The Top CEO Concern Three Years Running: Excellence In Execution

According to the latest results from the CEO Challenge 2010 Survey produced by The Conference Board, the critical issues of excellence in execution and consistent execution of strategy by top management once again remained at the top of the list.

In addition, this latest survey (which was fielded October-December 2009) revealed such growth-oriented challenges as sustained and steady top-line growth, customer loyalty/retention, and profit growth received higher ratings as "greatest concerns."

Also moving up were corporate reputation for quality products/services, and stimulating innovation/creativity/enabling entrepreneurship.

Here's links to their two previous surveys in which execution was named the top priority:

Executing Strategy - Once Again The Top Priority for CEOs

Excellence of Execution is Top Concern for CEOs Worldwide

CEOs are Priming for a Return to Growth

According to results from the CEO Challenge Survey produced by The Conference Board, CEOs appear to be emerging from recession mode and priming for a return to growth.

Other key results from the survey:

• The critical issues of excellence in execution and consistent execution of strategy by top management have consistently remained at the top of the list. 
• Participants in the survey place such challenges as sustained and steady top-line growth, customer loyalty/retention, and profit growth among their top 10 challenges. 
• Also moving up the list of concerns were corporate reputation for quality products/services, and stimulating innovation/creativity/enabling entrepreneurship.

Too Many Strategic Initiatives?

Is your organization "drowning" in too many strategic initiatives?

If you're evaluating far more opportunities than your team can realistically handle, it's time to do a serious screening of those initiatives.

According to Robert W. Bradford, President/CEO of the Center for Simplified Strategic Planning, your organization should only take on between 3 - 10 strategic opportunities, depending on the size, breadth of your team and its resources. (We've found the fewer, the better.)

Bradford recommends a senior team exercise in which you simply ask the team to rate each opportunity on two dimensions – resource requirements and strategic impact on the organization.

• For resource requirements, you may want to anchor the rating on a one to five scale.  In a medium sized company, a one might indicate resources commensurate with an individual employee’s initiative – requiring little management of either manpower or money.  A two could correspond with departmental level resources, a three with two or more departments, and a five would indicate a need for co-ordination of resources across the entire company. 

• For strategic impact, we used one for “nice to do”, three for “important” and five for “critical to our future”.  Note that we do NOT rate on a purely financial basis, and in practice, opportunities with a strictly financial payoff were generally given a three impact rating – that is, a simple boost to profit is not enough to earn an opportunity high marks on strategic impact.

BOTTOMLINE: "If your organization is plagued by a surplus of incremental projects or “just do it” items that are overwhelming mid-level management, this approach to opportunity screening may give you one more way to rationally say “no” to things that will impede your strategic progress."

The Benefits Of A Formal Strategy Execution Process

Scott Cleveland reported that a managing director of the Palladium Group (think: balanced scorecard) conducted a survey that compared two groups, one with and one without a formal strategy execution process in place.

A formal process in their terminology means "strategy maps, derived projects and process improvements from it, and associated key performance indicators (KPIs) with targets reported in scorecard dashboards and cascaded down into the organization."

The results?

• 70% of organizations WITH a formal process were exceeding the performance of their peers in their industry, while in contrast only 27% of those without a formal process were.

BOTTOMLINE: The overwhelming majority of businesses (and particularly, small and midsized organizations) do not have a formal process for strategy execution. They do not have strategy maps, derived projects, process improvements and associated key performance indicators (KPIs) with targets reported in scorecard dashboards and cascaded down into the organization.

What kind of strategy execution process is your organization using?

Welcome Business Strategy Execution!

Welcome Business Strategy Execution, Inc. to the growing network of licensed Six Disciplines business coaches.

If you're in Rhode Island or Massachusetts, and want to find out more about the services offered locally by Six Disciplines, contact Jim Crisafulli at 401-356-0030 or visit them on the web.

Top Companies for Leadership Reveals Differentiators

HR consulting firm Hewitt has released their "Top Companies for Leaders 2009" study, which reveals that leadership is more important than ever before.

Their research has found that the Top Companies for Leaders are never satisfied, and use a number of tools in their leadership and talent planning efforts. In short, they bring a "measurement mind-set" to the often inexact process of developing the next generation of leaders.

Click here to view the highlights of the report.

Creativity and Purposeful Innovation

"Creativity, a quality more traditionally associated with artistic endeavors, has been slow to find its acknowledged place in the business world. "

So begins an article from the Harvard Business School's Working Knowledge site called "Getting Down to the Business of Creativity."

