our strategy class at the Asian School of Management yesterday. It is true that the importance of implementing a strategy is often overlooked. Perhaps strategy formulation is considered a glamorous exercise in which the top-guns in the boardrooms participate. After-all the

 

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future direction of the company is being decided in this elite group. Execution or implementation on the other hand is viewed as routine stuff that follows a predetermined path dealing dealing with the nitty-gritty – shirt sleeves rolled-up and the grime and dust of the shop floor. No excitement and little scope for creativity. Crafting a strategy and execution are both sides of the same coin and need to resonate together. Like to share a few of the critical points in execution that we discussed in our class:

Top Ten Challenges in Strategy Execution

  1. Strategy is formulated on assumptions – but the environment may have changed at some point of time during implementation. The assumptions too would need periodic revisits.
  2. Vision, value statements and trust – are emphasized during formulation of the strategy but during implementation – forgotten. An ‘End justifies the means’ approach results in a compromise of values and eroding ‘trust and shared values’. The answer lies in transparency and communication and admitting mistakes.
  3. Hubris (or overconfidence) in leaders – where the leaders and organizational members believe their brand is more powerful than the competitors leading to complacency in implementation. Forecasts are based on what may happen in future often based on optimistic estimates of uncertainties. As such one must be realistic. 
  4. Organizational trap – is an excessive focus on efficiency with no flexibility to adapt to changes. A no mistake-syndrome prevails. No questioning or challenging the current strategy. 
  5. The status quo bias – risk aversion. It is the entrepreneurial spirit that helps overcome hitches. This has to be built into the culture by encouragement.
  6. Strategy before people – strategy not aligned to organizational culture will meet with resistance and opposition. Meaningful communication is the key.
  7. Strategy and structure not being in sync. -E.g., a diversification strategy may have a better fit with a divisional structure.
  8. Effective leadership – failure occurs due to weak empowerment and lack of perseverance. Focus on knowing rather than doing. Things get worse before they get better so inspiring the team with the vision and mission is important. 
  9. High emotional intelligence in leaders – will banish negative emotions from breeding in the workplace. What are needed are positive energy and a calm mind to deal with the fluid situation.
  10. The sunk cost effect – A familiar problem with investments is called the sunk-cost effect, otherwise known as “throwing good money after bad.” When large projects overrun their schedules and budgets, the original economic case no longer holds, but companies still keep investing to complete them rather than change.

To end this post - an apt quote by Sun Tzu, in 514 BC in his ART OF WAR – “Weak leadership can wreck the soundest strategy; forceful execution of even a poor plan can often bring victory”.

Your views are always welcome please. Thanks.

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About dilipnaidu

An open mind! Love to share inspirational thoughts and a keenness to learn. My interests are growing culinary herbs and playing golf. I enjoy my teaching assignments and interaction with students.

10 responses »

  1. Amey Poyekar says:

    Hello Sir,
    This article is pretty brief,precise and focused.
    I would say, based on my limited knowledge and experience, that most basic issue any firm faces in an effective strategic execution is lack of meaningful strategic planning! that is the foundation of any plan and if that is not sound then the plan may fail any time.
    You have covered this point in the blog, yet I would like to add few points.
    1.Many times, especially in the organizations with tall hierarchies,where there is more scope of rigid, mechanistic and bureaucratic issues, the real picture is not taken into consideration. Since the duties are assigned with the post and the performance is evaluated based on the quantitative outputs; quality of the decision may seriously suffer.

    2. Some fields are more prone to top- down effect and some to bottom -up effect. It is required to make sure which one is the best suitable. Some sectors such as mining,large scale/ heavy industries where work force cooperation is the most important factor, bottom up approach may play an overpowering role to influence some top management decisions. where as in some places, the vision of the top management is right and the subordinates need to trust on it. Mostly both of them play in sync with each other and need mutual adjustment. Leadership failures may occur in these cases but i think that is an inherent risk in any business venture.

    3. Compromise on values and deliberate negligence towards bottom line employees’ suggestions can be the most harmful. Recent troubles of Toyota Motor Corp. over safety issues in the US can be an example.
    (http://abcnews.go.com/WNT/video/toyota-ceo-apologizes-9762898)

    4.Sunk cost fallacy can be like a maze, where one tries to get out but may or may not succeed. If the firm can find a real fix, and are ready to adopt to new changes then they can turn around the situation and come up with good results. But if the project is a complete failure then usually the management may try to give an impression to the stakeholders that they are attempting to find a turn around, because mostly many managerial jobs or careers are at the stake.
    These are my personal opinions based on my understanding of the situations around, experience and knowledge acquired by me through the various sources. I have no intention to hurt,blame or damage the sentiments and feelings of any individual or groups of people.They are expressed only for the discussion purposes.
    Any constructive criticism is most welcome
    Thanks
    Amey

    • dilipnaidu says:

      Hi Amey,

      Its really nice to read your observations on strategy implementation. The is no doubt that strategy planning must be meaningful and realistic. But the challenge is when the external competitive conditions change during the execution phase – this is when leadership and operational issues become dominant.

      Large bureaucratic organizations do have a tendency to develop inertia yet we have many exciting ways to get the benefits of bureaucracy and also making them nimble and responsive to change. The book ‘Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround’ by Louis V. Gerstner is worth reading.

      Yes the debate between top-down (centralization) and bottom-up (decentralization)is a hot issue between both these opposing forces. Yet I feel it is the leadership and the organizational specialists who need to arrive at a balance between the two.

      I too am a firm believer in adhering to values and ethics. Toyota’s recent recall could be due to their over-rapid speed to beat GM in overseas expansion and become the No.1. In this their supply-chain management went wrong on the quality control issue.

