Execution Larry Bossidy and Ram Charan

Transcription

1 Part One: Why Execution is Needed The Gap Nobody Knows Why People Don't Get It Part II: The Building Blocks of Execution Execution Larry Bossidy and Ram Charan Building Block One: The Leader's Seven Essential Behaviors Building Block Two: Creating the Framework for Cultural Change Operationalizing Culture Linking Rewards to Performance The Social Software of Execution The Importance of Robust Dialogue Leaders Get the Behavior They Exhibit and Tolerate Building Block Three: The Job No Leader Should Delegate Having the Right People in the Right Jobs Why the Right People Aren't in the Right Jobs What Kind of People are You Looking For? How to Get the Right People in the Right Jobs The Unvarnished Truth Part III: The Three Core Processes of Execution The People Process: Making the Link with Strategy and Operations Building Block One: Linking People to Strategy and Operations Building Block Two: Developing the Leadership Pipeline Through Continuous Improvement, Succession Depth and - Reducing Retention Risk Talent Review at Honeywell Building Block Three: Dealing with Non-performers Building Block Four: Linking HR to Business Results The Strategy Process: Making the Link with People and Operations The Importance of Hows The Building Blocks of Strategy The Difference Between Business Unit Strategy and Corporate Level Strategy Building the Strategic Plan How to Conduct a Strategy Review Making the Link with Strategy and People How to Build a Budget in Three Days Sound Assumptions: The Key to Setting Realistic Goals Building the Operating Plan Outcomes of the Operations Process

2 The Big Idea You've got the bright ideas and the smart people, and the market is just ready for you. But why hasn't your business taken off as you predicted? Maybe the problem is in your execution. What does it really take to get a business going? You need the right people combined with realistic strategies to create effective operating procedures. Let Larry Bossidy and Ram Charan tell you how. A business leader's most important job is the execution of plans, the detail work, making sure that the staff is getting results. This is the sort of responsibility that cannot be delegated. It is the leader's primary duty to see that every member of the team is carrying out his part of the big plan to ensure the whole company's success. There are no excuses for failure: the market will always be tough. What spells the difference between successes and failures is the ability to execute plans. Too often, too much intellectualizing and philosophy occurs at the planning level. The leaders are busy with their dreams and plans for success but there is little focus on implementation, thus the promised result is not delivered. The emphasis on execution as an integral part of the business process has not received enough attention in terms of accumulated knowledge and literature. Part One: Why Execution is Needed The Gap Nobody Knows Sometimes even good companies fail with catastrophic results, despite stellar qualities. The problem is usually not the strategy or the person in charge; it is the gap between strategy and execution. Execution Comes of Age 1. Execution is a discipline: Execution is fundamental to strategy and must shape it. It is the process of taking into account all factors that can affect your end result. Too often plans are static, made by rote and taken for granted. Plans and processes need to be carefully thought out and performed given current and possible future realities. 2. Execution is the Job of the Business Leader: Execution requires a comprehensive understanding of a business, its people and its environment. Leaders should be intimately and intensely involved with their people and operations; in other words, active involvement is the key here. Dialogue must be at the core: be candid and reality-based, ask questions and find realistic solutions. 3. Execution Has to Be in the Culture: Execution has to be embedded in the rewards system and in the norms of behavior. Look for deviations from desired managerial tolerances. Execution only works as a widespread collective effort, not on an individual basis. Why People Don't Get It People assume that the statement of an idea instantly produces results. Or they announce the idea and expect other people to spell it out and do what needs to be done. Results can only be obtained when you specify in detail how to arrive at desired outcomes through persistent probing in the right direction. We are geared to think that leaders are supposed to find new ways of thinking, new strategies, new ideas. But the work of bringing these abstract thoughts to fruition is usually delegated to someone else.