Key points:

• Business leaders must manage and support creativity just as they would any other asset.
• People have their best days and do their best work when they are allowed to make progress.
• Their research suggests that most managers are not in tune with the inner work lives of their employees.
• For the longest time, creativity was considered the work of a genius operating on their own, however, there's a construction of creativity that involves many other actors.

BOTTOMLINE: Creativity, when sought after and encouraged, MUST be done purposefully.

Innovation, which is really just another name for creative problem-solving, must be done in such a way as to support the overall strategy of the organization. Discipline V - Innovate Purposefully is a discipline that is detailed in the award-winning handbook Six Disciplines for Excellence. It is not an isolated event in an annual or quarterly cycle; it's a mindset that permeates the culture of an excellent organization.

How To Build Accountability Into Your Organization

Many of the top-performing organizations we work with every day - have expressed a real need to build accountability into their organization.

Take a quick minute – and consider the following key questions:

• Does each of your team members understand exactly what they are responsible for?
• Does your leadership team set consistent expectations for accountability?
• Do your new team members know exactly what’s expected of them – Day 1?
• Are all of your team members self-managing?
• Do you have a standardized way of monitoring progress? Weekly? Monthly? Quarterly
• Does your hiring process focus on attracting individuals who can be self-managing?

BOTTOMLINE: Here are some steps to consider when considering organization-wide accountability:

• Understand your company's core competencies
• Validate your team members
• Create a culture that grows and develops its people
• Identify the systems and processes that are now in place throughout your company and rely on your team members to make the systems and processes more efficient and more effective
• Get the right people in the right place
• Get all team members to understand that what they do affects everyone else in the company
• Build a strong second-tier management team that can take the company to the next level
• Hold everyone, including yourself, accountable
• Raise the bar by bringing in top talent

Top Five Reasons Why Strategic Initiatives Fail

Next time you consider embarking on a strategic initiative, be aware of the following five factors that are common elements of failed initiatives (from IndustryWeek's article: "Top Five Reasons Why Strategic Initiatives Fail")

1. Strategy is Not Clearly Communicated to the Stakeholders
2. Lack of Support by Key Leaders in the Organization
3. Decision-Makers Do Not Understand the Relevance or are Unable to Measure Progress
4. Lack of Impact on Employee Compensation
5. Technology Needed for Implementation is Not Available

Achieving Sustained Growth - Take Two

As reported in the Harvard Business Review's Daily Stat, the consulting group Bain's updated global database of Sustained Value Creators found only 12% of companies worldwide managed to grow profits and revenues more than 5.5% over the 10 years and earn back their cost of capital. 

Here's another take on the same issue: 

As reported in the best-selling book Six Disciplines Execution Revolution, (How Big Is The Challenge, page 29), a recent McKinsey study concluded that few large global companies outperform their competitors on both revenue growth and profitability over a decade. The consulting firm analyzed 1,077 companies according to revenue growth, profitability, and both measures. This study concluded that thirty of these companies were superior, based on growth over this period. Ninety-nine were superior performers by profitability. And only nine (.008 percent) out of 1,077 companies were superior in both categories.

BOTTOMLINE: Achieving sustained, profitable growth is very challenging, and the odds of success are low.  Achieving such balance and predictability is extremely difficult, and therefore, extremely rare. While this fact may be viewed as a deterrent to some, it provides insight into an enormous opportunity for building a business that executes more predictably than most. 

Trends Affecting Leadership Development in 2010

The most significant emerging trends affecting leadership development, as identified in a Human Resources Executive recap of the 2009/2010 Trends in Executive Development: A Benchmark Report, are: 

1. Impact of the Economy. It means that there is more pressure now than before to prepare leaders who can weather the storm and navigate their companies successfully through the turbulence.
2. Bench Strength is No. 1. "Lack of bench strength" was identified as the second most influential factor impacting executive development and "Increasing bench strength" was the top key objective in executive development.
3. Accelerate the Development of High Potentials. Respondents placed much greater emphasis on the identification and development of high potentials in the 2009 survey than in any of the prior surveys.
4. Strategic Thinkers and Those Who Can Inspire. Areas in which the next generation of executive leaders are weak are the ability to think strategically, lead change, create a vision and rally others around that vision.
5. Better Metrics. A standard for measuring participant outcome has become more universal. This is a notable shift from just four years ago, when evaluation metrics was a much more fragmented practice.
6. Leader-as-Teacher Model. The use of leaders as teachers has become a best practice that is growing in popularity. Respondents noted that it is a particularly effective component in their executive-leadership programs.

