This three-part series about strategy and its execution is based on Richard Lepsinger’s book, Closing the Execution Gap: How Great Leaders and Their Companies Get Results (Jossey-Bass/A. Wiley, 2010). Part one defines the “five bridges” that companies can use to close the gap; part two describes how to build the bridges; this final part highlights successful companies that have bridged the gap.
Ever wonder why some companies consistently meet their goals and others don’t? So did I, and it was to find out why that my consulting firm conducted a study of 400 companies. We discovered that there are five factors that set apart the organizations with the best performance results and those more effective at execution. I think of them as "The Five Bridges" because they help companies close the gap between strategy and execution. To see what the bridges look like in action, let's take a look at a handful of well-known companies that execute exceptionally well:
Execution superstar: Procter & Gamble
Bridge No. 1: The ability to manage change
A few years back, Procter & Gamble (P&G) hit a home run with its Mr. Clean Magic Eraser. But what makes it relevant to Bridge No. 1 lies in how the product came to fruition. The organization had a track record of developing new products in-house. With the Magic Eraser, it broke from that model. An employee discovered the prototype in Japan, and rather than limiting itself to internal ideas, P&G saw an opportunity to license a product that already existed and tap into its own organizational competence to add value. Its plan to use ideas that had been developed outside the company worked due to P&G’s openness to change and its ability to execute flawlessly.
Execution superstar: IBM
Bridge No. 2: A structure that supports execution
IBM set out to become a “globally integrated enterprise.” The key? It put in place a structure that best supports this strategic goal. Historically, IBM created mini versions of itself in each country where it operated. As it turned out, this was inefficient and expensive. Now the company sets up shop wherever it finds the right talent at the right price: for example, global IT service delivery in India, global supply chain in China, and global financing back-office in Brazil. IBM also redesigned business processes and automated work with software to help coordinate these activities.
Execution superstar: Google
Bridge No. 3: Employee involvement in decision making
When Google started out, it was easy to keep all of its employees involved—primarily because there were so few of them. But now that the company has expanded to thousands of employees, leaders have had to find ways to ensure that everyone has a voice. One way they keep their ears open to grassroots ideas is by allowing engineers to spend at least one day a week working on their own pet projects. The company also uses smaller teams to develop new concepts—sometimes assigning only three or four people to a team.
Execution superstar: Costco
Bridge No. 4: Alignment between leader actions and company values and priorities
James D. Sinegal, president and CEO of Costco, is one of the best and most consistent examples of a leader whose behavior is aligned with the organization’s values and priorities. Costco operates with razor-thin margins, yet manages to maintain solid earnings through its membership fee and its Spartan approach to costs. The fact that the CEO “walks the talk” is at least partially responsible for Costco’s success. In an environment of thin margins, store managers need to be obsessively focused on details. Sinegal models that behavior every time he visits a warehouse store. He quizzes store managers about the sales of each department, what they are doing to move merchandise, and the process of individual items. Here’s another way Sinegal signals the importance of keeping costs low: his office overlooks the parking lot of the Costco across the street and he has folding chairs for visitors. He answers his own phone and does not have an entourage like many successful senior executives. His salary and bonus total about $450,000. Now there is someone who lives the values and keeps the organization’s priorities front and center every day.
Execution superstar: Cisco
Bridge No. 5: Companywide coordination and cooperation
To help ensure cross-organizational cooperation, Cisco, led by John Chambers, changed the compensation system so that people were paid not only for hitting their targets, but also for how effectively they collaborated with their peers. Technology has also played an important role in facilitating teamwork. Cisco has installed 120 telepresence centers (a new high-end video conferencing system) across the company and uses social networking to bring together employees from around the world.
