Execution: The Discipline of Getting Things Done

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By: Larry Bossidy and Ram CharanSYNOPSIS How do you translate strategy into results? Execution is both an organizational culture and a specific set of behaviors. Leaders must be hands-on and intensively involved with three core interlinked processes -the people process, the strategy process and the operations process. Authors Ram Charan and former Honeywell CEO Larry Bossidy share leadership strategies about how to hire doers that energize others, make decisions quickly, get things done through delegation and follow through. Business leaders who understand the reality of markets, customers and resources must own the strategy process and use the operations process to design new programs and tie performance to incentives. These three core processes are the foundation of competitive advantage. explainer video TOP 20 INSIGHTSThe process to create an execution culture is similar to the six sigma process for continual improvement. Leaders constantly look for deviations from desired tolerance levels in execution across areas like profit margins to promotions. They swiftly close the gap and raise the bar for the entire organization. Like Six Sigma, execution works only when people practice it continuously.Leaders who execute do not preside. They actively lead. The leader who presides takes pride in a hands-off style and does not deal with core issues or confront people responsible for poor performance. In contrast, those who actively lead are personally involved in the critical details of execution. They ensure people understand organizational priorities, assign tasks, follow up, and promote and reward people who execute. Lack of execution can cost CEOs their jobs. In 2000 alone, over 40 CEOs from the top 200 companies on the Fortune 500 list were removed by their board because they could not execute what they had committed to do. 20% of the top business leaders in America lost their jobs only because they failed to master the art of execution.The three core processes of execution are deeply interlinked. Strategy Plans must account for personnel and operational realities. People are chosen and promoted in light of strategic and operational plans, so operations must be linked to strategic goals and human capacities. Employees need a small number of clear priorities to execute well. When you speak to employees, emphasize only three or four key priorities that will influence the overall company performance. They have to make daily trade-offs because there is competition for resources and ambiguity over decision rights. Without carefully thought-out priorities, people can get caught up in endless conflicts. Companies don't execute because they don't measure, reward or promote people who know how to get things done. Ensure that there is a clear percentage differentiation in salaries, bonuses and stock options between top performers and other employees across the organization. This differentiation creates clarity in the organization that execution is rewarded and respected. Emotional fortitude gives you the courage to be open to unpleasant information. It also allows you to accept opposite points of view, be firm with underperformers and handle ambiguity in a complex organization. Few leaders are good at everything their role demands. Emotional fortitude makes you comfortable with your strengths and, most importantly, puts mechanisms in place to address your shortcomings. Authenticity is key to emotional fortitude. People watch a leader's behavior for ethical clues. If a leader behaves differently than what he preaches, the best will lose faith, and the worst will follow in his footsteps. Meanwhile, the rest will do what they can to survive in a muddy ethical environment. This toxic landscape becomes a barrier to get things done.Candid conversations are central to execution. Honesty helps the organization effectively gather accurate information, process it and reshape it to produce decisions. Informality is the key to truth-based dialogues, as it invites questions, encourages employees to air brutal truths instead of consensus and fosters critical thought.Executive development is a core competency. Leaders need to spend as much as 40% of their time and emotional energy in the selection, appraisal and development of people. As CEO of AlliedSignal, Larry Bossidy devoted 30-40% every day to guide future leaders. His effort created an extraordinary leadership pipeline that propelled organizational success. These candidates went on to become CEOs of American Standard, Raytheon, PerkinElmer and W.R Grace.Most companies look for leadership candidates who are thinkers and visionaries. However, there is little correlation between the ability to think and the ability to execute well. To build an execution culture, you must select the doer with a proven track record of execution over the thinker with elite academic credentials and a high IQ. Check if the candidate displays energy and enthusiasm for execution instead of just abstract ideation. To execute, you must learn how to get things done through others. People who cannot work