Read a lengthy excerpt of the study here. 

Do You Need a Consultant, or a Business Coach?

What is the difference between a business coach and a consultant?

A consultant completes projects for you based on their own technical expertise. Often, a consultant will provide suggestions and direction for what needs to be fixed, however, rarely will they help the business leader actually implement the fix.

A business coach guides you in growing your business:

• Business coaches provide business leaders with awareness, education, and accountability through regularly scheduled coaching sessions and other proven, best-practices business performance tools.
• Instead of getting paid for billable hours or project work like consultants, business coaches get paid for the value they deliver to clients.
• Business coaches help business owners become aware of their blind spots, and leads them to discover the possibilities in their business. 
• Business coaches provide information to help build business best practices and close the gaps and accountability to meet performance objectives.

BOTTOMLINE: Not every business needs a consultant, but EVERY business needs a business coach.

New Leaders Need Coaching Too!

Only 23 percent of new leaders — or employees who have advanced from being individual contributors to supervising or managing others — receive the coaching they need to reach their full development potential, according to a survey conducted by Right Management, a provider of integrated human capital consulting services and solutions.

Key findings from the survey:

• While organizations see value in providing coaching to strategic and developing leaders, coaching is not offered as frequently to new leaders.
• Most new leaders advance in their careers due to their proficiency with technical skills, but they don’t necessarily have the leadership abilities needed for success in their higher-level positions.
• New leaders would benefit most from coaching in emotional intelligence skills. “Coaching in emotional intelligence provides self-awareness, builds management and social skills, and assists one to become more empathetic toward others and more understanding of oneself.
• New leaders don’t need coaching in technical skills as much as they need guidance in how to treat others.”

BOTTOMLINE: “New leaders need as much development as strategic and developing leaders. They are the future leaders of the organization. Smart organizations focus their resources to develop these individuals and ensure they deliver on their much-anticipated success.”

Identifying Growth Leaders In Your Organization

According to a Wall Street Journal article, "Growth leaders - most companies have managers who can turbocharge results. The trick is finding -- and nurturing -- them."

"Indeed, powerful catalysts for organic growth often exist deep within an organization, hidden and untapped. We're talking about a special breed of midlevel managers -- men and women who possess the vision, leadership and entrepreneurial talents that together make up what we refer to as a growth leader."

Find them, recognize them, and support them - or your competition - WILL!

How to Make Organizational Change Enduring

Here's a real shocker:

In a survey of 3,300 senior managers and human resource professionals reported by Rob Lebow in his Washington CEO magazine

• 75% of all organizational change programs fail

Why is change so hard?

Most organizations say their most important assets are their people, but few behave as if this were true. Change initiatives typically devote most budgets to structural issues such as technology and processes, not staff issues. There is still a whole notion of focusing on tangible assets and their impact on the bottom line, rather than the intangible assets, which are people. Organizations don't adapt to change; their people do.

Constant change in the organizational environment mean that leaders must not only learn about change and its impact on people and systems, leaders must be able to master the process of implementing change, just as their employees must learn to accommodate change.

Why do most change efforts fail?  Here's an analogy: As with a transplanted flower, it initially wilts after the transfer. However, in time with proper care, it stands upright again. With continued good care, it blossoms. The same holds true with the introduction (transplant or transfer) of a new system (a new idea, business-building method, best-practices, business improvement processes), the productivity curve drops (wilts) - but given proper support and care, the productivity curve loops upward on a continuous positive trend.


Transition trauma is little understood by business leaders, but it is a fact of organizational change.

Some misread the downward curve (wilt) as failure, often triggering inappropriate actions; rather then understanding it as transition trauma that is a normal readjustment, realignment and adaptive phase of change that requires trust, patience and on-going support.

Replace Annual Performance Reviews? Where Ya' Been?

In his book, Just Ask Leadership: Why Great Managers Always Ask the Right Questions, author Gary B. Cohen proposes a "radical practice": 

......replacing annual performance reviews with monthly ones. Monthly! The heart stops at the thought. And yet...take a look at the process the author describes. The reviews are conversations about the best way forward, not critiques of the past. Look in particular at the issue of timing. Might not this approach, if practiced regularly, lead to a whole different way — a much more mutually appreciative way — of looking at the job and the task at hand?

