Since Michael Porter’s seminal work in the 1980s we have had a clear and widely accepted definition of what strategy is—but we know a lot less about translating a strategy into results. Books and articles on strategy outnumber those on execution by an order of magnitude. And what little has been written on execution tends to focus on tactics or generalize from a single case. So what do we know about strategy execution?
We know that it matters. A recent survey of more than 400 global CEOs found that executional excellence was the number one challenge facing corporate leaders in Asia, Europe, and the United States, heading a list of some 80 issues, including innovation, geopolitical instability, and top-line growth. We also know that execution is difficult. Studies have found that two-thirds to three-quarters of large organizations struggle to implement their strategies.
Myth: Communication Equals Understanding
Many executives believe that relentlessly communicating strategy is a key to success. The CEO of one London-based professional services firm met with her management team the first week of every month and began each meeting by reciting the firm’s strategy and its key priorities for the year. She was delighted when an employee engagement survey (not ours) revealed that 84% of all staff members agreed with the statement “I am clear on our organization’s top priorities.” Her efforts seemed to be paying off.
Then her management team took our survey, which asks members to describe the firm’s strategy in their own words and to list the top five strategic priorities. Fewer than one-third could name even two. The CEO was dismayed—after all, she discussed those objectives in every management meeting. Unfortunately, she is not alone. Only 55% of the middle managers we have surveyed can name even one of their company’s top five priorities. In other words, when the leaders charged with explaining strategy to the troops are given five chances to list their company’s strategic objectives, nearly half fail to get even one right.
Not only are strategic objectives poorly understood, but they often seem unrelated to one another and disconnected from the overall strategy. Just over half of all top team members say they have a clear sense of how major priorities and initiatives fit together. It’s pretty dire when half the C-suite cannot connect the dots between strategic priorities, but matters are even worse elsewhere. Fewer than one-third of senior executives’ direct reports clearly understand the connections between corporate priorities, and the share plummets to 16% for frontline supervisors and team leaders.
It’s pretty dire when half the C-suite cannot connect the dots between strategic priorities.
Senior executives are often shocked to see how poorly their company’s strategy is understood throughout the organization. In their view, they invest huge amounts of time communicating strategy, in an unending stream of e-mails, management meetings, and town hall discussions. But the amount of communication is not the issue: Nearly 90% of middle managers believe that top leaders communicate the strategy frequently enough. How can so much communication yield so little understanding?
Part of the problem is that executives measure communication in terms of inputs (the number of e-mails sent or town halls hosted) rather than by the only metric that actually counts—how well key leaders understand what’s communicated. A related problem occurs when executives dilute their core messages with peripheral considerations. The executives at one tech company, for example, went to great pains to present their company’s strategy and objectives at the annual executive off-site. But they also introduced 11 corporate priorities (which were different from the strategic objectives), a list of core competencies (including one with nine templates), a set of corporate values, and a dictionary of 21 new strategic terms to be mastered. Not surprisingly, the assembled managers were baffled about what mattered most. When asked about obstacles to understanding the strategy, middle managers are four times more likely to cite a large number of corporate priorities and strategic initiatives than to mention a lack of clarity in communication. Top executives add to the confusion when they change their messages frequently—a problem flagged by nearly one-quarter of middle managers.
A version of this article appeared in the March 2015 issue of Harvard Business Review
We at Bridgepoint Coaching & Strategy Group have experienced this myth of communication equals understanding with nearly every corporate client. Donald Sull, senior lecturer at MIT Sloan School of Management states, "It's not surprising that corporate strategy is misunderstood, it's how surprised executive leadership is that this is true." Remember, only 55% of the middle managers surveyed can name even one of their company’s top five priorities.
Is this true for your team?