In business, execution is everything. High-performing companies execute better than their competitors. Yet management research has focused more on strategy formation than implementation.“Books and articles on strategy outnumber those on execution by an order of magnitude,” says Don Sull, senior lecturer at the MIT Sloan School of Management, who for the past nine years has been working on a large-scale project to understand how complex organizations can execute their strategies more effectively.
He and his co-authors recently shared some of their findings in a Harvard Business Review article debunking five of the most pernicious myths about how to implement strategy.Because our enterprise goals platform provides insights into how work gets done, we’re excited to have Don join us for the first annual Goal Summit in San Francisco on April 16. In addition to teaching an MIT course about strategy execution, Don is the co-author (along with Kathy Eisenhardt of Stanford School of Engineering) of a forthcoming book entitled Simple Rules: How to Thrive in a Complex World. He is a global authority on managing in turbulent markets. The Economist named Don “a rising star in a new generation of management gurus,” and Fortune listed him among 10 new gurus you should know.In advance of the Goal Summit, we caught up with Don to hear some of his thoughts about execution and goals:
BetterWorks: How did you become interested in strategy execution?
Don: My first job was as a consultant at McKinsey & Company, where we helped clients develop a strategy and then assumed they would go off and implement it. Then, I joined a private equity firm where we owned and helped run our portfolio companies, and it became painfully clear that execution was critical and difficult. When I transitioned to academia, I was shocked to discover that books and articles on how to develop strategy outnumbered books on how to get things done by ten to one. Even worse, the existing research on strategy execution was largely anecdotal. So I started this research project to fill this gap.
Is execution a big deal problem?
Execution is really important and really hard to get right. 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 U.S., heading a list of some 80 issues, including innovation, geopolitical instability, and top-line growth. Studies have also found that two-thirds to three-quarters of large organizations struggle to implement their strategies.
Could you tell us a bit about how you are studying execution?
You can’t understand what you can’t measure, so my research focuses on collecting granular data on execution. In one study, done jointly with the Young Presidents’ Organization, participating companies implemented simple rules to guide a critical process, such as new product development or market entry, and we quantified the impact. Rebecca Homkes of the London Business School and I have surveyed nearly 10,000 managers in around 300 companies using a state-of-the-art assessment tool to create a data set on the drivers of effective execution. My MIT colleague Neil Thompson, Lucy Hu from Berkeley and I are working with BetterWorks to understand how goal management can drive better execution. All these studies use data and experiments to shed light on how to improve strategy execution.
How do you think goal setting is related to execution?
Goal setting and management is one of the best established ways to get things done in organizations. After the First World War, executives at large companies like GM, DuPont, and GE struggled to manage their sprawling empires of autonomous and diversified business units. In 1954, Peter Drucker introduced Management by Objectives (MBOs) as an approach where executives would agree on explicit goals with their subordinates, which helped them to manage decentralized corporations. MBOs were widely adopted and most of the evidence shows they improved productivity in most companies. I think of this era as goals 1.0, and it was state of the art for decades.
What are your thoughts about modern goal setting approaches?
The next big improvement in goal management, call it goals 2.0, arose in the early 1970s when Andy Grove implemented a system that specified not only objectives, but how to measure progress. John Doerr, who worked at Intel under Grove, refined this model into Objectives and Key Results (OKRs), and introduced this model to Kleiner Perkins’ portfolio companies, such as Twitter and Google. OKRs placed a greater focus on the measurement of objectives and having multiple measures per objective, which were important improvements over the MBO approach which often specified vague objectives. Another innovation was that OKRs took big goals and broke them into chunks so teams could achieve lots of little goals on the way to reaching a bigger objective. When well executed, OKRs can focus everyone on the activities that matter the most. The emphasis on measurement allows teams to track their progress, identify what is not working, and make mid-course corrections along the way.
Are we embarking on a new goal-setting era, and if so, what differences are you seeing now?
Technology is having a profound impact on goal setting. New solutions like BetterWorks are on the cutting edge of goals 3.0, which are real-time and social. Goal setting used to be an annual exercise–in large part because it was so cumbersome to develop and track goals on paper or in spreadsheets. Goals 3.0 speeds up the tempo by making it easy for individuals to update and check in regularly. The benefits of this new approach are significant because companies can now adapt faster and speed time to market. Goal setting 3.0 enables ongoing collaboration across teams, so there’s better coordination. When goals are transparent, it is much easier to see how work links together across teams or functions. Platforms like BetterWorks may make it easier to run a large organization as a self-organizing system where colleagues coordinate with one another on the fly. That would be a huge improvement on many companies’ legacy command-and-control management systems.
What excites you most about the upcoming Goal Summit?
Eight out of 10 companies struggle to execute, and the Goal Summit has a great lineup of speakers focused on how to execute more effectively. I expect we’ll hear practical insights on how to set and goals more effectively as well as pitfalls to avoid. I’m also looking forward to sharing some of our preliminary research findings with the group.Register for Goal Summit on April 16 to hear more insights from Don and other industry leaders.