Poor strategy or poor execution?

Due to the Yin and Yang nature of strategy and execution, it is much more likely that they both fail or both succeed, than only one of them is flawed

Turnaround CEOs and Equity Analysts are fond of declaring “the company’s strategy is right, but was executed poorly. We just need to focus on execution now.” I always wonder how do they know? If it was not executed, why are they so certain the strategy was right?

The question matters because if the cause of the poor performance is not understood, it is likely to repeat itself. Focusing on the execution of the same flawed strategy will not help the company.

In practice, it is rare for a company to execute well on a flawed strategy. Managers at all levels will see the return from the strategy fail to materialise and will tone down their commitment early. Without the “flywheel” of results to build internal momentum, execution will rapidly falter.

It is equally unlikely that a company falls down hard in execution of a well thought-through strategy. A key part of the strategic thinking process is a brutally realistic view of the execution capability of the company. The critical assumptions underpinning the strategy are made explicit and investment paced to proving them.

Far more likely is that the initial strategy roadmap was not well thought through, and therefore the company got lost trying to execute it.

The turnaround CEO at the very least needs a new strategic roadmap that avoids the execution pitfalls of last time. Not as newsworthy a sound-bite, however.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: