In 2002, Larry Bossidy and Ram Charan coauthored a book titled “Execution, the Discipline of Getting Things Done,” which focused on the single element of successful companies that is so often overlooked: the ability to execute. Some engineering and construction companies would say this is their core strength, but others would argue that many of them fail to do this well.
To borrow from the book, execution is the main reason companies fall short on their promises — it is the gap between what a company’s leaders want to achieve and the ability of their organizations to deliver it. The superlative companies in our industry have linked together three key components — the people, strategy and operating plans — that provide the details of execution. Said another way, strategy well executed is the difference between aspirations and results. Many companies develop strategies that are correct, yet fail because they are simply not executed. Without execution, breakthrough thinking adds no value, no stretch goals are met, and morale suffers.
Execution is not just about efficiency and effectiveness: It is more comprehensive than that and encompasses these three points:
- Execution is a discipline and integral to strategy
- Execution is the major responsibility of senior management
- Execution must be a core element of a company’s culture
Strategic planning often involves a discussion of strategies and tactics, with “tactics” being the steps that are executed. Certainly, tactics are central to execution but execution is not just tactics. Execution is fundamental to strategy and has to play a role in shaping it.
Charan and Bossidy write, “Execution is a systematic process of rigorously discussing the hows and whats, questioning, tenaciously following through and ensuring accountability. It includes making assumptions about the business environment, assessing the company’s capabilities, linking strategy to operations and the people who are to implement the strategy, and linking rewards to outcomes.”
Many company CEOs would like to “think strategically” and let other managers do the dirty work of executing the plans. More often than not, the best performing companies are those where the CEO takes a passionate role in execution. That does not mean the CEO is out running projects, but rather personally engaged in the substance, sometimes even the details, of execution. Only by being deeply engaged can the CEO know which are the right questions to ask and which messages must be sent in order to communicate effectively. Leaders who are removed from the day-to-day operations of a business are the ones who get surprised by projects, people and customers.
Creating a culture of execution is imperative to long-term success and it is the foremost job of senior management. It cannot be delegated to project managers, department heads or other staff who do not have the authority to act and/or the internal clout to create change. Only the CEO and other senior people can set the tone and dialogue in the company.
According to Bossidy’s and Charan’s book, there are three building blocks of execution:
- Seven essential behaviors of leaders
- Creating the culture of execution
- Having the right people in the right places
Many senior managers who are engineers struggle to avoid being micromanagers and yet stay involved enough to know their people and manage them effectively. Certainly, there is a balance that one must maintain, but here are the seven behaviors that matter as you learn to lead others to create a culture of execution:
Know your people and your business. Every leader who receives information from someone is getting filtered information. If the CFO says that cash flow is not a problem, what is his or her definition of “no problem”? When project managers assume they can include unapproved change orders in an estimated revenue and profitability projection because they are sure that the owner will approve it next week, how will you know to ask, “Did you capture the additional costs?” if you do not know the business or the person deeply enough? Connecting personally with your people helps you build a more intuitive feel for the business as well as the people who are executing work.
Insist on realism. Nobody wants to be the messenger who gets shot or the troublemaker who challenges authority. People want to hide mistakes or buy time to figure out a solution rather than admit they do not have an answer at the moment. Reality is at the heart of execution. Leaders must set the tone of embracing reality and living with uncomfortable conversations at times. Many companies have embarked on pie-in-the-sky strategies or suffered project write-downs due to a lack of honest dialogue that went missing early in the process or job. Questioning the status quo or delivering bad news early is never a bad thing; in fact, it should be encouraged. Keep it real.
Set clear goals and priorities. One of most fundamental mistakes we see in senior managers is the laundry list of 10 to 12 priorities that are simply overwhelming to others who have to execute the array of tasks associated with the “executive wish list.” A strategic plan should never have more than three to four major priorities. Think about it, if you have 10 major goals, you have no sense of what is most important because everything is important! When construction companies get into financial trouble, there is only one goal — collect receivables and conserve cash! We have seen priorities sharpen after a serious safety violation occurs — focus becomes intense, behavior gets modified, and results improve.