through others reduce the organization's capacity and don't leverage the full capabilities of their team. If you work an 80-hour schedule and push others to do the same, it's a clear signal that you should learn to get things done through others. A robust people's process does three things. First, it evaluates individuals accurately and in-depth. Second, it provides a framework to identify and develop the leadership talent required to execute its strategy. Finally, it creates a strong leadership pipeline to enable succession. The people's process must be linked to strategic milestones in the near (0-2 years), mid (2-5 years) and long terms (5+ years). Leaders create this linkage to ensure that they have the correct number and types of people to execute their strategy. The ability to meet medium and long-term milestones depends significantly on a solid pipeline of promotable leaders. Organizations must have robust processes to analyze succession depth and retention risk. Succession depth analysis determines whether a company has enough high-potential candidates to fill positions. Retention risk analysis evaluates a person's potential for mobility and the risk faced if they leave. If the person is a business-critical high-risk candidate, the organization will take more vigorous efforts to retain them with rewards and career progression. Identify critical jobs and create talent pipelines for them. Critical jobs are those that are essential to execute the organization's strategic vision successfully. These jobs are not necessarily high-level ones. For a biotech company, someone who heads a clinical trial for a critical product is vital to the organization's three-year strategy. In the mid-'90s, when GE was recognized as the best pipeline of leadership talent, the division presidents became retention risks. GE's people process ensured that the company retained most candidates through financial rewards like stock grants which they could not cash until retirement. When a key person left, the process provided replacement within just 24 hours. When Larry Johnson, president of GE's appliance division, announced his departure, GE named a successor the same day.Talent reviews are best conducted in a group setting. Get five people who know the candidate to share their observations, argue differences and reach a conclusion. The diverse views converge to bring out an accurate, objective and composite picture of the candidate's capability, far better than the perspective of any single person. The strategy process must be designed and owned by those who will execute it. Staff can help through data collection and analysis. Still, the substance and detail of the strategy must come from the leaders because they best understand which ideas will work in the marketplace and what strategies will need new organizational capabilities. The people process and operating plan must be strongly linked to the strategic plan to be realistic. A link to the people process helps you evaluate if you have the right people to execute the strategy. A link to the strategic plan specifics to the operating plan aligns the different parts of the organization towards the strategic goals.Great strategists can detect patterns of change and relate them to their landscape, industries, competition and business far earlier than others. When the Asian Financial Crisis hit in 1997, most companies failed to detect the change till March 1998. But GE and AlliedSignal recognized the crisis before 1997 and changed their 1998 operating plans to deliver the promised results despite the new circumstances.Ensure your strategy does not lead to fragmentation or entry into too many markets. A fragmented strategy plan will result in more goods and services than the organization can handle. After two decades of unfocussed growth, Unilever ended up with over 1600 brands. In 2001, it confronted the problem and reduced the number of brands to 400. The consolidation resulted in higher margins and revenue growth. SUMMARYExecution requires leaders to be hands-on and intensively involved with their people and organizations. They must put vital leadership behaviors in place and create a culture of execution to run the core processes effectively. In this way, execution is a systematic way to expose reality and act on it.SEVEN ESSENTIAL LEADERSHIP BEHAVIORSHere are seven things you must do to execute:Know your people and your business — Leaders must make an effort to engage with their staff actively and have candid discussions on operational realities. A leader who asks superficial questions at significant and casual interactions leaves the team with a sense that said leader is clueless. In contrast, a leader who actively discusses operational realities shares the organizational vision and opens a space for candid conversation, which earns the team's respect. Insist on Realism — Leaders have to be realistic and ensure that realism is the goal of all dialogues in the organization. An excellent way to start is to ask employees frequently, "What are we doing right, and what are we doing wrong as a business?"Set Clear Goals and Priorities — Focus on a few clear priorities that can produce