3 Part II: The Building Blocks of Execution Building Block One: The Leader's Seven Essential Behaviors 1. Know Your People and Your Business. A leader must be in touch with the day-to-day realities of the business. Get to know your organization down to the smallest unit. Get to know the supervisor and her team, how they produce results for the organization and their level of awareness regarding the situation elsewhere in the company. Work towards a climate of open, honest dialogue on all levels, up and down the hierarchy and across various departments. The best ideas and the earliest warning bells can reach you if your ears are open to all. Use dialogue as a tool for educating and guiding your subordinates and showing sincere organizational support from the top level of the administration. Use this personal connection to make new ideas work, and explain theories, concepts, purposes and implementation. Help the staff accept the new directions the company wishes to take. 2. Insist on Realism. Identify your weaknesses, and don't mince your words. Be aware of your organization's capabilities and shortcomings. Try to look at the situation from all sides, especially from the points of view of the consumer and of the competitor. 3. Set Clear Goals and Priorities. Focus on very specific, defined priorities to maximize the resources you have at hand. Simplify. Choose which goals are important and manageable for you, and work on those. 4. Follow Through. Make sure the plans you make are carried out and check on all subordinates to whom responsibilities have been delegated. Provide incentives for those who provide exemplary results and deliver ultimatums to those who don't meet their requirements. 5. Reward the Doers. Reward your top performers. They will reward you in the future with more good work. 6. Expand People's Capabilities Through Coaching. Don't just give orders; teach your staff how to get things done. Observe your people in action then provide feedback. Compliment and encourage good behavior, note the bad and makes suggestions for improvement. Help others find a better way of doing their job for your company by asking them questions that lead to the answer. They figure out ways to improve by themselves, and the lesson is more easily absorbed. This applies not only to business practices and decisions but personal attitudes and behavior as well, especially those that affect co-workers and work results. Provide opportunities for learning to those who will benefit the most from them, especially those who might be promoted to key positions later on. These opportunities might be different projects that will hone their talents, short courses, or even additional responsibilities. 7. Know Yourself. Do you have the strength and the courage to do what's necessary? If you hesitate to act, you bring risk to the whole organization. If you are determined and resolute, others will follow your example. All of this requires emotional fortitude, which is comprised of authenticity, selfawareness, self-mastery and humility. Building Block Two: Creating the Framework for Cultural Change You can t just institute changes for the sake of shaking things up at your company. Your changes must be geared towards getting results. Be specific: what sort of behavior is acceptable in your company? What s unacceptable? Change must begin at the top-level, to set an example down the line. Don t just expect it to happen either. Reward successful implementation of your plans to instigate change. Operationalizing Culture The problem is usually not the organization s values but in its practice on all levels. Identify the beliefs and attitudes that influence behavior, particularly those that are detrimental to the company s and other employees growth. Linking Rewards to Performance Make obvious the fact that certain actions will be rewarded and that negative behavior gets you nowhere. Use a rating and rewards system to encourage not only positive behavior, but also to encourage the halfhearted to push harder. Use this system to convince those who are already results-oriented to improve their performance.

4 To ensure your employees know what you want of them, reiterate what goals you have set for them and make sure that they agree to deliver on mutually agreed-upon terms. Offer different financial and nonfinancial rewards for different results and provide different motivations. In the end, your employees ultimate goal should be quality work that benefits the whole unit and the whole organization, not just the compensation for good work done. The Social Software of Execution Sometimes the problem isn t people heading in the wrong directions. Sometimes, the problem is people aren t going anywhere: inaction. People are constrained by formality, lack of trust and hesitation. You re going to need to work on your company s social software then. Social software refers to the factors outside organized rules, structure and norms, such as values, beliefs and motivation. An organization s social software is defined in concrete terms by its social operating mechanisms, which refer to any opportunity for dialogue within the organization. Social operating mechanisms create new relationships and communication lines, creating links where there normally are none, fostering transparency and knowledge-sharing. These provide opportunities for business leaders to put into practice the beliefs and behaviors that should be the norm, thus setting an example for the whole company. Social operating mechanisms can be used to make changes in behaviors. Use these opportunities to observe various units in your company, to follow up on previously agreed-upon plans of action, to update and evaluate, to plan ahead, and to reinforce the good and weed out the bad. Only through the incorporation of social operating mechanisms into the organization s routine can desirable behaviors be integrated into the collective consciousness. Ensure that these mechanisms occur at given frequencies, to reiterate the value of each occurrence, to include the repetitions into the work timetable and to constantly remind people of the desired behaviors and beliefs. The Importance of Robust Dialogue Robust dialogue is necessary for gathering information, processing it and putting it to good use. Robust dialogue is characterized by candor, informality and closure. Its purpose is to see multiple viewpoints, see the pros and cons of each opinion and to choose the most practical, sensible option. Robust dialogue encourages all people involved to speak their minds and to gear their thinking towards solutions and results. Leaders Get the Behavior They Exhibit and Tolerate You get what you give. A leader shows his people what sort of behavior he should get from them by giving them that behavior. Thus, you can change the culture of a company by changing the behavior of its leaders. The business leader must be a constant presence in the lives of those whose behavior he wishes to influence. The more she gets involved, the better the whole team works and produces results. Executing cultural change depends first and foremost on having the right people. Building Block Three: The Job No Leader Should Delegate Having the Right People in the Right Jobs Hiring the right people is as important as planning ahead; you need people who are not only capable, but also full of potential for growth as your business expands. Take time to focus on your staff, because in effect your business is in their hands. Take time to develop your staff s leadership capabilities so that they can bring results to your plans and visions. Assess individual capabilities and determine if you can further develop your employee through training, coaching and exposure, or if he s better off elsewhere. If you can properly develop your people, you should be able to fill top administrative posts from within. Hire a talented person and she will hire a talented person. Why the Right People Aren t in the Right Jobs 1. Lack of Knowledge. Sometimes, the people in HR don t really know their people s specific qualities or a job s requirements. Job requirements must specify the level of personal experience and professional know-how necessary, and match all these with what a candidate has to offer. 2. Lack of Courage. If someone screws up, fire them if they re beyond help. You will save your company the trouble and the employee will be relieved of a duty he can t perform.

