When it comes to executing strategy, the old saying “the devil is
in the details” holds true for many companies, according to Wharton
emeritus management professor Lawrence G. Hrebiniak.
While executives may readily participate in the development of new
strategies, execution tends to get short shrift, because it is often
viewed as a lower-level task or concern, he notes. In the following
interview, Hrebiniak — who just published the second edition of his
book, Making Strategy Work: Leading Effective Execution and Change — explains why it’s critical for firms to create a “culture of execution” in order to succeed.
An edited version of the conversation appears below.
Knowledge@Wharton: Why do firms tend to focus much more energy on strategy and less on execution?
Lawrence G. Hrebiniak: Strategy execution takes
longer, involves more people, demands the consideration and integration
of many key variables or activities, and requires an effective feedback
or control system to keep a needed focus on the process of execution
over time. The strategic planning stage is usually more concentrated and
of shorter duration than the execution stage. It often deals with
interesting conceptual issues that appeal to many managers. The longer
execution time horizon results in developments and changes that must be
addressed over time — for example, manager turnover, competitors’
reactions to a company’s strategy, changing economic and competitive
conditions, a changing industry structure and forces, etc. — suggesting
the importance and difficulty of organizational adaptation during the
execution process.
Keeping managers and functional specialists involved in and committed
to the execution requirements over a long time period can be difficult.
Some managers simply give up or turn to other developing problems and
opportunities, reducing the energy expended on implementation plans and
activities. To some managers, execution-related issues aren’t as
exciting or conceptual, resulting in less than enthusiastic attention or
energy being focused on these activities. These factors, among others,
increase the difficulty of strategy execution and cause managers to
avoid critical implementation requirements. The key here is management
support — from the top down — to create a culture of execution and
maintain a focus on execution and its benefits.
Knowledge@Wharton: What are some of the biggest
mistakes that companies make when it comes to implementing strategy?
What are the common pitfalls?
Hrebiniak: There are a number of mistakes I’ve
observed over the years. One is that strategy execution or
implementation is viewed as a lower-level task or concern. Top managers
with this view believe that making strategy work — the decisions and
activities associated with this task — is somehow “below them,”
literally and figuratively. This often creates a “caste” or class system
in which upper management feels that it’s done the hard work —
strategic planning — and that the lower-level people then can do the
easier work of execution. This is a huge mistake, one that can create
cultural rifts and poor communication across organizational levels,
leading to ineffective performance and other serious problems.
Another mistake managers make is to assume that execution is a quick,
one-shot decision or action, like “Ready-Aim-Execute” — or even worse,
“Ready-Execute-Aim.” Implementation or execution simply isn’t a one-shot
deal. Strategy execution is a process, with important relationships
among key variables, decisions and actions, not a quick fix marked by
simple clichés, such as: “Give him the ball and let him run with it.”
Failure to see and appreciate the interdependence or interaction among
key factors — strategy, structure, incentives, controls, coordination,
culture, change, etc. — is a costly mistake that detracts from strategy
execution success. The complexity of the implementation process also
results in managers ignoring the execution process, an issue I mentioned
earlier.
A mistake I’ve observed occasionally is that a good strategy is seen
as sufficient to motivate effective execution. The assumption is that
solid execution will come naturally, as people see the benefits and
logic of the strategic plan and act accordingly to foster execution
success. This assumption rarely, if ever, is founded; execution takes
hard work, communication of actions and benefits, and effective
incentives to get managers to buy into the execution process. Managers
need skin in the game and logical guidance about their roles in the
execution scheme to make even a good strategy work.
A related mistake is to assume that a really bad or unsound strategy
can be made to work well if “we execute it well.” A bad strategy cannot
be saved by working hard at execution. “You can’t make a silk purse out
of a sow’s ear,” as the saying warns. Good strategy comes first and is
essential to sound execution. Skimping on the strategy formulation stage
of strategic management can only lead to implementation headaches.