the best results from the resources at hand. Well-thought-out priorities can help people make better trade-offs between priorities daily and avoid organizational politics. Follow Through — Ensure accountability and create follow-through mechanisms to ensure that everyone does what they are supposed to do. Regular follow-through meetings send the signal throughout the company that others can expect follow-through on tasks from each other.Reward the Doers — Performers must get a better bonus, stock options or even stock grants. A leader needs to ensure that distinctions based on performance become a way of life through the organization. Coach to Expand Capabilities — Leaders must regard every encounter as an opportunity to coach their people. Provide specific feedback and point out behavior and performance that require changes. Do not preach. Ask incisive questions that bring out the reality of a situation and give stakeholders the help they need to correct problems. Know Yourself — Emotional blockages result in conflict evasion, procrastination on decisions and failure to deal with underperformers. Build emotional fortitude to be honest with yourself, accept opposite points of view and give people honest assessments. Leaders earn confidence when followers can see their inner strength, confidence, ability to help others deliver results, and efforts to expand their capabilities. Four core qualities make up emotional fortitude: authenticity, self-awareness, self-mastery and humility. FRAMEWORKS FOR CULTURAL CHANGEEfforts at cultural change fail because they are not linked to business outcomes. Usually, values don't need to be changed. Instead, work to change the limiting beliefs that affect behavior. Behaviors are beliefs turned into actions. Behaviors deliver results. Beliefs are conditioned by experience, what people hear inside and outside the organization, and perceptions about their leaders. If employees believe that those who perform less will gain the same rewards, they will be unmotivated and work poorly.FOUR STEPS TO A CULTURE OF EXECUTIONThere are four steps to create a culture of execution. Be transparent with your team about what results are needed. Coach and support them to achieve the results. Reward people for positive results. If people come up short, coach them, withdraw rewards, offer other jobs or let them go. LINK REWARDS TO PERFORMANCEA business culture ultimately tells the people in the organization what kinds of behaviors are valued and rewarded. The compensation system must reward not just substantial achievement on numbers but also desirable behaviors that people adopt. SOCIAL OPERATING MECHANISMSA vital part of the organizational software is "Social Operating Mechanisms," which include any place where dialogue occurs in an organization. Social Operating Mechanisms could be formal or informal meetings, emails, presentations etc. Social Operating Mechanisms cut across functions, disciplines, work processes and hierarchies. They create new information flows, working relationships and improve transparency and collective action. Social Operating Mechanisms are critical to share the leader's behaviors, beliefs and mode of dialogue throughout the organization. Other leaders who are present adopt these as their mode of operationROBUST DIALOGUEThese candid and open dialogues improve the organization's ability to gather information, process it and make decisions. Informality encourages questions, helps colleagues take risks and surfaces out-of-the-box ideas.BLOCK 3: THE RIGHT PEOPLE IN THE RIGHT PLACEThe best long-term competitive differentiator is the quality of an organization's talent pool. Leaders need to spend up to 40% of their time and emotional energy in the selection, appraisal and development of people. While a CEO may not interview every leadership candidate, employees will follow the standard set by the CEO for hires across the organization. What Kind of People to Hire: You can spot the doers by their work habits. Here are qualities to look for in candidates:Energize People: Some leaders drain energy from people while others create it. Hire candidates who energize their fellow employees. Be Decisive on Tough Issues: Some candidates waver, procrastinate and avoid reality. Choose candidates with the emotional fortitude to decide on complex issues swiftly and act on them. Get Things Done Through Others: Without this ability, leaders cannot get the full benefit of the team's capabilities. Leaders who cannot get work done through others put in 80-hour weeks and push their team to do the same. If a candidate cannot get things done through others, they are sure to burn out. Follow Through: Every leader who is good at executing follows through religiously. Follow through ensures that people do the thing they have committed to do on time. Never finish a meeting without follow-throughs.  