Starting an Execution Revolution

Written By: Sam Savage

Published Date: June 17, 2008 Last Edited: June 17, 2008

By Lepsinger, Richard

EXECUTIVE SUMMAR Companies frequently develop vision and mission statements about being at the top of their industry, the great service they provide to customers, and their rewarding work environment. Yet more often than not, these statements are so far from reality that they become joke fodder for customers and employees alike. It doesn’t have to be this way. Your company really can keep its promises- but first you must create a culture of execution.

Creating a culture of execution begins with the knowledge that developing plans and strategic initiatives is just the starting point. The foundation for execution also requires adopting the mindset that a highly skilled and engaged work force – while important – will not ensure effective execution.

Many leaders have a blind spot in this area. Either they believe that their job is setting the direction and execution is the responsibility of lower-level managers or they assume that if they clearly communicate an exciting vision of the future to an engaged work force, everything else will fall into place.

A survey that we conducted at OnPoint Consulting shows how widespread the problem of ineffective execution is. Results show that almost half of those surveyed believe there is a gap between their organization’s ability to develop a vision and strategy and its ability to execute that strategy, and even more – 64 percent to be exact – lack confidence that the gap can be closed. But companies can make a conscious effort to close the execution gap. You simply have to take some tried and true steps to creating a “get it done” culture.

In laying the foundation, recognize that execution starts with a plan. A solid plan can immensely improve the efficiency with which a project is carried out. It facilitates the organization and coordination of related work activities, prevents operational delays and bottlenecks in work processes, helps people avoid duplication of effort, and helps employees set priorities and meet deadlines. It also helps you prepare for potential problems before they happen so that one snag in the system doesn’t throw everyone completely off course. Remember that the best and most useful plans are flexible starting points that can be easily changed to address new needs or challenges as you encounter them.

Ensure plans are aligned and coordinated across the organization. A common snafu at many organizations is that the head of one department will implement a new initiative without considering how it will affect the overall company or specific departments. When a New York-based mutual insurance and financial services company realized it wasn’t going to meet certain financial goals, division heads focused on cutting expenses in their individual departments. Unfortunately, they did not develop operational plans that were compatible across the organization or that helped coordinate the day- to-day activities required to achieve overall business objectives. In fact, these individual cuts made it difficult to maintain support and service to internal customers.

When the CEO became aware of the problem, he worked with his executive team to clarify cross-organizational initiatives that were priorities for the entire company. Then each divisional leader identified the specific cost reduction targets for his or her division that would support the achievement of the corporate objectives and initiatives while not inhibiting the ability of other departments to achieve their goals.

Finally, in setting the tone for execution, clarify and clarify even more. It’s often difficult to get things done because people don’t understand their role, responsibilities, or what exactly is expected of them. One reason employees aren’t always clear on what they should be doing and when is because their manager assumed that they would understand what needed to be done.

Don’t underestimate the importance of taking time to make certain that everyone is on the same page and understands what needs to be done. Clearly communicating roles and responsibilities and checking for understanding is never a wasted effort.

Convene and electrify the team

People work better if they know exactly what’s expected of them. Establish clear expectations. Goals help everyone focus on important activities and responsibilities. They encourage people to find more efficient ways to do the work, and they facilitate constructive performance feedback by ensuring that managers and direct reports or team members have a shared picture of expected outcomes. Setting specific performance goals or task objectives is also an important form of clarifying. Performance improves because specific objectives guide effort toward the most productive activities, and challenging objectives tend to energize a higher level of effort.

Goals should be set even for those things that can’t be easily measured. It’s much easier to measure an improvement in sales than it is to measure an improvement in service quality or customer satisfaction.

Lack of clarity on goals and expectations can have a significant impact on business performance when not put in the context of organizational objectives. For example, in the early 1990s, Sears experienced a rash of complaints about its automotive service business in more than 40 states. The company was accused of misleading customers and selling them unnecessary parts and services. What had happened was that Sears had tried to boost flagging revenue by establishing new goals and incentives for its auto center employees. Minimum work quotas were increased and productivity incentives were introduced for mechanics. The automotive advisors were given product-specific sales quotas and paid a commission based on sales.

