Managing Director & Senior Partner, Director of the BCG Henderson Institute
San Francisco - Bay Area
Peter Drucker said: “Plans are only good intentions unless they immediately degenerate into hard work.” This and a slew of similar maxims reflect a common view of strategy execution: that it’s distinct from strategy, harder to pull off than defining a strategy, and therefore more critical to success—underpinned by seemingly indisputable virtues such as diligence, discipline, consistency, alignment, and focus. But such a simplistic view of execution can be misleading and can reduce actual impact.
In fact, several frequently observed traps result from such a view of execution.
Losing the Plot. Action plans and Gantt charts can span many pages in pursuit of precision and concreteness. But excessive complexity can undermine thoughtful execution as much as a failure to specify tactics can. In the worst case, busyness can become an implicit goal or cultural norm, and the original strategic intent can be lost in a frenzy of detail and activity. Execution must be insightfully focused on the most critical aspects of a challenge, or those that unlock other critical actions. For example, if category expansion is critical to value creation in a particular strategy, plans should focus disproportionately on how to achieve this. As former Mars president Paul Michaels shares in Your Strategy Needs a Strategy: “The job of strategy for a segment leader like us is to drive category growth, and that’s the thing you should be thinking about all the time.”
Metric Obsession. Drucker’s exhortation “What gets measured gets managed” is often invoked when approaching execution. In the sense that results count, and their quantification is desirable, it seems irrefutable. But the worst way to achieve a goal can sometimes be to pursue it directly. For example, new drugs are not discovered by pursuing a target number of new drugs, but rather by exploring new areas of chemistry and biology. It would also be a mistake to restrict ourselves to managing what we can easily measure. Few would deny the importance of corporate culture, for example, even though it is not easily quantifiable.
Planning Myopia. Emphasizing compliance with a plan can, under stable conditions, accelerate the fruition of a strategy. But under the changing conditions of a nascent or recently disrupted industry, a rigid plan can become a straitjacket for the flexibility and adaptation that are required to succeed. To take a historical example, centrally planned economies in the Eastern Bloc left no space for adaptation to even the simplest types of change, like variation in demand. This inevitably created shortages and oversupply of goods.
Missed Learning Opportunities. The value of execution can, in the simplest cases, be boiled down to the successful accomplishment of specific tasks. But where a high degree of uncertainty and change is involved, the value can instead reside in the learning that accompanies execution, whether or not the immediate outcome is successful. A famous example is YouTube, which began as a video dating site back in 2005. The site failed to gain traction, so the founders, leveraging what they had learned while building the original platform, launched another version of the website focusing on sharing videos online, with significantly more success.
The Tyranny of Intermediate Goals. When goals and tasks are broken down several times into lower-level ones, it can clarify what is required of an individual or department and can therefore help scale the job of execution. But often the intermediate goal or task becomes an end in itself. A famous example is Hoover’s free-flight promotion. In 1992, to free up warehouse space, the UK team promised free airline tickets to customers who purchased more than £100 worth of its products. A little later, the US marketing team offered the same promotion to US customers in order to boost sales. The offer was implemented so “successfully” that the company could meet neither the demand for vacuum cleaners nor the cost of the flights. As a consequence, after the courts settled customer complaints, the US-based company had lost £48 million; a few years later, it had to sell its UK branch.
Missing the Forest for the Trees. Strategic plans are often broken down into different modules for execution by different parts of an organization. Yet sometimes optimization of the parts does not lead to optimization of the whole. To take a biological example, the US National Parks policy used to be to extinguish all forest fires. This led to an increase in the severity of fires. Why? Because most fires are small and stop by themselves, while creating natural firebreaks and eliminating the undergrowth that can fuel larger fires. In 1972, the policy was therefore adjusted so that only manmade fires were fought. Businesses can be equally complex: a diversity initiative, for example, might include some compulsory training, but if this triggers sentiments of resistance and skepticism, it can be self-defeating. Every action can change perceptions, motivations, and actions, such that a list of individually plausible actions can easily create the opposite of the intended effect. In such cases, a holistic perspective of strategy and execution is required.
Execution as a Thing. We often treat strategy and execution as separable disciplines, each with its own distinct, and constant, character. But as we have shown in Your Strategy Needs a Strategy, different strategic environments require different approaches to strategy and execution. A nascent technology business might require an adaptive approach and a stable commodity business might require a classical, planning-based approach. In predictable classical environments, strategy formulation can be separated from execution. But in adaptive environments, it cannot, since “strategy” continually emerges from amplifying the results of success experiments—that is, execution. Furthermore, the nature of execution is also very different for each case. In the first, it centers on compliance with a predetermined plan; in the latter, on decentralized initiative taking and experimentation.
The Tyranny of Practicality. That an execution plan be “practical”—simple, concrete, familiar, and unchanging—seems incontrovertible. Execution is praxis, after all. But when dealing with new or changing situations, familiar, plausible actions can easily fail to achieve the desired effect. Polaroid, for example, was a pioneer in digital photography. Yet, it tried to sell its digital cameras using the same business model as its film-based cameras—by aiming to make high margins on instant film sales. Believing that users would want hard copies, they added digital technology to instant cameras, instead of creating a new product not requiring film. As we now know, the company lost to rivals. Former Polaroid CEO Gary DiCamillo summarizes the company’s failure well: “The reason we couldn’t stop the engine was that instant film was the core of the financial model of this company.” More broadly, a mature business can often create its own increasingly questionable reality by focusing on the part of the market where its own beliefs about how things work still apply, creating a double opportunity for disrupters—one physical and one mental. Indeed, entrepreneurs and disrupters often refer to this double inertia of incumbents as their greatest asset in taking on incumbents.
We should not let the simplistic but comforting dualism of strategy and execution deceive us. Execution should be as varied, as thoughtful, as subtle, as diverse, and as intertwined with strategy as is necessary to get the job done, and that will vary according to the specific challenge at hand. In short, your execution needs a strategy.
The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit Featured Insights.