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HBS The secret to successful strategy execution (why execution typically…
HBS The secret to successful strategy execution
why execution typically fails?
try to executive by restructuring
structural change only produces short term gain
companies that reduce mgt layers observe costs to plummet, but the layers soon crept back in
a brilliant strategy may put you on the competitive map, but only solid execution keeps you there
If not restructuring, what are the 2 levers that matter?
(1) decision rights
decide who's accountable for what
encourage higher-manager to delegate operational tasks
allow managers to focus on developing the strategies needed to fulfill the org's mission
(2) information flow
facilitate info flow across organizational boundaries
ie: issue reports showing performance against targets --> involve multiple departments in interpreting the insights
help field & line employees understand how their day-to-day choices affect company's bottom line
CURRENT CHALLENGE: salesppl routinely crafted customized one-off deals with clients
that cost company more than it made in revenues
SOLUTION: help sales team understand the cost & complexity of these customized, one-off transactions
by establish standardized back-office functions such as
rish assessment
analytical support tools to inform salespeople of cost implications of their proposed transactions
better negotationss
profitability improved
ie: when Omar writes up a new proposal, he mainly works within the norm or relies heavily on directions from Danny, without knowing how much money the company gonna make from this deal
make sure important info abt competitive environment flows quickly to corporate headquarters
top teams identify patterns & promulgate best practices throughout the companies
ie: top executives mingle with unit leaders during mgt meetings & hold regular brown-bag lunches to discuss company's most pressing issues
top 5 traits that enable effective execution
(1) clarify decision rights
blurring of decision rights tends to occur as a company matures
young org too busy getting things done to define roles & responsibilities clearly at the outset
for small biz, everyone knows what others are up to. so for a time, things work out well enough
when company grows, it's get harder to draw the accountability line
ie: each division heads are charged with explicit performance targets
but the division heads can't make important decisions
bc function staff at corporate headquarter controlled spending targets
decision made by division heads routinely overridden by functional staff
OH increases when divisions added staff to create bulletproof cases to challenge corporate decisions
SOLUTIONs
designate accountability for profits unambiguously to divisions
give divisions more control over budget & also remind them to be conscious of the spending decisions bc of the ambiguous accountability above
(2) important info gets to headquarter quickly
if provided up-to-date market intelligence, headquarter's function is to identify patterns & promulgate best practices throughout the biz
OTHERWISE: headquarters tend to impose its own agenda/policies rather than defer to operations that are closer to customers.