"It doesn't matter how good your strategy is, if you can't execute it," says Richard Lepsinger, president of OnPoint Consulting and author of the recently released Closing the Execution Gap: How Great Leaders and Their Companies Get Results. For many companies, he says, a clear gap separates intent and execution.
His belief isn't based on a hunch. OnPoint has studied over 400 companies and found that 49% of leaders surveyed reported a gulf between their organization's ability to formulate and communicate a vision and strategy and its ability to deliver results. Research also showed that only 36% of leaders who thought their company had an execution gap responded positively to the statement, "I have confidence in my organization's ability to close the gap between strategy and execution." That means some 64% of leaders who saw an execution problem didn't believe their company could fix it.
For companies struggling to pull themselves out of the ditch the recession kicked them into, the inability to get things done is very bad news. "If you can't execute well, you're not going to be successful, and you might not be around for long," says Lepsinger.
But execution isn't a mystery for those who are masters of it. Lepsinger's research uncovered five characteristics and competencies -- which he calls "The Five Bridges" -- that differentiate companies that are consistently able to get things done from those that aren't. Here they are, with explanations and examples:
1) Make Change Your Friend
"The ability to manage change is critical," says Lepsinger. Even though companies spend money and time helping managers to manage change, they still don't get it. "If management isn't effective in helping people move through transition, it's harder to close the gap," he adds. And in business, change is constant, be it a target market, the economy or any number of factors.
Quite frankly, he says, "If you're not flexible enough to bend with the winds of change like a palm tree or a bamboo, you'll snap in half like a Bradford pear when the first storm comes along."
Lepsinger points to Dell (DELL) as an example of what not to do. "For a long time, Dell was an icon. It had a great product and a good price, but it was slow to adjust when high-end computers became available at places like Walmart and online. Dell responded by cutting costs to maintain market share, but customer service suffered, an area where it once stood out." And though the company has made some changes to enhance its customer service, says Lepsinger, "Once you damage your reputation, it's hard to get consumer's confidence back."
Lepsinger says Netflix (NFLX) stands out as a company with a mindset of change. "When they first came on the scene, there weren't Web-based movies, yet they named the company Netflix in anticipation of moving forward with streaming video and movies online. That showed a willingness to shift and change with technology -- a certain change readiness."
2) Create a Structure That Fits
Striking the right balance between centralization and decentralization distinguishes top-performing companies from less successful ones. Leaders can make the mistake of assuming that the current organizational structure and systems will support the new strategy. Sometimes, that's simply not true.
Lepsinger applauds Hewlett-Packard (HPQ) in this department. When Mark Hurd became CEO, he was constantly asked if acquiring Compaq was a good idea. His answer, says Lepsinger, was that the question was irrelevant. What mattered, was finding a way to make it work. He reorganized the company into three divisions, each with its own sales force, and he reorganized the info-tech function. Instead of having 85 data centers, he centralized them into three. "This proved to be a more efficient way to share and move information, and the improved flow of information was a key component to their success," says Lepsinger.
On the other hand, Walmart (WMT), which took full control of Seiyu Stores in Japan in 2002, has never managed to make the stores profitable, says Lepsinger. He says the retail giant made several decisions that created employee distrust and consumer apathy. Among them: laying off employees, cutting out distribution middlemen, mandating that stores stay open 24 hours and introducing low-cost products that didn't meet Japanese tastes or quality standards.
Some surmise that these problems result from Walmart's international operations being centrally controlled from the U.S. by people who lack appropriate international experience and knowledge of Japan's intricate culture. Furthermore, the two companies' systems haven't meshed well, resulting in many products not being ordered on time and suppliers not being paid on time, adds Lepsinger.
3) Look Outside the Executive Suite
Involving employees in decision-making may seem on its face to leaders like a sign of weakness, but Lepsinger says otherwise. "Others fear giving up control, but in reality, the world is too complex for any leader to go it alone. To make good decisions, you must seek out the perspectives of a wide range of people. And who knows better than employees what the closest-to-the-ground issues are?" he asks.
Then, too, involving employees gets them focused on generating solutions to problems rather than complaining or waiting to be told what to do. "It creates a sense of ownership."
One glaring example of dropping the ball, says Lepsinger, comes from the National Basketball Association. It tried to introduce a new basketball after doing research and development. But the league neglected to ask players for input. It came up with a ball made of synthetic material, which players couldn't handle properly. "The players rejected it, and that ball never made it into play," says Lepsinger. "To get the best thinking, get buy-in and acceptance," he adds.
On the other hand, even though Google (GOOG) has grown wildly, Lepsinger says its leaders have come up with approaches to ensure that everyone has a voice. One way management keeps their ears open to grassroots ideas is by allowing engineers to spend at least one day a week working on their own pet projects. "When people are working on what they're interested in, good things bubble up," says Lepsinger.
4) Practice What's Preached
You can't just talk the talk. You have to walk it. Simply put, says Lepsinger, "When leaders say one thing and do another, business suffers." He contends that there's a connection between execution and how consistent a leader's behavior is with organizational values and priorities. "A do-as-I-say-not-as-I-do attitude sends mixed messages and breeds resentment," he adds.
A great snapshot of such a mismatch was the CEOs of GM, Ford (F) and Chrysler flying in a private jet to Washington, D.C., to testify before Congress about the auto industry's woes. "Behavior so inconsistent with what was being described as a crisis is an example of how the auto executives helped create the problem they found themselves in." Lepsinger says.
On the plus side, Costco (COST) President and CEO James Sinegal is a good reflection of the company's values and priorities. He signals the importance of keeping costs low by having an office that overlooks the parking lot of the Costco across the street, and he has folding chairs for visitors. He answers his own phone, and he doesn't have an entourage like many senior executives. Says Lepsinger: "He lives the values and keeps the organization's priorities front and center every day."
5) Encourage Teamwork
There's much to be said for a workplace where the team is king. It takes shared goals and clearly defined roles. These provide the foundation upon which cooperation and coordination can be built. Add accountability -- for fulfilling commitments, meeting obligations and taking responsibility for doing their jobs properly -- and you've got a well-running operation.
Cisco (CSCO), says Lepsinger, has been on a journey to enhance its ability to get things done. It has reorganized around functions. Whenever it wanted to enter a new market or geography, business-unit leaders brought together team members from these functional groups. To help ensure cross-organizational cooperation, the company changed the compensation system so that people were paid not only for hitting their targets but also on how effectively they collaborated with peers.
Lepsinger says these five "execution bridges" are critical. The more of them you have in place, the more likely you are to achieve company goals. "The lack of any one of them could derail your efforts," he adds.
Know, too, that it's quite possible for a company to have a bridge in place one year, only to discover that over time it's weakened or even crumbled, and no longer able to help your people traverse the gap. Says Lepsinger: "Execution is not a single-point event. It's an ongoing process."