"To understand execution, you have to keep three key points in mind:
- Execution is a discipline [akin to Six Sigma], and integral to strategy
- Execution is the major job of the business leader
- Execution must be a core element of an organization's culture"
Every business has three core processes which the business leader must not delegate, but be deeply engaged in and build the system and discipline for execution. They are:
- The people process (the most important of the three)
- The strategy process
- The operations process
There are 3 building blocks of execution:
- The leader's seven essential behaviors
- Creating the framework for cultural change
- Having the right people in the right place (no leader should delegate this job)
Behavior 1: Know your people and your business.
Meet as many people in the organization as you can. Give your view on the state of the business but spend more time listening to them.
Behavior 2: Insist on realism
Create a culture where openness and honesty are rewarded. Compare your company's goals with other companies as a measure of realism.
Behavior 3: Set clear goals and priorities. Focus on no more than 4 priorities.
Behavior 4: Follow through
At the end of every meeting, establish a schedule for follow-up meetings with milestones to be met at each one.
Behavior 5: Reward the doers
To change people's behaviors, link rewards to performance and do it transparently. Reward people for performance against objectives and for their behaviors; for example, reward collaboration. Be sure to regularly record specific instances of people's behaviors, both positive and negative.
"Differentiation [in rewards] is the mother's milk of building a performance culture."[My commentary: I am deeply skeptical that a performance evaluation process can be designed to eliminate the dysfunction and unintended incentives they often breed. I've written more on this topic in this blog post. I agree with the authors that any such system must evaluate people's behaviors, not just their performance against objectives, but even so there is great potential for mistrust, fear, and promoting competition over collaboration. I also believe it's critical that people receive constructive feedback on their performance much more often than once per year. I recommend bi-weekly reviews if you truly want people to improve their performance quickly.]
Behavior 6: Expand people's capabilities through coaching
Teach others how to get things done and how to lead. Create a deep bench of leadership succession within the organization.
Behavior 7: Know yourself
A leader must have the emotional fortitude to "accept and deal with your own weaknesses", accept differing points of view, deal with conflict, and "be firm with people who aren't performing".
Building Block 2: Creating the framework for cultural change
A company culture consists of it's "hardware" (org structure, compensation structure, communication systems, etc.) and it's "software": values, beliefs, and norms of behavior.
How to create a culture of execution:
First you tell people clearly what results you're looking for. Then you discuss how to get those results, as a key element of the coaching process. Then you reward people for producing the results. If they come up short, you provide additional coaching, withdraw rewards, give them other jobs, or let them go.A company culture is based on the collective beliefs of it's employees, and their behaviors are their beliefs turned into action. If people believe that they are in competition with their peers for rewards, they will act accordingly. If they believe people are not held accountable, then they won't expect to be held accountable either. The behaviors exhibited and tolerated by leaders trickle down through the organization.
My commentary: The authors, perhaps unintentionally, have revealed the difficulty with traditional performance evaluations here; they put employees in competition with one another to get the biggest slice of the rewards pie, reducing collaboration. Perhaps by adding collaboration and similar behavioral criteria, rather than solely results-based criteria, to the evaluation process, this effect can be mitigated. But can it be eliminated?
Building Block 3: Having the right people in the right place
This job can't be delegated. Larry Bossidy spent 30-40% of his time in the first 2 years at Allied Signal hiring & developing the leadership team. Developing leaders should be a core competency and the company should fill most leadership positions from within. Provide people with various job opportunities matched to their skill sets and potential.
It is critical to know the 3-4 specific key skills & qualities required for a job and to ensure the person has those skills via interviews and reference checks. Specificity is important. For example, the specific skills for a Chief Marketing Officer might be: (1) ability to select the right mix of promotion, advertising, and merchandising; (2) proven sense of what advertising is effective; (3) ability to execute the marketing program with the right timing and sequence in coordination with new product launches.
Determine how the candidate accomplished particular results. Did she sacrifice long-term success to achieve short-term numbers? Did he succeed due to luck? Did she fail to meet an objective due to outside circumstances but still do better than others in the same situation?
The People Process
The people process is the most important of the three core processes, and it must be tightly integrated with the strategy and operations processes. Determine your talent needs over time - they may be different in the future. Know the number and types of people you need in the short, medium and long terms based on strategic milestones. Develop a leadership pipeline with retention risk analysis and succession depth analysis.
When evaluating a person, meet with five other people to candidly discuss the person's strengths and weaknesses. (My commentary: Note that this requires a culture of trust where mistakes are treated as learning opportunities.) Determine when someone can improve via coaching and/or a different role.
The Strategy Process
The strategy must be linked to the people process and operations process. A strong strategy addresses the following questions:
- What is the assessment of the external environment?
- How well do you understand the customers and markets?
- What is the best way to grow the business profitably, and what are obstacles to growth?
- Who is the competition?
- Can the business execute the strategy?
- Are the short term and long term balanced?
- What are the important milestones for executing the plan?
- What are the critical issues facing the business?
- How will the business make money on a sustainable basis?
The Operations Process
The operations process must be tightly linked to the people & strategy processes. It "breaks long term goals in to short term targets", specifying how to execute & achieve results. It should include plans for product, marketing, sales, manufacturing, productivity improvement, and contingencies. It is critical to have an open and robust dialogue and debate on the the assumptions underlying the operations process. The budget should be prepared based on the operations plan, not vice-versa. Use quarterly reviews to update the operations plan.