Since failure to meet the new goals could lead to a transfer or a reduction in work hours, the pressure on employees to produce was intense and some desperate employees resorted to unethical practices. It appears that management did not anticipate the unintended consequences of the goals they put in place or clarify the line between legitimate preventive maintenance and unnecessary service leaving employees to chart their own course. The total cost of the settlement was estimated at $60 million.

Don’t micromanage your entrepreneurial-minded employees but do monitor them. Your entrepreneurialminded employees – those who take individual initiative and do an effective job without much direction from you – are the gems that make your company special. But just because you feel like you can let them loose with a project or client doesn’t mean that you shouldn’t follow up with them periodically. In fact, when you empower employees in this way, monitoring becomes even more important.

As your employees take on new roles and responsibilities, they are using new skills, working in new arenas, and making and implementing decisions that can have a powerful effect on your organization’s success. You may be concerned they’ll think you’re micromanaging them if you’re keeping an eye on things. Don’t be. When done right, monitoring does not have to feel like micromanaging.

Encourage employees to share bad news openly. Getting information from employees can be easier said than done. If there is a problem, mistake, or delay, they may be hesitant to inform you because they fear your reaction or think it will make them look incompetent. Even an employee who is not responsible for a problem may be reluctant to report it if he or she is concerned about being on the receiving end of an angry outburst. It’s essential to be careful about how you react to information concerning problems.

Strive to always be constructive and non-punitive. When an employee presents bad news, express appreciation for the accurate information, no matter how negative it may be. Respond quickly to the problem with specific actions to deal with it. Help your employees learn from mistakes collectively rather than singling anyone out.

Decisions: deal makers or deal breakers

Balance careful analysis of a problem and decisive action to solve it. Effective leaders move quickly to deal with a threat or problem. Nevertheless, they know they must make an accurate diagnosis of the problem and identify relevant remedies before taking action. Otherwise, they may end up implementing ineffective solutions or solving the wrong problem – both of which can make things worse instead of better.

Carlos Ghosn at Nissan is a leader who is able to balance analysis and decisiveness and has a reputation for being able to get things done. When Ghosn became CEO in 1999, the company was in a state of serious decline and had lost money in all but one of the previous eight years. The problems at Nissan included excessive costs, declining sales, and weak management. By the end of 2000, however, the company was once again profitable and the 2001 earnings for Nissan were at a record high. The rapid turnaround at Nissan was accomplished with a series of decisions and actions that represented a good mix of analysis and decisiveness.

Purchasing costs represent 60 percent of the cost of a vehicle and at Nissan they were excessive. Ghosn formed a cross-functional team with representatives from relevant functions such as engineering and tasked them with finding ways to reduce purchasing costs. One solution was to reduce the number of local suppliers by half and place large orders with a smaller number of global sources. Another solution was to eliminate overly exacting specifications imposed on suppliers by Nissan engineers. These and other changes made it possible to attain Ghosn’s goal of reducing purchasing costs by 20 percent. Production overcapacity was another source of unnecessary costs. The company could manufacture a million more cars than it could sell, but any reduction in production capacity would have to be consistent with plans to increase sales in the future. Ghosn closed five factories in Japan and eliminated more than 21,000 jobs. To simplify production operations at the remaining factories and make them more efficient, Ghosn reduced the number of different car platforms and power train combinations.

Years of declining sales at Nissan were caused by a lack of customer appeal for most of the company’s cars. Designers were taking orders from engineers who focused completely on performance, and there was little effort to determine what types of cars customers really wanted. To increase the appeal of Nissan vehicles to customers, Ghosn encouraged the designers to be more innovative and gave them more authority over design decisions. Several new models were introduced, and for the first time in many years Nissan had cars that excited customers both in Japan and abroad.