      Your point on the sunk cost fallacy is quite right this is a huge challenge and a dilemma too.

      These are my own thoughts too and I too welcome critical comments – that’s how learning occurs.

      Cheers & many thanks.

  2. Gary Clayton says:

    Hi, Dilip,

    As always, you have created a great post, one with several important ideas in it. A “bias toward execution” rather than strategy is essential for any successful entrepreneur and the 10 ten challenges are right on the money.

    Naturally, the successes we see are those of entrepreneurs who executed – and executed well. We don’t see or remember the many entrepreneurs who executed poorly. Even for those who succeeded, we typically don’t remember the failures that they experienced. It took Thomas Edison hundreds of tries before he created a successful light bulb. IBM built its computer industry dominance on a policy of creating three of everything and allowing the market to pick which of the three would become dominant. Those of us who consulted around IBM’s products often swore in frustration about how IBM was confusing the marketplace with three competing processor families (especially in the mid-market) that required differing talent-sets to support. In the interactive software world, IBM created three software platforms called CICS, IMS/DC and ACP, leaving us consultants with confused customers who wanted to know which was IBM’s strategic direction and which was best for their business. IBM executed well, keeping all three alive and a significant source of revenue for as long as its multi-million-$ processors ruled the market.

    Ultimately, the world changed, and these IBM systems no longer dominate the market. Instead, they are called “legacy systems”, meaning that they are antiques that are still critical for some companies’ operations but into which no newcomer would buy.

    Most of the entrepreneurs I have worked with do have a strong (probably too strong) bias for execution. They feel comfortable executing. It has made them successful for 10 or 20 or even 30 years. Unfortunately, the world has changed around them as it has changed for IBM. Whether they thought much about it or not, they had a strategy when they first starting executing. And they have never updated their strategy. Like Einstein, they have become the Old Guard about whom he complained in his youth. The old strategy, the old mindset, either no longer works or it will not much longer.

    There is much truth in Sun Tzu’s comment, but he made it in a time when change in possible tactics was measured over centuries. That is not the case today.

    There is truth in Jamie Dimon’s statement, but let’s remember that JP Morgan Chase would have collapsed if the US federal government had not propped it up in early 2009 – and even today it’s propensity to “act first and think about regulations later” has caused it to be unable to process many mortgage foreclosures in a timely manner. If it had to show its assets on its books at market value as in normal times, it would likely have to file for bankruptcy.

    All this is a long-winded way of saying that execution will win if it happens to be based on a superior strategy (which may be implicit or explicit). If one can afford to lose many times, then just execute, If one can not risk many failures, then wait long enough to execute from a basis of clarity: (1) clarity of one’s skills, (2) clarity of what one’s environment offers or threatens and one’s position within the environment, (3) clarity of what support one has, and hopefully (4) clarity of one’s opponent’s resources and skills. The first three are essential, the last is good to have if time allows before execution must begin.

    And pay attention to the Top Ten Challenges.

    • Dilip says:

      Hi Gary,

      Very gracious of you and thanks for the kind words. Sharing your rich experience with us – my readers and my students is very enriching. The IBM example of creating three of everything for the market leading to confusing signals is is indeed interesting. Even JP Morgan Chase’s survival and present status is an eye-opener.

      Your observation on entrepreneurs having a strong bias for execution is quite correct. However I feel though the entrepreneur may not formulate strategy in a the conventional way but he does have a mental picture of the future and the way forward. And he does this spontaneously.

      And thank you for summing-up and highlighting the four important keys to strategy execution. Great learning for us.

      With warm regards,

      Dilip

  3. Geetha Chandar says:

    Dear Sir,

    Thank you for an insightfully interesting post.

    May I please share this here?

    http://economictimes.indiatimes.com/features/corporate-dossier/Long-term-vision–disciplined-execution-ensure-a-flourishing-organisation/articleshow/6343381.cms

    20 Aug, 2010, 05.56AM IST, Devdutt Patnaik,

    Long-term vision & disciplined execution ensure a flourishing organisation

    Thanks and regards,

    Geetha

    • Dilip says:

      Hi Geetha,

      Nice link fits very well in this post. Devdutt Patnaik’s article beautifully explains the two key attributes of a successful strategy. It’s great to learn from him that ‘short-term and attention to detail’ too are vital.

      Thanks aplenty!

  4. Gaurav R Aora says:

    A successful strategy is one which bring out happy customers. executing any business plan will be aimless without strategy.When I talk about strategy it always remind me of Chupa Chup and its success.

    However well the planning done ,its through dynamic leadership that’s make all achievement possible.learning from mistakes is also very important

    A nice looking strategy on paper need not give best results, its something very deep inside each employee that count and they make it happen.

    Regards
    Gaurav R Arora

    • Dilip says:

      Hey Gaurav … a super response from you .. you are abs correct… its dynamic leadership’ that is critcal to successful implementation .. and Chupa Chups is fitting example how the world was conquered with some brilliant execution … I will now start giving this example in class :)

      Thanks and regards!

  5. Raju Nair says:

    Today strategist should think like cook in a large hotel…the base for most dish remain the same , only the cooking time and vegetables/meat keeps changing…Strategist should always look at time to market as one major area of thrust. The reason is the business environment is so rapid in its change. The value to customer erodes even more rapidly.

    • dilipnaidu says:

      Hi Raju … that’s a very good analogy and quite original too… yes the point on ‘time to market’ is the number 1 key to success in strategy implementation … the question is how?… and for that I believe some of the points mentioned above will help build organizational capabilities of agility and speed to convert strategy into action … of course an important prerequisite being that strategy formulated must be an adaptive one. .. cheers and thanks for the value addition ..

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