Strategy Vs. Execution: Which Is More Important to Your Company's Success?
If you had to choose, would you say a sound business strategy is better than a successful execution -- or vice versa?
The following excerpt is from Benjamin Gilad and Mark Chussil's book The New Employee Manual: A No-Holds-Barred Look at Corporate Life. Buy it now from Amazon | Barnes & Noble | Apple Books | IndieBound
Bold moves are never easy. They're also not cheap or safe. But one reason leaders discard maverick thinking is because they pay three seconds' attention to strategy and immediately proceed to execution challenges.
Which is more important: strategy or execution? The vanilla answer is "both," which you'll get from people who also follow (and like!) the popular posts on LinkedIn that claim the secrets to getting hired, promoted, living long and/or being wealthy are to be kind, work hard and avoid hitting bosses in the face.
You need to make a choice. Do you know why? Because strategy is all about choices. Leadership is about motivating. Management is about organizing and controlling. Strategy is about one thing and one thing only: making choices.
Making choices is the hardest thing in the world for successful companies because it means not doing something, and that sounds red-flag-waving, emergency-siren-blaring risky. People are afraid to make a mistake and cause their success to come crashing to an end. Refusing to choose -- "covering all the bases" --seems so much safer.
People who think strategy and execution are equally important don't tell you that they really think strategy is overrated and execution is extremely hard. That's why they spend three seconds on strategy and fret endlessly about "New Package! Same Great Taste!"
They might be right, but that's only when the strategy is a mere continuation of the current strategy with a tactical tweak here or there. And that's what often passes at Corporate for strategy.
The vast majority of employees -- 99.99937 percent to be exact and scientific (we checked) -- are dedicated to execution. That is, by definition, the role of employees and managers but not leaders. In a typical Corporate unit, that translates into thousands, tens of thousands, hundreds of thousands of people who toil day and night and often on the weekends and during vacations to implement their company's strategy. If 100,000 employees putting checkmarks on tasks accomplished, meetings attended, quotas met, emails sent and vendors contracted can't execute, who can?
So why do managers think execution is hard and strategy is easy? Probably because no one gathers them to take a break from the relentless execution for one day and think strategically. When someone does, managers are often shocked at how hard strategy is.
The crux of the issue isn't actually what's harder. The crux is the underlying belief that if execution were just a bit better (or actually, perfect), the company will prosper, competition will shrivel and peace will dawn on Earth. That underlying belief fits well with the knee-jerk response to stagnation or decline: Circle the wagons and execute the wrong strategy harder!
Good strategy triumphs
Excellent execution cannot save bad strategy any more than fine china can save bad food.
Strategy stumbling on execution might be saved with honest communication from leaders who prefer confronting reality to listening to the "mirror, mirror on the wall" chorus. U.S. airlines' strategy of constant price wars was replaced by quiet "territorial division" where the U.S. was neatly carved up by dominating hubs (Delta in Atlanta, American in Dallas, and United in Newark, among others). Prices could then be raised given the fewer options available to passengers, which, coupled with reducing capacity and charging for everything extra (baggage, meals, seat selection; next: bathrooms?), proved a breakthrough to an industry that was once a perennial loser. No one in their right mind would call airline service outstanding, and dragging passengers bleeding from their seats because of overbooking has done little to gain admiration. But the profits keep soaring. And when the strategy of overbooking became a huge PR problem, airlines showed (tactical) agility by quickly replacing the practice of offering a cheese sandwich and a recycled water bottle as compensation for those volunteering to give up their seats with thousands of dollars in incentives.
The strategy of dominating hubs was the result of consolidation. It created barriers to entry. Loyalty programs -- a truly innovative marketing strategy -- put smaller regional airlines at a crushing disadvantage and further promoted consolidation into big ones. It may have been less than cherished by consumer advocates, but the alternative was bankruptcy.
Interestingly enough, Southwest Airlines, which has proudly kept its strategy of being the only domestic airline that doesn't charge for the first two checked bags, is also the only airline that has been profitable for 44 years. Now that's a competitive strategy that doesn't even need to correct for bad execution.
Why can't Corporate do the same? Giora Keinan, of Tel Aviv University, and several other researchers studied the effect of stress on perception. His 1999 study, reported in the journal Anxiety, Stress & Coping, revealed that especially during periods of stress, our human tendency is to narrow our focus: "Let's just do what the others are doing, only execute it better. We have a 6.5-inch entertainment screen while they only have 5.8 inches."
Strategy is hard -- but it's worth the effort. Execution is hard, but if the strategy is wrong, at best, it's not worth the effort.
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