THE PEOPLE PROCESSThe people process is more important than the strategy or operations process. People make market judgments, create strategies and translate them into operational realities. A people process accurately evaluates individuals, provides a framework to identify and develop leadership talent and creates a leadership pipeline that builds a strong succession plan. There are four building blocks to a robust people's process.LINK PEOPLE TO STRATEGY AND OPERATIONSLeaders must have the correct numbers and kinds of people to execute their strategy. The people's process must be linked to strategic milestones in the near (0-2 years), mid (2-5 years), and long-term. These milestones must also be linked to operational targets to understand what new talent to hire and what capabilities to develop. DEVELOP LEADERSHIP PRINCIPLESA pipeline of promotable leaders is essential to meet mid and long-term targets. The people's process must assess candidates and decide what they need to do to become ready for leadership responsibilities.THE LEADERSHIP ASSESSMENT SUMMARYThe Leadership Assessment Summary is a matrix with performance and behavior as axes, both with a scale of low, medium and high. The Leadership Assessment Summary gives an overview of candidates who are high-potential and promotable. Similarly, it shows those who exceed performance standards but need coaching on behavior and vice-versa. Retention risk analysis evaluates a person's potential for mobility and the organization's risk if they leave. If a candidate is both high mobility and critical to the future of the business, the organization will take actions like recognitions and rewards to retain them. Succession depth analysis evaluates if the company has the talent pipeline to fill critical positions. It also evaluates if high-potential people are stuck in the wrong jobs. RETENTION AND SUCCESS AT GE In the mid-1990s, when GE was widely seen as the best producer of leadership talent, every senior leader was a retention risk. GE's people process swiftly moved to retain critical candidates. GE offered them long-term financial rewards like stock grants that they could not cash in until retirement. However, if a critical person left, GE's succession depth approach could replace them within 24 hours. DEAL WITH NONPERFORMERSA robust people's process must distinguish between candidates who need to be moved to a lesser job and those who need to be fired. When you have to let people go, it's best to do it with as much dignity as possible. It reinforces the positive nature of the performance culture.Lastly, link HR to business results. Apart from people skills, the HR representative in charge must be a business leader with a point of view on how the people process can help achieve a business objective or a strategic plan.THE STRATEGY PROCESSA good strategy emerges from people closest to the action who understand the market, customers, and resources. While staff can help with numbers and analysis, ultimately, business leaders must develop a strategic plan.To be realistic, leaders must link their strategy to the people process. The organization must have the right people in the right place to execute the strategy. The operational plan must link the strategic plan specifics to align the different parts of the organization towards its target goals. A business unit strategy must be less than 50 pages and easy to read. You should present its essential components within one page and describe your strategy in 20 minutes in simple language. If you find this difficult, it means that you will have to clarify your thought process.THE ASSESSMENT OF THE EXTERNAL ENVIRONMENTThe strategic plan must explicitly state assumptions it makes about the social, political and macroeconomic context. Successful strategists can perceive patterns of change and relate them to their landscape and business far before everyone else. UNDERSTANDING CUSTOMERS AND MARKETS Sometimes organizations can lose awareness of consumers' needs and purchase patterns due to excessive focus on the production and sales of their products. PATHS TO PROFITABILITY AND OBSTACLES TO GROWTHMarket segment maps are helpful to define growth opportunities. A.T.Cross, the pen manufacturer, has three primary consumer segments: individual buyers, gifters and corporate purchases for institutional gifts. Each product segment will have different competitors, channels, economics and price.A robust strategic plan must address these questions:Who is the competition? Sometimes unlikely competitors can have more attractive value propositions for customers. While Staples and Office Depot competed for the discounted office supplies market, they missed the emergence of Walmart as a competitor.Can the business execute the strategy? Many strategies fail because businesses don't accurately assess whether their organization can execute the plan. If the leader has been actively involved in all three core processes and runs robust dialogues, they would have a decent sense of the organization's capabilities. What are important milestones to execute the plan? Milestones make a strategic plan realistic. Periodic interim reviews can help the organization understand the current state and what changes might be required to get back on track. Are short-term and long-term needs balanced? Most plans don't address what a company must do, from when the plan is made to when peak results are expected. When the CEO is clear that long-term projects don't