By Alfonso Bucero
The business world is plenty of expensive, well-intended strategies that failed in the execution. Some of them make the front pages and the evening news. Many others disappear into desk drawers. All represent a significant drain on resources that could have been used more profitably elsewhere. The spectacular flameouts of Carli Fiorina at HP and John Sculley at Apple are merely a few high-profile examples of CEOs whose strategies failed because of poor execution.
Business schools unleash aspiring strategists into the corporate world every year, yet studies have found that less than 10 percent of strategies carry through to implementation. So, around 90 percent of companies fail to execute strategies effectively.
However, senior executives regularly hideaway and plan the next big think, leaving the execution to the lower echelons. That is precisely where strategy goes awry. When strategy makers neglect the critical connections between words and deeds, they are almost guaranteed to fail.
Many executives understand this instinctively, but they lack a systematic approach for identifying the right actions to deliver. Worse, they ignore their own responsibilities towards people who execute the strategy. Repeatedly, they make broad assumptions about how well the strategy can convert into understandable work, and whether the organization is capable of making the changes needed for the strategy. When executives think of the strategy implementers as mere lines and boxes on a chart, they fail to tap the full power of the enterprise.
In the midst of changing technologies and competitive global markets, senior executives face extreme pressure from customers, competitors and employees. All of these forces place a premium on the executives’ ability to articulate strategy and provide resources for middle managers and workers to implement it within the context of the corporate structure, goals, measurement and reward systems. Often this requires reshaping the organization and creating new types of interactions.
Top management’s biggest issue is the failure to recognize that any significant shift in strategy requires changes throughout the organization.
Executives regularly find themselves responding to a simple question: Where do you expect to take your organization in two years’ time? Most executives answer by pulling out their strategy documents and launching into their official presentations.
A more important question is – how do you know you will get there? Corporate leaders would come much closer to describing where their organization will be in two years’ time by describing their current investments. The best indicator of strategic direction is an enterprise-wide look at what the company is doing rather than what it is saying.
Don’t believe it? Just go back two years and look at the major activities that have been completed in any given company. Compare that record with the strategy the company was espousing two years ago. Chances are that the list of completed actions, along with another list of failed actions, will offer a better explanation of the company’s current position than its two-year-old strategy documents.
What a company is doing can be summed up by identifying the group of projects in which it invests. In fact, for the espoused strategy to become a reality, it must be converted into the packets of work we call projects. Projects are the temporary initiatives that companies put into place alongside their ongoing operations to achieve specific goals.
The project is the true traction point for strategic execution. The project builds new products, new skills, new alliances, or new delivery mechanisms for customers. A company’s project portfolio drives its future value. The project portfolio – the array of investments in projects a company chooses to pursue – is the agent of change, and the success of change initiatives depends on the ability to select and manage these projects.
Successful strategic execution requires tightly aligning the project portfolio to the corporate strategy. I call this the engagement domain, where the objectives of strategy meet constraints of resources.It is the fundamental responsibility of executives to ensure that the corporation engages continuously in the right projects and establishes the right priorities in a competitive environment.
The engagement domain, which requires companies to engage the strategy via the project investment stream, is the most central of the six domains of strategic execution. Executives have a tendency to think of this kind of work as being too “tactical” to take up their precious time. Nothing could be further from the truth. Only by continuously reviewing the project portfolio and consciously realigning the organization can a company bring its espoused strategy to life. Strategy makers can only align the engagement domain by working with and through project leaders at the execution level.
Effective strategy consists of choosing to do the right things. Effective execution means doing those things right. Strategic execution results from executing the right set of strategic projects in the right way. The only path to executing strategy is through project portfolio management.
Project portfolio management is always on, whether executives recognize it or not. Everywhere in the organization, people must take thousands of small project investment decisions everyday. If the company’s leaders fail to engage actively in strategic portfolio management, the small but critical daily portfolio management decisions are delegated to the lowest level of the organization.
Without clear leadership, individuals will use other decision rules in choosing what to work on: first in, first out, most politically correct, wild guess etc. Portfolio management still takes place, but it is not necessarily aligned with strategy, and it occurs at the wrong level of the organization.
Many executives fail to understand how crucial is to determine the degree of alignment between investments and strategy. All one needs do is look at the project portfolio to see whether the project work of the organization is aligned with the strategy. Whatever the cause, competent and well-meaning executives routinely fail to integrate and align the work of the organization with the strategic vision of the organization.
There is no way for senior management to accomplish a strategic transformation without getting deeply engaged in project management. In some cases, particularly for new strategies, the senior executives themselves must become the project leaders.