5 3. Psychological Comfort Factor. Some leaders hire or promote people for the wrong reasons like friendship, personal loyalty or personality compatibility. This poses a great threat to the whole company because the decision was not based on acquiring the skills and traits necessary for the job. 4. Lack of Personal Commitment. If you don t sincerely care about your company and your people, you won t do much if at all to fix a problem that you know is there. What Kind of People are You Looking For? While vision, philosophy and intellect are always important, it is still more important to find determination and resolution, someone who s a doer, a winner with drive and strong decision-making skills. Your people should: Energize people Be decisive on tough issues Get things done through others Follow through How to Get the Right People in the Right Jobs During an interview, examine not only the list of your candidate s achievements but also the manner in which those achievements were made. Call references to find out his track record. Probe deeply so that you can get the unadulterated truth. Know how to listen for eagerness and determination to get things done. Most importantly, don t leave this job to the HR department. These are the people in whose hands the fate of your business lies and this is a critical process which needs your personal attention. The Unvarnished Truth When evaluating people, transparency should go both ways. Inasmuch as you should know the truth about a person s strengths and weaknesses, it is your responsibility to discuss these things with the employee concerned, to find solutions and to help him help himself. Part III: The Three Core Processes of Execution The People Process: Making the Link with Strategy and Operations The people process does three things: 1. It evaluates people accurately and in an in-depth manner. 2. It provides a framework for identifying and developing the leadership talent the organizations will need to execute its strategies down the road. 3. It fills the leadership pipeline that is the basis of a strong succession plan. Your people should be able to grow along with the company and the work. Evaluate people not only for their capability to produce results today, but for their potential to take on other responsibilities tomorrow. Sometimes strategy requires replacing an excellent performer with someone who can foster further growth for the company. Constant and accurate evaluation processes that examine not only a person s professional capabilities but also his capacity to be a leader and a team player can keep the wrong person from being assigned a key role in the first place. The people process framework is based on the following business blocks: 1. Linkage to the strategic plan and its near-, medium- and long-term milestones and the operating plan target, including specific financial targets 2. Developing the leadership pipeline through continuous improvement, succession depth, and reducing retention risk 3. Deciding what to do about non-performers 4. Transforming the mission and operations of HR Building Block One: Linking People to Strategy and Operations

6 Break your strategy down into manageable near-, medium- and long-term goals. Determine kinds of skills you need for the upcoming goals and start laying the foundations early. Then design an action plan for each step of your big plan. Building Block Two: Developing the Leadership Pipeline Through Continuous Improvement, Succession Depth and Reducing Retention Risk Meeting your goals depends on the quality of the people you have. Assess today those who can be leaders in the future with the following aids: The Leadership Assessment Summary: Examine behavior vis-à-vis performance. The Continuous Improvement Summary: It captures key performance highlights and determines what further development the person needs. This helps provide the foundations for succession, creating early on tomorrow s division presidents and vice-presidents, even CEOs. Succession Depth, and Reducing Retention Risk Analysis: What is a person s marketability and potential for upward mobility? What risks will the business face if she leaves, fails, is promoted, or retires? Succession depth ensures that you have capable, qualified people who will fill the position as well as the domino effect of related promotions. Retain your valuable staff by offering incentives, opening the possibility of upward mobility, and incorporating them in the company s future plans. Talent Review at Honeywell How does the people process work at Honeywell International? Larry Bossidy s efforts at getting Honeywell back on track as the company s CEO are held in high regard and the Management Resource Reviews (MRRs) are no small part of this success. The MRRs evaluate people in their current jobs, their potential for transfer or promotion, the people who can succeed them and what to do about those who fall short. Leaders have to prepare their reports for the MRRs beforehand, to be discussed at the meeting. The review will even discuss all the factors that may be affecting a person s performance, including his superior s behavior and efforts at developing him. The reports are required to be descriptive, detailed, honest and thorough and must have been discussed with the person under review. The report is discussed by a committee, which will determine a person s potential, behavior, capability, etc. The group dynamic ensures fairness and freedom from bias. Building Block Three: Dealing with Non-performers Non-performers are people who aren t meeting their established goals. This does not mean that they re unqualified or incapable. It just means they aren t performing at the level required for your company s success. Sometimes you just need to coach a person to get them better acquainted with a job. Sometimes they just need to be transferred to another division or responsibility that s better suited to their capabilities. Other times there s no choice but to let him go. However, do so in a manner that allows the person to keep his dignity. Building Block Four: Linking HR to Business Results The role of the HR department in a company is different now. The HR function must set out to fill the positions that are and will be important as projects and plans progress over the upcoming months even years. Use the HR division to keep track of your company s top people across the whole organization, to see who can be groomed, or even promoted already, for key positions. HR should not only be able to assess people in their current jobs but also the people below them if one person is to be promoted, someone should be adequately qualified to fill the upcoming void. Examine all your strategies and determine the sorts of skills you need for these plans. If you can t develop the right people in time, determine if you need to hire from outside. Identify which jobs are critical, and which ones will be critical down the line. Are they filled with the right people? Monitor also the top positions in the company and spell out criteria for filling them. If there is a sudden vacancy, is there someone you haven t considered who might be more than qualified? If you know your people and their capabilities, filling the vacancy should be a small problem, especially if you ve done your job in developing them for leadership.