Follow-through. Everybody agreed that the goal was good, the strategy sound, but it was never accomplished. Sometimes it was because there was no one assigned responsibility, and accountability faltered. Maybe other things came up that seemed more important at the time. Maybe it was decided that it was not such a great idea in the first place, but no one spoke up. Simply put, the only way to create accountability and therefore a culture of execution is to have a strong process of follow-through in all things.
Reward the doers. In general, our industry does this piece quite well, but it is amazing to find some companies where reward has no linkage to performance. You should absolutely distinguish those who achieve results and those who do not, either in wages or bonuses and preferably the latter. In a culture of execution, socialism is not the goal; it has to be clear that rewards and advancement are based upon performance.
Expand the capabilities of your people. There are many baby boomer CEOs who are trying to figure out how to transfer their business to the next generation. They are often concerned or even sorely disappointed at the lack of business savvy in the next group of leaders. Company owners and senior executives have a responsibility to pass on their wisdom, knowledge and experience to those who will be running the organization after they are gone. This should never wait until they are ready to retire; it should happen all the time with regularity. This is how to expand the capability of the company and improve the results today. Coaching and training employees always provides a positive return on investment, even if you cannot calculate it with precision. Anecdotally, the companies that train their people perform better and have lower turnover and higher morale. All of these are worthy outcomes.
Know yourself. Depth of character is essential to being a good leader, especially when focusing on execution. It requires emotional fortitude to take the heat for poor performance, ask the tough questions or deal honestly with friends who may be taking advantage of your relationship. It requires strength of character to listen to and perhaps accept other ideas opposite of yours and deal with conflict. It also enables you to have the confidence to accept and deal with your own weaknesses. This comes from self-discovery, which can be obtained through leadership development. Asking others to provide honest feedback on your performance as a leader and for ways to improve it is a good place to start. A solid, long-term leader also has an ethical frame of reference that gives him or her the foundation of doing what is right. This goes hand in hand with honesty and integrity and is the hallmark of great leaders.
Corporate culture is powerful and potentially crippling if not oriented correctly. Most efforts at cultural change fail because they are linked to improving the company’s business performance. Charan and Bossidy speak of “social operating mechanisms” as processes to change a company culture. There are three mechanisms that work here:
- Behaviors are beliefs turned into action, so believe your way into action. In other words, visualize your new way of behaving and beginning acting that way. Set the example as a leader.
- Increase the population of “A” players, defined as those who are top in performance and behavior. Reward them accordingly. Remove nonperformers, regardless of tenure or relationship.
- Value “truth over harmony” and create open, honest dialogue focused on execution and accountability. It will create uncomfortable situations but may also stimulate creativity.
Finally, you must have “the right people in the right places.” There are many things you cannot control in business — the quality of your leaders is not one of them. We often hear that “people are our most important asset” — their judgment, experience and capabilities make the difference between success and failure for your organization. You should look for people who have a drive to excel. They are the ones who find ways to solve problems and make success happen. They usually energize other people and create excitement. If they also can get things done through others, all the better — they have mastered the art of delegation. If they are not afraid of tough decisions, you have winners.
Finding the best people requires a rigorous and systematic recruitment and hiring process. It involves setting standard requirements for knowledge, experience, past results and attributes/behaviors that you adhere to as you cull through the résumés, introduction interviews and final choices. Having multiple people involved in the interview process, asking tough questions about behaviors and results and not just background and education, is a best practice. Spend enough time with the person to get a “feel” for his or her work ethic and drive as well as his or her fit with your company’s culture. If potential employees have unrealistic expectations that will not be ever be met, do not hire them hoping you can change their minds once they get on board. In today’s climate, finding the best people is not easy, and in most cases, you will have to develop them internally or woo them from other firms. Either way it will be a time-intensive process but one that must be taken seriously in order to build a culture of execution.
Better leaders hire better people; better people make a better culture and a better culture makes better results occur.
Lee Smither is a managing director at FMI Corporation. He can be reached at 919.785.9243 or via email at email@example.com.