Teach your key employees to execute well and statistics show you’re already ahead of the competition. Don’t do that, and you risk becoming like the team you first see in this video.
An in depth study on business success by Harvard Business Review, McKinsey and Dartmouth University showed that there is a formula for sustained success.
Over the last 25 years, companies such as Avery Dennison, Campbell Soup, Citigroup, General Electric, Home Depot, Nucor, Procter & Gamble and Target saw their share price increase by 1,870% (versus 495% for the S&P500 index). Their market capitalization increased some 4,040% or 162% per year. And their annual revenue growth was 110% per year (all numbers adjusted for inflation).
The key ingredients for such outstanding success? Clear strategy; flawless execution; a performance based culture; and well developed internal talent.
Seems easy enough right? Yet each year organizations spend billions of dollars investing in strategy that never actually leads to results. They hire entire teams to work creating a plan designed to take their company to the next level. Ironically, however, organizations report that less than 50% of these plans actually move through the implementation phase. Where is all this stargazing getting us, if the plan gets left on the conference room white board or sits on shelves in binders?
- $10 billion: annual U.S. spending on strategic analysis and strategy formulation.
- <50%: Successful implementation of plans – as reported by managers.
- <10%: Successful implementation of plans – as reported by outsiders.
- 64%: C-level executives who say that being able to execute, to react quickly to changing opportunities and technologies, is critical for their success.
Yet nearly 80% of them said that it is nearly impossible to achieve.
- 69%: Leaders who are NOT confident in their organization’s ability to execute strategy.
The top 10 reasons why execution is difficult
- Past Habits, 66%
- Organization Culture, 64%
- Senior Management, 52%
- CEO/President, 50%
- Middle Management, 46%
- Economic Conditions, 44%
- Budget, 40%
- Way We Work Together, 34%
- Other Employees, 30%
- Government Regulations, 26%
The top 5 internal factors that prevent successful execution
- Unclear accountability for execution, 52%
- Internal resistance to change, 48% (“we’ve always done it this way”)
- Lack of buy-in or agreement on critical execution steps or actions, 40% (perhaps because the right people were not involved in setting direction or action plans)
- Employees’ lack of ownership, 38% (lack of involvement)
- Lack of a model to guide strategy execution, 27%
Execution is the missing link between aspirations and results, and as such, making it happen is a leader’s most important job. While failure in today’s work environment is often attributed to other causes, the biggest obstacle to success is the absence of execution. Without execution, breakthrough thinking on managing change breaks down.
Clearly, there is a fundamental gap—call it the Execution Gap—between the best-laid plans and their realization (download white paper here).