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Published: April 19, 2010

 
 

Putting Strategy into Practice

Celebrating a “must-read” concept, based on data from thousands of companies: Information flow and decision rights are integral parts of the strategic process.

Note: This article refers to the HBR anthology Must-Reads on Strategy, which includes “The Secrets to Successful Strategy Execution” (beginning on page 81). 

Of all the false distinctions that dog business thinking — leadership versus management, profitability versus growth, short term versus long term — the most pernicious is the separation of strategy (where the company should go) from execution (getting there). Strategy without execution is daydreaming. What good is a blue ocean to one who cannot swim? Execution without strategy is pointless, even dangerous. What profit is there in doing the wrong things well?

Worse, the separation of strategy and execution lets both strategists and operators off the hook; it means that no one is held accountable for poor results. Strategists can claim that there is nothing wrong with the corporate plan; “those bozos just couldn’t execute it.” Those charged with implementation, for their part, may accuse the strategy of being impractical. Or they may devote their lives to the small tactical wins that made “the man in the gray flannel suit” such a sad sack, really. Strategy and execution are the left and right hands of the same organizational body: They should wash each other.

So it was profoundly right that the editors of Harvard Business Review (HBR), in compiling a new collection of their 10 most significant articles on strategy (Must-Reads on Strategy, [Harvard Business Press, 2009]), chose to devote half the volume to articles about execution. Leading this group was an article I commissioned when I was the editor of HBR: “The Secrets to Successful Strategy Execution,” by Gary L. Neilson, Karla L. Martin, and Elizabeth Powers, first published in 2008. It is a great honor for the authors to be included in the company of Michael Porter, Jim Collins and Jerry Porras, Clayton Christensen, and W. Chan Kim and Renee Mauborgne. And it is being celebrated at their firm, Booz & Company (which publishes strategy+business, and where I now work as chief marketing and knowledge officer).

But the article is also worth celebrating more generally — because it is a harbinger of the closing of that false gap between strategy and execution, and of a new understanding of the role of capabilities in driving strategy.

The Missing Link: Data

When I was running HBR, we on the editorial team occasionally discussed our frustration that there hadn’t been a really new, big idea in strategy for 20 years. We tried to fill the gap by publishing a lot of material about execution. But it was often narrow, and although the world changed rapidly, the sense-making tools available to executive decision makers didn’t expand very much. A lot of it is brilliant and important, but nothing sets the editorial heart racing like a truly new, big idea or a newly opened domain of knowledge.

The problem was ignorance — or, more precisely, a tapering off in the availability of data relevant to corporate strategy. As Walter Kiechel writes in his excellent The Lords of Strategy: The Secret Intellectual History of the Corporate World (Harvard Business Press, 2010), strategy as we know it today came into being in the 1970s and ’80s, when a handful of consultants and academics dug up and rigorously analyzed data on costs, customers, and competition that companies simply hadn’t studied before. Prior to that, as Kiechel points out, many companies didn’t even know their own costs, let alone their competitors’ — indeed, microeconomic theory argued that competitors’ costs would be about the same. Instead of “strategy,” companies had “planning” and schools taught “policy.”

When the new data became available, it changed how companies went to market. But the one remaining data-free zone was execution: No one fully understood the internal capabilities that explained why Company A managed to deliver on its brilliant strategy, while Company B, equally brilliant in its intent, stumbled coming out of the gate. Consultants and scholars had many hypotheses, but no real answers. Now some answers are emerging, with Neilson, Martin, and Powers making one of the first major contributions. Consequently, a company can now be as rigorously analytical about the way it carries out a strategy as it was in constructing it in the first place.

 
 
 
 
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