Saving the company also required major changes in human resource practices that were strongly embedded aspects of the company culture, such as guaranteed lifetime employment, and pay and promotion based on seniority. These changes would primarily affect managers and other salaried employees. One change was to establish a merit pay plan. Instead of being rewarded for seniority, employees were now expected to earn their promotions and salary increases through effective performance. Areas of accountability were sharply defined so that performance could be measured in relation to goals. New bonuses provided an opportunity to earn up to a third of one’s annual salary based on performance.

To facilitate management development, Ghosn delegated imponant responsibilities and provided opportunities to learn from experience. The changes in human resource practices made it possible to replace weak middle and upper-level managers gradually with more competent successors.

Leaders should always use a systematic, logical analysis to identify the cause of a problem before taking action. Great leaders know when additional information or analysis will only delay action without adding value. To facilitate a rapid, effective response, top performers anticipate potential problems and disruptions and develop contingency plans in advance.

Make decisions as close to the action as possible. The key here is ensuring that decisions are being made where the best information is in order to increase speed and quality of responsiveness. It’s not uncommon for organizations to swing back and forth from centralizing work and processes to decentralizing as they try to deal with a strategic issue or competitive threat.

Organizational redesign is not necessarily the best solution to a competitive or strategic problem. Leaders frequently find that the change just presents a different set of problems and issues. The key is to determine what processes and work would benefit from centralization or decentralization.

Facilitate informal and spontaneous interaction among employees. Your employees’ informal relationships are key in getting things done. The ability to connect with a colleague “in the moment” when you have a problem or new information is essential for effective execution.

When people are in the same location, it’s easier to arrange the work space so that employees can easily interact with one another on work and nonwork topics. Employees in these organizations can meet up in a break room or kitchen area, but more and more frequently organizations have employees who are working all over the place, whether they’re out in the field or working from home. These global organizations use technology – virtual workspaces, video conferencing, instant messaging, electronic social networks – to provide proximity and access to a dispersed group of people.

BMW’s new factory, which opened in Leipzig, Germany, in May 2005, is an example of teamwork enhanced by physical design. Open work spaces cascade over two floors and unfinished car bodies move along a track that runs above offices and an open cafeteria. If the assembly line slows, engineers feel the pulse of the plant change and can quickly investigate the problem. And weekly quality audit meetings in a plaza workers pass on their way to lunch ensure that everyone is quickly aware of production problems. The combination of togetherness and openness sparks impromptu encounters among line workers, logistics, engineers, and quality experts.

Turn your performance management system into a business tool. This system is one of the most important tools leaders have to ensure effective execution. It ensures goals are aligned across levels and work units, helps people know what they need to do and how they need to do it, and allows leaders to monitor progress toward goals. When used effectively, it provides early warning when things are off course and allows time to get back on track. If, however, you view performance management only as an end-of-the-year review along with a form to fill out for human resources, then it isn’t going to help you get things done any more efficiently.

When you put these elements in place at your organization, you’ll see a general improvement in individual, team, and overall organizational ability to execute plans and initiatives. Your employees will start getting things done more easily and consistently, and these regular wins will inspire them to redouble their efforts.

One day you’ll look around and realize your mission statement actually rings true – and that’s one of the best feelings you’ll ever have as a leader.

The best and most useful plans are flexible starting points that can be easily changed to address new needs or challenges as you encounter them.

When done right, monitoring does not have to feel like micromanaging.

Leaders should always use a systematic, logical analysis to identify the cause of a problem before taking action.

Richard Lepsinger

Richard Lepsinger is president of OnPoint Consulting, an organizational and leadership consulting firm that combines practical, research-based tools and business simulations to help clients translate issues into action. Lepsinger has 20 years of experience as a human resources consultant and executive. He was a founder of Manus, a human capital consulting firm, which he grew to more than $4 million in revenue before selling it to Right Management Consultants. Lepsinger is also the co-author of three books including Flexible Leadership: Creating Value by Balancing Multiple Challenges and Choices.

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