There are additional pitfalls that threaten the strategy execution
process in addition to those suggested above. An important one emanates
from not having a solid plan of execution or implementation. Every
strategic plan requires an implementation or execution component or
plan. Every corporate and business plan must be supported by a plan of
execution. The execution plan or component must lay out clearly the key
decisions and actions required for making the strategy work. The
interdependence or interactions among key factors must be spelled out,
and well understood. Responsibility and accountability for decisions and
actions must be clear and agreed upon, with areas of overlapping
responsibility and need for cooperation laid out and committed to by key
personnel. Failure to develop an implementation plan is a problem or
pitfall that usually ends in disastrous performance. Again, the
assumption seems to be that execution simply happens or unfolds
seamlessly, and this is a mistake.
A big pitfall or mistake emanates from a poor understanding of
organizational structure. Not understanding the costs and benefits of
different structures or designs can lead to severe problems. Treating
structure as an afterthought or something that changes according to
managers’ whims or fancies and not as a response to the demands of
strategy represents a major problem or pitfall. Structure has a role to
play. It affects many things, including efficiency, effectiveness,
getting close to markets and customers, and so on. A lack of
understanding of structure’s role in making strategy work usually leads
to problems.
Also, a major pitfall with all sorts of related problems is
inadequate or inappropriate attention to the management of change.
Implementation or execution plans often include the need for change, and
handling it poorly can lead to resistance to new execution efforts.
Knowledge@Wharton: What new kinds of problems have
emerged since you published the first edition of your book — that is,
what kinds of new challenges are managers facing when it comes to
executing strategy in today’s business environment?
Hrebiniak: A number of new challenges emerged after publication of the first edition of Making Strategy Work. One
might think that the old or consistent, ongoing challenges I noted
earlier would be sufficient to keep managers who are interested in
execution busy for a long time. Yet, new challenges and ideas were
presented to me, adding to the list of execution-related needs. One [new
area of concern was] the service sector, including not-for-profit
organizations. The question simply was: Does the material in Making Strategy Work apply
equally well to service organizations? Not-for-profits? Another request
was for a deeper coverage of the execution of global strategies. The
first edition of the book contained little insight here, and managers
told me that they would like to see more about implementation in the
global arena.
Quite a few managers raised questions about project management. In
fact, I was contacted by someone representing the Project Management
Institute who asked [several] questions about the role of project
management in the execution process. Additional questions regarding
making M&A strategies work also were raised. The new edition [has
sections] dealing with service organizations, global strategies and
project management, as well as a revised chapter on making M&A
strategies work.
Knowledge@Wharton: What can a company do to become more focused on executing successfully?
Hrebiniak: The basic step for a company to follow to
become more focused on execution or implementation is to create a
culture of execution. How does one create such a culture? Let’s look at
some basic facts. First, it’s a fact that culture affects behavior. An
organizational culture include values, prescriptions on how to act, how
to treat others, how to react to performance shortfalls, how to compete,
etc., and these have a profound impact on behavior. A related fact,
however, also must be kept in mind: Behavior, over time, affects
organizational culture. Culture, [in other words], is both an
independent, causal factor, and a dependent factor, affected by
behavior. How, then, does one create a desired culture? By creating
behaviors and performance programs that become an integral part of an
organization’s way of doing things. By creating and reinforcing
behaviors and performance programs that affect the very essence of how
organizations act and compete, i.e. their culture.
A company, then, can [create] a culture of execution by [developing
and reinforcing] behaviors that affect culture. It can: lay out key
decisions, actions, and capabilities needed for successful execution;
support the model and execution plan with effective incentives and
controls; create structures and processes that support desired strategic
and operating objectives; and manage execution as a change process in
which agreement and commitment are sought and rewarded. Creating and
reinforcing behaviors related to execution will impact culture; culture
will reflect the critical execution-related behaviors. It is important
to design, reward and otherwise support the right behaviors, those that
are vital to making strategy work, in order to create and nurture a
culture of execution.