Sorry - but from my standpoint, regular reviews of performance need to be conducted even more frequently than monthly.  How about weekly (just a progress/synch meeting - but it's still better than monthly!)

An excerpt of chapter 2 of this book is pushed here at Strategy + Business magazine. 

Execution – The Fine Art of Getting It Done

(The following article was written by Eric Kurjan, President of Six Disciplines Ohio/Indiana. Six Disciplines brings “big company” process improvement to organizations looking to break beyond the status quo. For more information visit www.SixDisciplines.com/Ohio, or call 419-348-1897)

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Execution – The Fine Art of Getting It Done!

Most of the organizations I run into fall into one of two camps – the first and most common is the organization that does not have a strategic plan to guide their business. They have been meaning to build one but haven’t gotten around to it. They see it about as exciting as cleaning the leaves out of the gutters on their house.  The other camp is the organization that has a strategic plan but does not use it.  In fact, this document has not seen the light of day since it was neatly typed and added to the “Strategic Planning” notebook located on every leadership team member’s bookshelf.


So every organization needs to start with a strategic plan, the road map or blueprint of where we are going, what will we do to get there, and how we will do it.  Those three basic tenets are the key drivers of strategy formation. The following two disciplines of the Six Disciplines will lay-out the strategy and planning portions and give you guidance in building your plan:


Discipline I – Decide What’s Important:  The process must  include a predictable, repeatable method for assessing your organization’s Mission, Values, Vision, Strategic Position, and Vital Few Objectives (VFOs - a.k.a. goals or objectives).  In this step, setting the Vision is the single most important exercise in forming the strategy.  It is the picture of “where” we want the organization to go in the next five to ten years. Once we have defined our destination, we need to define “what” we need to do to get to that destination. Creating this “what” step is referred to as forming our Vital Few Objectives (VFOs). 


Discipline II - Set Goals that Lead: The next we need to determine and set goals that are measureable, allowing us a way to develop clear targets and deadlines.  There is nothing vague or squishy here – hard numbers, revenue dollars, margin percentage, dates, units.  Real goals have real outcomes by which we can measure our progress. Also, this is where we need to define the projects or initiatives that will help us get to our goals.  If our Vision (where) is to have “regional geographic presence” and our VFO (what) is to “open five offices in the next five years” then our Initiative/project is “how” to open the first “new San Francisco office in 2010”.  It is in this step we identify all the tasks associated with opening that office, including everything from locating space, working with a realtor, signing contracts, designing the build-out, selecting the contractor, hiring personnel, etc, etc. etc.  You get the picture.  There are tons of tasks for an initiative or project to be successfully carried out and these tasks need to be assigned and more importantly completed.  These Initiatives and the associated tasks are intended to change the trajectory of the business.  We do many things to “run the business” but what do we need to do to “change the business?” These are the items that drive activities of “every person, every day.”


Now that we know, “Where”, “What” and “How”, we can move on to the next component, execution. We will pass over Discipline III – Align Systems (aligning resources - people, technology, policies, and processes). Next, we need to define the steps to turn the plan into action. Experience has shown us that while the CEO and leadership team “own” the strategic plan and are accountable for it, they cannot be completely responsible for its proper execution.  Even a well-crafted strategy is subservient to superior execution.  And, most successful business leaders agree, they’d rather have a “B” strategy and an “A” execution, than the other way around. In fact 90% of organizations fail to execute their strategies successfully.  We also know lots of things control the success rate of execution in organizations including their ability to manage communications, accountability, discipline and focus.


Without a doubt, execution is the tougher, more critical side of the strategy/execution - getting it done, measuring progress along the way, finding what doesn’t work early enough to make course corrections so that Initiatives can support the Vital Few Objectives (VFOs).


Discipline IV - Work the Plan:  The execution phase is setting the stage for “who” will do the work and “when” will it be done.  This is where we must assign the work that needs to be done to help the organization achieve the goals to arrive at the destination. Set real tasks with real deadlines and real outcomes.


The best way to organize the execution plan is to create a personal plan for your specific assigned work.  We call this an Individual Plan or IP.   The IP consists of two key components.  First, the normal everyday tasks as described in your job description are called sustaining or “Run the Business” activities.  The second are the tasks or activities which are intended to “Change the Business”.  These are the date-driven tasks that are supporting the initiatives/projects we have chosen to implement to truly change the direction of the company and support the key objectives (VFOs). 


