Execution by Larry Bossidy & Ram Charan

March 30, 2008 at 7:12 pm 1 comment

Execution

In the year 2000, 40 CEOs of the Top 200 Fortune 500 companies were let go. This is because sometimes even smart, highly regarded people fail to produce critical results. Results they promised to deliver. Bossidy and Charan believe this is fast becoming an epidemic due not to the volatility or unpredictability of the business environment, but to the direct consequence of the lack of execution. The thesis here is that execution – the real job of business leaders and the key discipline for success today – bridges the gap between what leader want to achieve and the ability of their organizations to deliver it.

Part I: Execution – The Fundamentals

There are three critical points to understand:

1. Integral to strategy, execution is a discipline that prosecutes the three core processes of people, strategy, and operations with rigor, intensity, and depth.

2. It is the major responsibility of the business leader, who gets things done by taking responsibility of the business leader, who gets things done by taking charge of running the three core processes (no delegation).

3. Execution must be a core element of the organization’s culture, embedded in the reward systems and in the norms of behavior.

These points are built on seven essential behaviors of leadership, an effective framework for cultural change, and having the right people in the right place.

Leaders:

  • must know their business
  • have acquired a lot of knowledge, experience, and wisdom which they must pass on to the next generation of leaders
  • directly influence the behavior of the organization and behaviors deliver results
  • must change the beliefs that influence people’s behavior
  • have the most important job of selecting and evaluating people

Though the judgment, experiences, and capabilities of people make the difference between success and failure, many leaders do not pay enough attention to the quality of this resource – the one thing under their control. Instead they pay more attention to budgeting, strategic planning, and financial monitoring, when they need to commit as much as 40 percent of their time and emotional energy to selecting, appraising and developing talent.

Critical Point: Boards, CEOs, and senior executives place too much emphasis on education and intellectual qualities and neglect to determine how good a person is at getting things done.

Part II: Execution – The How

If leaders model the right behavior, create a culture that rewards execution, and have a consistent system for getting the right people in the right jobs, the foundation is in place for operating and managing the people, strategy, and operations processes effectively. Bossidy and Charan stipulate that the people process is the most important, for people create strategy and translate strategy into operations.

A robust process:

  • accurately/exhaustively evaluates individuals
  • provides a framework for identifying and developing all levels and kinds of leadership
  • is the basis of a strong succession plan

Most companies evaluate the jobs people do today instead of focusing on whether individuals can handle the responsibilities of tomorrow.

This kind of framework must be built on:

  • linkage to the strategic plan/milestones (near, medium, and long terms) and operating target
  • including specific financial targets
  • development of the leadership pipeline through continuous improvement
  • decisions on what to do about non performers

Most companies have three major flaws in their budgeting/operations process:

  1. The process does not provide for robust dialogue on the plan’s assumptions
  2. The budget is built on desired results, but does not specify the actions that ensure those results
  3. The process does not provide coaching opportunities for people to learn the whole business, nor does it develop the social structure for working together for a common cause

Thus, an operating plan must include the programs the business is going to complete within one year:

  • product launches
  • marketing plan
  • sales plan
  • manufacturing plan that stipulates production outputs
  • production plan that improves efficiency to reach specified earnings, sales, margin, and cash flows

Note: An open debate on assumptions is a critical component. Debating the assumptions and making trade-offs build the business leadership capacities of all involved.

Advertisements

Entry filed under: Leadership.

The Leadership Challenge by James M. Kouzen and Barry Z. Posner The One Thing You Need to Know by Marcus Buckingham

1 Comment Add your own

  • 1. Ed Schipul  |  April 15, 2008 at 4:08 pm

    Great cliff notes! Thanks for the summary!

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


March 2008
M T W T F S S
    Apr »
 12
3456789
10111213141516
17181920212223
24252627282930
31  

Blog Stats

  • 37,446 hits
Contact: bookreviewsummaries@gmail.com

%d bloggers like this: