What is Your Reality?
Good execution is really about one thing: understanding the reality of your organization and making decisions based on facts.
The Reality of Execution
One of the most critical business books from the early 2000s was Execution: The Discipline of Getting Things Done by Larry Bossidy and Ram Charan. In the book, Bossidy and Charan described execution as a “systematic way of exposing reality and acting on it.”
The three most important words in the book were “discipline,” “reality,” and “acting.” Twenty years later, their approach is more relevant than ever, and these words still describe how to successfully improve execution performance.
Bias, Bias, Bias
Bossidy and Charan stressed the importance of “reality” because they appreciated how much leaders may have a biased understanding of their own organization.
In our client work, we use the Line-of-Sight analytics platform to evaluate execution performance; it shows the discrepancy that can exist between the leaders’ assessment of their company’s execution capabilities and that of their managers and employees directly involved in daily tasks and activities.
Measured on a scale of 0 to 100, we routinely see differences of 20 points or more between CEOs and their leadership teams in these assessments. The delta is even wider when we survey front-line employees. That difference in perception is not surprising: employees have a front-row seat in all the tasks and activities that make up daily execution. They see firsthand what works and what does not. They are the ones making decisions based on their understanding of the strategy.
Conversely, company leaders may not need to know all operations to the last detail. But they should appreciate that their own understanding might be biased because they are separated by several degrees from the reality of daily execution.
This leadership bias is not unique to strategy execution. It is a well-known factor in risk management (where it is called the “risk ceiling”); it causes leaders to underestimate the operational risks their organization is exposed to because they do not have personal experience or knowledge of these risks.
It is also prevalent in talent optimization: when the Predictive Index surveyed executives and employees about how engaged they felt in their current role in 2021, they found that executives’ engagement was 25 points higher than individual contributors. When leaders feel a deep connection to their work, it is easy for them to assume that everyone else shares the same engagement, and data shows that this assumption, like the perception of execution capabilities, is frequently flawed.
Getting Your Reality Right
Bossidy and Charan suggest a solution to correct for this execution “leadership bias”: know your reality.
Reality is premised on two conditions:
When it comes to execution, those who know are the employees directly involved in company operations. The sum of their actions is execution. You cannot assess execution capabilities from the top down; you need to ask employees in every single part of the organization.
This is where Bossidy and Charan’s “discipline” comes in: you cannot get to reality by just interviewing employees or running focus groups; you need an objective measure as the basis for evaluation, and a deliberate process to gather and process the data.
These two conditions, getting the facts from employees and using quantified measures, are why we implement analytics’ platforms like Line-of-Sight; they synthesize the sum of all employees’ perspectives on operations into metrics across a small number of execution factors (Line-of-Sight uses five factors: strategic understanding, leadership, balanced metrics, activities and structure, and human capital).
Using quantified, standardized measures is what allows leaders to understand their current state and track progress.
Acting on Reality
Using quantified measures to identify possible gaps in execution capabilities can unlock considerable value. A well-established, medium-sized trucking company with over 2,000 drivers had grown consistently over 20 years. Yet as it grew, it progressively lost sight of its strategy of establishing long-term relationships with customers through service excellence.
By the time the CEO sought help, revenues and brand reputation had both significantly eroded.
By objectively measuring execution capabilities, the CEO found out what his reality was: analytics showed that confusion about the company strategy led employees to make decisions that compromised delivery quality and diminished clients’ satisfaction. Furthermore, disengaged leadership and middle management led to low morale, which led to drivers’ attrition thus compounding quality issues.
A turnaround plan based on this assessment was aimed at renewing and clarifying the company’s strategic intent and doubling down on service and relationships. The leadership team got a wake-up call, leading to more frequent operational meetings and greater involvement in daily activities and processes. The company refocused on training and development and started to use behavioral, analytics tools to hire and retain drivers.
Within 18 months, the revenue slide was stopped and reversed, with the topline increasing by 9% in the first fiscal year following the assessment. Driver retention increased by 27%. From an objective standpoint, strategic understanding among employees shot up from 31% to 89%, human capital capabilities went from 28% to 75%, and activities and structure (a measure of how employees feel their work is consistent with the strategy) went from 39% to 78%.
The CEO did get a reality check based on a disciplined assessment of the company’s capabilities, and he and his team acted in a thoughtful manner based on measurable facts. This is Bossidy and Charan’s textbook mindset on good execution.
Where to Start
If you’re a leader who wants an unbiased view of the execution capabilities of your organization and experience the same improvements as in that trucking company, give us a call.