Strategy execution: from plan to behavior

In this Italian-language video, shot in Hoboken, I say that my work really begins when the vision has to become reality, and that strategy succeeds when it stops being a plan and becomes behavior. Here I bring in research on thousands of managers. It looked for the exact point where execution gets stuck, and found it where few people look for it.

Video transcript (translated from Italian)

A strategy is useless if it stays on paper.

My work really begins when the vision has to become reality.

In this phase I work alongside companies inside their processes: I analyze the way they make decisions, how they communicate, how they turn an idea into a concrete result.

I work with internal teams, with marketing managers, with designers, with leadership, with the Human Resources department.

Every function has to speak the same language.

I translate the strategy into operational choices: in the organizational structure, in the tone of communication, in the way a product is designed or presented, the way its story is told.

It is work that constantly connects analysis and action, method and sensitivity.

Because strategy is not a theoretical document but a process that has to live inside the company.

And when that happens, every decision, big or small, starts to move in the same direction.

That is the moment when strategy stops being a plan and becomes what it should be: behavior.

Strategy becomes real in small decisions

A strategic plan approved by the board is a promise. It becomes a strategy on the day it changes the way a sales manager chooses a customer, a department head sets the week’s priorities, or a purchasing department decides between two suppliers. That is where you see whether the company has decided on a business strategy or has only written a document.

A strategy becomes real when it changes everyday decisions, in every function.

The Harvard scholar Joseph L. Bower had already shown this in 1970, in Managing the Resource Allocation Process. By following how large companies decided on their investments, he found that the real strategy takes shape in the decisions through which ideas are proposed, backed and funded, more than in the plan. Thirty-six years later, in an interview with Harvard Business School, he summed it up, speaking of the people who run a company’s business units: “If you add up what those people actually do, which ideas they choose to bring forward, and which of those get funded, the consequences of that activity is what adds up to the strategy of the company, not words on paper.”

Execution stalls between departments, more than between leadership and those who carry it out

In March 2015, in the Harvard Business Review, Donald Sull, Rebecca Homkes and Charles Sull published the results of a survey of 7,600 managers in 262 companies across thirty industries. They wanted to understand why so many strategies get lost along the way. The most common explanation, a lack of alignment between those who decide and those who execute, turned out to be largely wrong: 84 percent of managers say they can rely on their boss and their direct reports all or most of the time.

The fault lay elsewhere. Only 9 percent say they can rely on colleagues in other functions and units all the time, and only half say they can do so most of the time. When the strategy asks two departments to work together, marketing with production or sales with finance, execution stalls: each has its own priorities, its own timing, its own metrics.

Donald Sull and his colleagues found that strategy execution stalls above all between one department and another, more than between leadership and those who carry it out.

Their definition of execution takes this into account: “Strategy execution, as we define the term, consists of seizing opportunities that support the strategy while coordinating with other parts of the organization on an ongoing basis.” In the same study they debunk other common beliefs: that executing means sticking to the plan, that communicating a strategy is enough for people to understand it, that execution has to be driven entirely from the top.

Every function has to be able to rely on the others

In the video I list the people I work with in this phase: marketing, designers, leadership, human resources. Read alongside Sull’s research, that list describes precisely the points where execution breaks down. Strategy almost always travels well along the vertical line, from the owners to the managers and from the managers to their teams. It gets lost in the horizontal handovers, where no one has the authority to decide and everyone has a good reason to wait for someone else.

That is why, after talking with the owners, I talk with everyone, from executives to factory workers, and go up and down the chains of command: only then can you see what happens between one department and another. There you can tell whether the strategy has been translated into operational choices: in the organizational structure, in each function’s priorities, in the way a product is designed and described. This is what the work on organization and culture is for: who decides what, how information flows, which steps slow the work down.

Middle managers play a special role. They are the ones who turn direction into work, and they are also the point where a strategy can stall without anyone saying so, the phenomenon known as the frozen middle. They do not always resist on principle: sometimes they do not know how to coordinate with a department that has other priorities, and they choose not to take the risk.

Consistency is made of commitments that are kept

In the video I also say that every function has to speak the same language. That is true, and it is a necessary condition. A common language lets people understand each other; I have written about this in the piece on the words that reveal a strategy. But Sull’s research goes a step further. Two departments can use the same words and still not rely on each other, if no one keeps their promises.

Speaking the same language is not enough if departments cannot rely on one another: consistency is made of commitments that are kept.

In practice, it means making commitments between departments as visible as commitments to customers: who delivers what to whom, by when, and what happens if that does not happen. It is less elegant work than the vision, and more decisive. When it works, every decision, big or small, really does start to move in the same direction.

What to do and what not to do

• Look for the points where the strategy asks two departments to work together, and attend to those first.
• Write down commitments between functions as precisely as commitments to customers.
• Measure execution by everyday decisions, as well as by the indicators in the plan.
• Do not assume that a strategy communicated well is a strategy understood.
• Do not look for the problem only in the chain of command: it often lies between one office and the one next door.

Sources

• Donald Sull, Rebecca Homkes, Charles Sull, “Why Strategy Execution Unravels, and What to Do About It,” Harvard Business Review, 93 (3), March 2015, pp. 58–67. https://hbr.org/2015/03/why-strategy-execution-unravelsand-what-to-do-about-it
• Joseph L. Bower, Managing the Resource Allocation Process: A Study of Corporate Planning and Investment, Division of Research, Harvard Business School, 1970.
• Martha Lagace, “What Really Drives Your Strategy?” interview with Joseph L. Bower, HBS Working Knowledge, January 9, 2006. https://www.library.hbs.edu/working-knowledge/what-really-drives-your-strategy