mean an earnings holiday, stakeholders can develop remarkable ways to meet earnings requirements without damage to the long-term project.What are critical issues for the business now? Every business has some critical issues that can prevent the achievement of strategic goals. These have to be explicitly mentioned in the strategic plan. In strategy review meetings, these issues are discussed and handled periodically. The strategic plan provides a foundation for candid dialogue, the strategy review that links strategy to operations and people process.OPERATIONS PROCESSThe operations process breaks long-term strategic outputs into short-term targets. It looks at the programs like product launches, sales plans and manufacturing plans that the business must complete to achieve desired objectives. The leader has to set goals actively, link details of the operations process to the people and strategy processes and lead operating reviews to align the organization to the plan. The operating plan is fundamentally different from a budget, which usually uses the previous year's numbers to set targets. In contrast, an excellent operating plan begins with the strategy document and breaks down long-term strategic goals into short-term targets. Many companies prepare an operating plan based on the budget. In reality, the budget should be a financial expression of the operating plan. DEBATE EVERY ASSUMPTIONThere is usually an inherent conflict of interest as people see the review through their respective lenses. In a formal budget review, they negotiate to achieve compromise. Instead, the operating review aims to surface all assumptions, debate them out and validate them with customers and suppliers. An operating review must thoroughly debate every assumption, not only big-picture assumptions but little assumptions and their effect on business, item by item. You cannot set realistic goals unless you have examined the assumptions behind them. STRATEGY REVIEWAs it offers the last chance to test and validate the strategy before it faces the real world, the strategy review must feature a robust debate with all key players present. People must leave with closure on the discussion and clear accountability for their parts of the plan. Leaders should ensure everyone is clear about outcomes. The Strategy Review is a good place for leaders to learn about and coach other team members. At the end of the review, the leader gets a good perspective of the strategic thinking capabilities of the people involved and their potential for promotion. At the strategic review, the same questions raised when the team formed the strategic plan will be raised again with a broader group with more diverse views. Here are some additional questions to consider:IS THE PLAN SCATTERED OR SHARPLY FOCUSED? In a quest for expansion, sometimes businesses can end up with far more goods and services than they can manage. Check if your strategy avoids fragmentation of effort and if the company plans to enter too many market segments simultaneously. ARE THESE THE RIGHT IDEAS? Companies can strategize themselves into markets and business ideas they cannot succeed in. Irrespective of how well you execute, the odds are highly stacked against the company's success when ideas don't fit into current capabilities or require costly acquisitions. THREE STEPS TO BUILD AN OPERATIONS PLANFirst, set targets like revenues, productivity, market share and operating margin from the outside-in and top-down. Outside-in means that the numbers must reflect economic and competitive realities. Top-down means leaders set goals from the organization level to the business unit level. Second, develop action plans and make necessary trade-offs. These include significant programs for the year across sales, marketing, production and capital spends. The plans originate from business units as a response to the targets set. Leaders look at the assumptions that might be the most vulnerable and create and ask people to develop contingency plans for those scenarios. Finally, the leader gets agreement and closure from all participants and establishes follow-through measures. An excellent way to ensure follow-through is to send a memo that outlines the details of the agreements. Quarterly reviews keep the plan up to date and reinforce synchronization. Apart from clarity on achievable targets, the operations process is an excellent opportunity to coach for leadership. Leaders who participate see the company as a whole, think about every facet of the business and understand how they fit in. They learn to allocate and reassign resources when the environment changes. People get to practice trade-offs to balance the short and long-term.Finally, the operations process builds confidence. The team knows they can meet the targets because leadership based them on realistic assumptions. Additionally, the company has simulated the moves necessary to achieve those targets in all but the most uncertain circumstances. These three processes complement each other to create a virtuous spiral of excellence in execution. These three core processes, when done right, are the differentiation between you and your competitors.