Articles—Issue 25, August 2007
Driving Without a Map
“Its all about the execution” is a phrase that is used frequently by consultants and CEOs alike. They are wrong.
It is true that a brilliant strategy poorly executed will not succeed. However, it is not true that a foolish or misguided plan, brilliantly executed will bring success. In fact, it might just get you to failure faster!
I know a CEO who believed that it was all about execution. A senior executive made a pitch to him about the dramatic changes going on in the industry and the need for change. He responded, “If everyone will just go out there and execute, everything will be fine.” It wasn’t. Growth plummeted. No vision, no strategy.
In a recent study of 200 companies, McKinsey pointed out that 80% of the difference in growth within this group could be explained by the industry “segment” that they chose to participate in and by M&A activity. Changing industries would be very risky and is not what the study suggests. Choosing what segment of the industry to compete in and building distinct capabilities to do so is the key (i.e. strategic decisions). I would be remiss if I didn’t point out that this study speaks to growth not profit. While mergers and acquisitions may add growth, the sad fact is that the large majority actually destroy value; often for some fairly obvious reasons.
So what does this mean for the success of your company? Choosing the right segment of your industry to compete in is a key strategic choice. How do you decide what segment of the industry to participate in? Effective planning. This is not operational planning. It is predicting the future and figuring out how to prosper in it.
This is not an either/or proposition. Planning and execution are both equally important. Don’t let anyone convince you that you can succeed over the long run with either one by itself. You need both a vehicle and a roadmap to take a trip.
(c)2007 by Tood Ordal. You are welcome to share this informational article with others.
Todd Ordal is a business consultant helping executives struggling with execution. Prior to founding the consulting firm Applied Strategy LLC, Todd spent over 25 years in management and executive roles such as President and CEO. You can contact Todd at todd@appliedstrategy.info