To re-cap, if one element of our Vision (where) is to have a “regional presence” and our VFO (what) is to “open five regional offices” and our Initiative (how) to support the VFO is to open the “new San Francisco office in 2010,” then the tasks to support this change of business trajectory are found in a team member’s Individual Plan (who/when).  In many cases these tasks are spread among several team members and hence, found in several different team members’ IP’s.  The project may extend over multiple quarters but we are most concerned with assigning the work we can or need to get done in this upcoming quarter.  We must build an IP which is practical, achievable and drives the business/organization in the time and direction we desire.


 It’s the delicate balance of both strategic planning and execution that separates good organizations from great organizations. But the bottom line is that even the best defined, designed and lay-out plan means nothing if you do not have a way to get the work done. Although, conceptually the Individual Plan (IP) seems logical and practical, the challenge is to stay focused on the work you have committed to for the quarter and not to be diverted, distracted or lured to do work which does not lead the organization to the destination. I will give you more hints and tips on strategic planning execution next month.

To Understand Strategy, Look At What People Are Doing

Here's a profound observation from management guru, Gary Hamel:

"If you want to understand the real strategy, look at what people are doing!”

Indeed, more often than not, there are disconnects or gaps between the strategy that is formulated by the senior leadership team, and how the strategy is executed by the rest of the workforce.

Why the gaps?

Could be for a number of reasons:

• The strategy is not accessible/available to the workforce
• The strategy is not sound
• The strategy is not well understood

Most likely, the recognition and reward system that drives the daily activities and behaviors of each person in the workforce is not aligned with the strategy of the organization. How to combat this situation?

1. Make the strategy as transparent as possible. The mission, vision, values and strategic position of the organiztion MUST be transparent and available to everyone within the organization.
2. Establish Vital Few Objectives (VFOs). Most organizations have 2 to 5 times as many projects and initiatives going on than they can possibly address. Reduce the number of key objectives. Keep the VFOs simple - financial, customer, production, people - and let everything else go. Be very focused on a few things, and do them well.
3. Make the VFOs measurable. Define measures, targets, and create a small number of initiatives that support the VFOs. Assign responsibility and accountability to someone for each VFO.
4. Define an Individual Plan for each person. On a quarterly basis, develop a plan for every individual, assigning activities from each initiative. Have each person track time and progress toward achieving the stated outcomes. Measure progress and update status weekly.
5. Align recognition and rewards based on the achievement of outcomes. Recognition and rewards systems are not to be based on activities, but results.

BOTTOMLINE: What people spend time on should be based on how well your strategy, goals and initiatives are articulated. Reward and recognize workers based on how well goals were achieved (results), not on how much activity took place.

Strategy Execution - The Scary Statistics

Most organizations suffer a major disconnect between strategy formulation and its execution.

And while it's more pronounced in larger enterprises because of complexity, smaller organizations need to make sure they do something (anything!) to remove the barriers to execution.

Unfortunately, the research doesn't bode well for most of us.  Consider the following:

• 90% of well-formulated strategies fail due to poor execution. 
• 60% of typical organizations do not link their strategic priorities to their budget.
• Two-thirds of HR and IT organizations develop strategic plans that are not linked to the organization's strategy.
• 85% of leadership teams spend less than 1 hour per month discussing strategy.
• Only 27% of a typical company’s employees have access to its strategic plan.
• 70% of middle managers and more than 90% of front-line employees have compensation that is not linked to the strategy.
• Most devastating, 95% of employees do not understand their organization's strategy.

BOTTOMLINE: Strategy must be managed explicitly, like any other major process in an organization. In most organizations, this process either does not exist or is incomplete. However, 70% of organizations that used a formal process to manage strategy out-performed their peers.  What formal process are YOU using?

The Stop Doing List

The essence of strategy is deciding what not to do. If your organization doesn't develop the discipline to do this, our wonderful free market system will.

BusinessWeek recently published an article entitled "Are You Losing Control of Your Business?" in which it advised: "No. 1 on your to-do list? Make a "stop doing" list"

BOTTOMLINE: As part of the annual strategic planning process, the Six Disciplines strategy execution program has, in Discipline I. Decide What's Important, a distinctive step called "Agree What To Stop Doing."