7 The Strategy Process: Making the Link with People and Operations Strategy simply means an action plan designed to meet business objectives, but can your organization do what is necessary? And can your leaders determine how to reach those objectives? The Importance of Hows Even brilliant strategies are bound to fail if not grounded in realities regarding the competition, the capabilities of the company s own people, the market, the product offerings. When creating strategies, consider not only the current realities of all relevant factors, but also unexpected if unlikely turns of events. There must always be backup plans, or at least people who can quickly think up alternative plans to make the best of a botched situation. Adaptability to change should always be a consideration: constantly review your plan to see if it is being executed properly, if current and future steps are still feasible, and if the people in charge are still getting results. The Building Blocks of Strategy Determine the key concepts actions and base your strategy on these. Keeping these in mind will also make it easy to decide on alternatives if necessary, as well as finding the right people for special parts of your strategy. The Difference Between Business Unit Strategy and Corporate Level Strategy Corporate level strategy determines the business it wants to be in and the general arena of play. It analyzes the various businesses in the company and determines whether the mix is still profitable. It also integrates strategies built at business unit level to work in unison toward a common goal. Business unit strategy lays out in specific terms the direction of the unit, plans around costs, resources, risks and new possibilities, works within the context of the whole organization s scheme, and studies the competition. Building the Strategic Plan Who Builds the Plan? - The strategic plan should be authored by the people who will execute it, the business leaders who live with the realities of the field and the organization s capabilities. More often than, not this is a team instead of an individual. But that s even better: the group dynamic can iron out flaws in a plan and be a sounding board for each idea. Questions for the Strategic Plan Are your expectations realistic? How is your company doing in the market and what will your strategy do to change this? Who are your competitors and what are their strengths and weaknesses? How did the current top companies reach their success? Can your business at its current state and your rate of development execute your strategy? Is your projected growth sustainable? How dose the proposed strategy affect the end user, the consumer? What is the Assessment of the External Environment? Examine all factors that will have bearing on your business in any way. Monitor trends and events in politics, economy, society, etc., and act swiftly but carefully on potential pitfalls. How to Conduct a Strategy Review The review should be a creative exercise: discuss how previous strategies were executed, but don t dwell too long on the past. Use them as a springboard for new strategies. These questions can help determine the feasibility of a strategy: How well-versed is each business unit team about the competition? How strong is the organizational capability to execute the strategy? Is the plan scattered or sharply focused? Are the linkages with people and operations clear?

8 Making the Link with Strategy and People The operating plan specifies how the various moving parts of the business will be synchronized to achieve the targets. The budget should be based on the operations, not vice-versa. Translate your strategy into manageable steps. How to Build a Budget in Three Days Discuss the whole corporate picture. Determine each business unit s action plans and how this fits into the tentative budget. Bring together all the units action plans and proposed budgets to see if they amount to a realistic whole. Fine tune this over and over by reviewing the action plan and the budget until you come up with the most feasible plan. Sound Assumptions: The Key to Setting Realistic Goals To make a plan based on your experiences today, you will necessarily make some assumptions about the market, your product s chances against the competition, etc. Debate with a team about these assumptions. What realities do you face today? How could this change over the course of the next few months or years? Review the assumptions upon which proposals are made and weigh their feasibilities. Examine all possibilities of factors affecting your business. Building the Operating Plan 1. Set the targets: Keep your targets realistic. Base them on track records and histories. 2. Develop action and contingency plans: Study the possible outcomes that might leave the company most vulnerable and base your contingency plan on that. In other words, plan for the worst. 3. Get agreement and closure from all participants: Communicate agreed-upon goals to the people concerned after the meeting, to reiterate your expectations and what they promised to deliver. Outcomes of the Operations Process Think carefully: what does your business want to achieve? Think of this vis-à-vis what your company is likely to achieve. Watch how the operations affect your company, especially for the need to reallocate resources. Conduct quarterly reviews to see if you re still on track, who s keeping you there, and if you should even be there in the first place.