Closing the ‘execution gap’: 4 case studies
Last year saw its share of losers in the business arena. For many, the business model and strategy was sound, but the company fell down when it came to execution.
In fact, only 36% of leaders who think their company has an “execution gap” are confident in their organization’s ability to close the gap between strategy and execution, according to a study in the new book, Closing the Execution Gap, by Rick Lepsinger. The book points to four of last year’s headline-making companies and lessons learned about execution:
1. BP. Leading up to (and after) the oil spill, BP violated almost all guidelines of effective execution, including lacking an effective structure and lacking clear accountability.
Consider that hours before the explosion, the rig crew was arguing about the best way to finish the well. A “company man” told rig workers “how it’s going to be.” Although rig workers felt the plan was too risky, they reluctantly agreed. And just after the explosion, a captain yelled at a worker for pressing the distress button without authorization.
The lesson: For any company to execute, the right people have to be involved with the right decisions.
2. Nokia. Nokia’s share of the mobile phone market continued to slip in 2010. But about five years before Apple introduced the iPhone, Nokia was ready to introduce its own Internet-ready touch screen handset and online applications store. What happened?
The lesson: “Many innovative ideas became the victims of in-fighting among managers who had competing objectives,” says Lepsinger. “Plus, as a result of a lack of cross-organizational coordination and cooperation, Nokia wasn’t able to improve its proprietary operating system.”
3. The FDA and Agriculture Department. In August, thousands became ill after eating eggs contaminated with salmonella. Why?
“The cause appears to be a significant lack of coordination across federal agencies,” says Lepsinger. “The responsibility for food safety is split between two agencies: The Agriculture Department is responsible for chickens and the grading of eggs for quality … but the FDA oversees the safety of eggs.”
So who inspected the Iowa farms? “It turns out that no one did,” says Lepsinger. “It just fell through the cracks.”
The lesson: It’s critical that organizations learn to coordinate and collaborate decisions across organizational boundaries. Plus, people must be held accountable for results.
4. Toyota. Toyota last year recalled millions of cars due to a variety of defects. What went wrong? Toyota’s decentralized structure, which served it well for many years, turned into a liability as the company continued to grow.
“Keeping the U.S. operations separated in a functional structure—rather than reporting to a single headquarters—forced each to report back to Japan,” says Lepsinger. “This required customer complaints to first make their way through the U.S. operation and then over to Japan where they were reviewed by a special committee.”
The lesson: Make sure you have a structure that supports execution. Toyota’s structure slowed down decision-making and the company’s ability to effectively respond to the recall crisis.
As these stories illustrate, execution is the real bottom line. It’s the lens all leaders should look through as they review 2010 and make their “business resolutions” for 2011.
… Plus one company that executed correctly
Although the ability to deliver streaming video has just recently become a reality, Netflix has been preparing to replace its original business model of delivering DVDs through the mail since the company was formed in 1997.
“The company’s readiness for change is incredible,” observes Lepsinger. “A decade before the technology was even a commercial reality, it recognized that the delivery of movies over the Internet would eventually replace mail. Even the name they chose for the company reflected this awareness. They named the company ‘Netflix’ and not ‘Mailflix,’ which would have been an easier concept to understand more than a decade ago.”
