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Tuesday, September 22, 2009

The Four Quadrants of the Business Excellence Model

Simply put, the focus and capability of an organization can be understood in two dimensions: strategy (deciding what to do) and execution (getting it done). Leaders who build organizations with strong execution over long periods of time achieve enduring excellence. The combination of strategy (the choices of what we do versus what not to do) and execution (how well the choices are carried out) becomes the field upon which the Execution Revolution occurs in any given company.

The figure above shows a model of these dimensions using four quadrants of performance:

Quadrant I: Strong Strategy/Weak Execution: In this quadrant, a business has a strong strategy, which typically means a competitive advantage. This advantage can come from offering premium products or services, availability or price. It can be rooted in technology, distribution channels, manufacturing expertise or current customer base. Regardless of whether a company is a start-up or a seasoned business, strong strategy usually leads to growth in sales. A key point to understand is that success and the results of growth start the journey – but this often leads an organization (and its leadership) into Quadrant IV.

Quadrant IV: Strong Execution/Weak Strategy: A company in Quadrant IV usually gets there because it is experiencing the pains of growth. Quite often, sales have outpaced capacity, so leadership becomes focused on strengthening internal operations to address quality, scheduling, hiring, training, customer service, order processing and other issues. In other words, the movement into Quadrant IV is a natural reaction to success in Quadrant I.

Quadrant III: Weak Strategy/Weak Execution: It’s easy for a company to operate in Quadrant III for quite a while before leadership really accepts they are there. The shift into this state of weakness results from gradual decline in growth and profitability, caused by decisions made (or not made) a year or two earlier. In Quadrant III businesses are usually overworked, confused and eventually have a feeling of hopelessness if the issues are not addressed. Typically, the best exit plan for moving out of Quadrant III is to aggressively reallocate resources from low-profitability areas to the growth areas. This sounds easy, but most organizations don’t have the framework, the will or the persistence to make the hard choices it requires.

Quadrant II: Strong Strategy/Strong Execution: Quadrant II is all about balancing growth with profitability and performing predictably. This requires a disciplined organization, one that’s able to execute well enough to address the needs of today and build for tomorrow at the same time. Admittedly, Quadrant II performance is difficult to sustain. Few companies are able to
achieve this kind of performance for long periods of time.

BOTTOMLINE: This is what the Execution Revolution is all about: the process of changing the game with regard to enduring excellence by focusing on how to plan and execute strategy more effectively while successfully managing the surprises along the way.

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