Unfortunately, most executives have not yet learned the language of project management. Even leaders who emphasize the importance of strategic action invariably fail to take the next step by recognizing that the most important actions that serve to execute strategy are the projects that will bring the organization from its current state to its desired future state.
I do not claim that this is a new idea. However, in my experience, what has been missing is a systematic framework within which to apply decades of important contributions on the subject. The essence of strategy is in the activities – choosing to perform activities differently or to perform differently than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.
I believe execution is a process. It is not the result of a single decision; it is the result of a series of integrated decisions over time. This helps explain why sound execution equals competitive advantage.
The hidden language barrier prevents many senior executives from communicating effectively with the people who will bring the strategy to life. Executives speak of high-level strategic outcomes rather than specific project outputs, and too often, they fail to link the two. The converse is also true: project managers rarely have the opportunity to think about the strategic implications of their work. They focus on project outputs rather than strategic outcomes. To counteract this dangerous disconnect, corporate executives and strategy makers must eradicate the idea that the details of project management are beneath them.
The language of strategy formulation covers high-level concepts such as the company’s identity, and purpose. It connects the collective who, what, and why with the corporate culture and with the goals that will be used to measure strategic success.
In the human brain, the corpus callosum links the two hemispheres to align a person’s actions with her visions and intentions. Research has shown that when the corpus callosum is severed, people are unable to translate their plans into coordinated actions. Similarly, engagement serves as the corpus callosum of strategic execution, if it is severed or malfunctions – if the project portfolio becomes disengaged from strategy – a lethal disconnect is created.
A couple of examples from the mobile telephone industry illustrate two important ways in which faulty translation in the engagement domain can undercut execution. In one instance, a company executed flawlessly, but its leaders failed to notice that they were investing in the wrong projects. The other company failed to invest the resources necessary to manage a crucial project well.
In the first case, the Earth-orbit satellite telephone service known as Iridium grew out of a complex development program that met all of its targets within its original cost parameters. However, somewhere in its eleven-year duration, the program’s initial strategic goals became irrelevant, as convenient and inexpensive cell phone technologies rose up to replace Iridium’s value for customers.
In contrast, the program code-named ‘Odyssey’ at AT&T Wireless represents a different kind of failure. The ‘Odyssey’ number portability program was strategically critical when launched, with an immutable external deadline imposed by the FCC. The program remained crucial throughout its life cycle, but it failed catastrophically in execution. Within months of this dismal outcome, the Wireless division was absorbed at a considerable loss of value to AT&T.
Success in execution ultimately depends on two things: whether the planned objectives for each project remain relevant and feasible and whether each of the strategic projects are managed well enough to achieve the objectives that justified it at the time it was selected. In other words:
How are they managing changes?
Great execution in the absence of reasonable strategy is no better than great strategy with poor execution!
Strategic execution requires a system wide approach that consistently drives organizations to do the right things. Such an approach helps identify the necessary project investments so that everyone understands what they must do to execute strategy. Together, the leaders and managers must engage in conversations that identify and allocate resources to projects that accomplish three types of work:
Working in business means delivering products/services based on existing processes. Most of the ongoing work in a pure professional services firm or a custom solutions provider is project based. Such firms must engage continually in portfolio management to discern between what to accept and decline. However, even a “make to offer” manufacturer must regularly initiate projects in the business to develop new products on a make to offer basis.
Working on the business is about improving current business processes to create better levels of performance. This requires prioritizing projects aimed at improving the current way of designing and delivering. Working to transform the business is almost totally project oriented because transformation involves one-time strategic initiatives to move the enterprise to entirely new ground.
I have emphasized that strategy makers must work together with strategy implementers to achieve strategic execution. Both groups must recognize project portfolio leadership as a core competency, with different responsibilities at different levels. Everybody has a role to play!
Senior executives must take responsibility for communicating the company’s purpose and creating the organizational structure that will further strategic directives. They must translate strategic intent into specific goals and work with project leaders to determine which investments are required to attain them.They must take pains to identify the hidden work of realigning the SEF domains as needed, and undertake the projects necessary to accomplish it.
The project leaders must pay attention to the broader strategic picture and understand the organization well enough to identify the barriers to execution. They must also develop the communication skills to help influence the choice of projects, to identify resources, and to seek help with the project work when necessary.
When strategic project portfolio management works well, project managers are empowered to lead from the middle with support from the top. This creates valuable learning opportunities for project leaders and begins to sketch out a career path that could prepare them for executive positions.
On a personal level, each individual has the ultimate responsibility for deciding how to invest the time, energy, and other resources available on any given workday. At this level, too, the strategic execution framework offers a guide to investment choices both