Tuesday, August 01, 2006

IT ALL COMES DOWN TO EXECUTION

There is much we can learn from failure, both in our own lives and business. Personally, I learned more from being part of a failing company years ago than I did when the day-to-day operations were showing promise. Through analyzing the interworkings of these types of experiences one can identify the true factors of the demise and draw correlations between them. And by identifying these factors one is able to deduct what appropriate actions could and should have been applied. This is a short collection of a few “lessons learned.”

Vision

To be successful a company needs to align its people with a common end goal or vision for the organization to achieve. This ensures that everyone is aligning their individual duties to reach for this goal; creating a commonality in the interworkings of the organization. The importance of a vision statement is not simply the one-time event of stating a vision and then implementing it. Vision is an on-going creative process, requiring a leader to continuously reflect on it and reevaluate. Vision that is not clearly stated can't be shared, and a vision that is not shared, simply doesn't exist. If a business does not communicate with its team, it cannot expect the vision to become a reality. And if a business could get to where it was going without a team, it would be there already. You get my point.

Vision is required not only to see the sum of the parts but also to steer the business in the right direction. Corporate sustainability requires a complete understanding of the components of the organization and how those components relate to the financial, social, and environmental value drivers of the firm. With this understanding, a vision can be developed that relates the parts of the organization to maximize performance and ultimately maximize the value of the firm over the long-term. Long-term is a key word here. Enron had a vision that was shared by the multitude of new employees, but failed to encompass a vision that would delivery benefits to shareholders over the long-term.

To ensure that a vision is created, reevaluated, and communicated an organization requires strong and competent leadership. Too often we have seen success come to excellent, as well as not-so-excellent, leaders. Encouraged by Wall Street, the unlimited flow of capital, and their ego and importance, too many executives become enamored with the value of their stock holdings—hence Steve Case and other top AOL executives during the day. Once in that frame of mind, pressures for quarter-by-quarter growth, regardless of cost and resulting stock appreciation, overwhelm decisions that would produce balanced growth and profits over time.

Leadership & Management

Ahhh, the ideal characteristics of a good leader which include among other traits: honesty, accountability, and courage. I know this may sound overly simple but I’ve often witnessed leaders failing due to the lack of challenging other’s views and decisions. Leaders can fail their organizations by taking the easy way out and co-signing other’s ideas no matter how destructive the implications could be. An important part of leadership is realizing that one’s opinion is valuable, and that sometimes one may have to take some heat for voicing it. It is a constructive spirit of discontent. Some would call this criticism, but there's a big difference in being constructively discontent and being critical which a good leader needs to be. No one can lead without being criticized or without facing discouragement. A potential leader needs a mental toughness.

There is another component one must address when talking about corporate leadership and management and that is the board of directors and their relationship with top executives. Corporate boards have long had reputations as being too clubby with company executives. And it seems that no matter how many "outside" directors serve on boards, most are considered management rubber-stamps. What is troubling is that too many boards are filled with directors who have outside consulting deals or business ties with other interests other than that of the company.

There is a distinct difference between that of a leader and manager. Managers are employees or ‘agents’ of the owners to whom they have direct responsibility. They must conduct business in accordance to the stockholders desires. Steve Case made several mistakes after the merger with Time Warner, not least his decision to take a hands-off approach to managing the new company in the first months after the merger. His near-invisible profile triggered rumors on Wall Street and later attempts to involve himself seemed only to annoy senior executives, who complained that he was meddling too much.

Culture/ Ethics

There is no doubt that culture, or lack of cohesion, plays major roles in both the collapse of companies and the failed mergers of the world. I believe many organizations are examining their practices in light of their basic beliefs, ethics, and values. These no longer can be treated as "soft stuff"--nice to frame and display, prominent in the annual report and the employee newsletter, and included in every motivational address. They must become the "hard stuff" like product quality, cost reduction, and customer service. Companies with sound beliefs and ethics have a competitive advantage that extends far beyond one unique product or service, one set of loyal customers, a single technological breakthrough, the original founders, or one talented CEO. They help sustain the company at a baseline success level through all the ups and downs that will occur over time. Basic beliefs will not substitute for clear and focused strategy or vision or for effective day-to-day operations. However, when they are clear and consistently applied to influence and test major decisions and behavior, they allow ethical executives to minimize risk to the enterprise and potentially avoid collapse.

Transition and Strategy

Employees have a strong need for consistency and predictability in their working environment that they become accustomed too. During times of growth or after a merger sometimes people are unable to find their equilibrium in the evolved organization. These human nature emotions lead to resistance against management and their strategies and can hinder the overall transition into a new leader in that market. To properly smooth the transition from whatever the status quo, it is imperative that leadership provide employees with a sense of comfort, stability, and guidance.

Execution, The Discipline of getting things done.

Execution is a great unaddressed issue in the business world today. Its absence is the big obstacle to success and the cause of many disappointments that are mistakenly attributed to other causes. A company vision without the ability to execute is a hallucination. The problem is to me that everyone at an organization suffering from lack of execution blames everybody else for the company-wide poor performance, and very few people—managers and leaders—try to find ways for things to actually work. Execution is the major job of the business leader; it is both a discipline and an integral part of strategy. It is the difference between getting the job done versus merely talking about it; moving away from management theories and talk to reality and results. Execution must be a core element of an organizations culture in order to ensure long-term viability. Execution is the main reason companies fall short of their promises. It lies in the gap between what a company’s leaders want to achieve and the ability of their organizations to deliver it.

So, to all you leaders out there; know your people and your business ---- Leaders have to live their business. In companies that don’t execute leaders are usually out of touch with the day-to-day realities of the companies and also sadly themselves.

1 comment:

rachna said...

Wow.. wonderfully articulated piece!

I totally second your thoughts.

So much talk about vision, strategy, leadership, blah blah.. and so less of rhetoric-meeting-action.

- rachna