Which is More Critical – Strategy or Execution?
Have you and your leadership team debated this issue recently? Especially as our recovery is still underway-and so many charges are occurring in consumer behavior and COVID responses. This is on the mind of my clients. So consider this:
Would you rather have great execution than superior strategy in your company? I have heard many owners and CEOs say this. However, I firmly believe that you can’t have one without the other.
Some leaders say, “Strategy is results.” They think that strategy doesn’t matter as long as you are getting results. They associate strategy with research, analysis, detailed planning etc., and execution with getting things done. Their message is that doing has more value than analyzing. This perspective equates strategy to slogans like “Our strategy is to become the leader in our market.” This thinking implies that strategy is less important than execution.
Strategy vs. execution
However, experience tells us that strategy is not just slogans. It is clarity on the series of choices you make for your company on where to engage and how to win.
You make clear choices about how you are going to compete and how you will make money in the future. You choose which customers you are going to focus on, and how you will position and deliver your offer in a way that makes you meaningfully different from your competitors. You choose which activities you are going to perform and which activities you will say ‘NO’ to.
Execution is producing results in the context of those choices. Therefore, you cannot have good execution without having good strategy.
We all probably agree that you cannot achieve good results without good execution; and having a good strategy alone is no guaranteed formula for success. But don’t jump to the wrong conclusion that this makes execution more important than strategy.
Consider these examples
Toyota generated better results than GM for many years because it executed better than GM. And, it was able to out-execute GM because it made clearer and more coherent choices about where it would play and how it would compete. Toyota faltered in 2010 and 2011, which reinforces that good strategy alone isn’t enough; you have to have good execution as well. But don’t confuse this with the fact that the quality of your execution is dependent on the quality of your strategy.
Southwest Airlines outperformed American Airlines for decades. Why? Did Southwest execute better than American? Absolutely. But it’s no coincidence that Southwest also has a better strategy. It has a more sharply defined target customer, a more compelling value proposition and a well-orchestrated set of capabilities to deliver that proposition.
How about retail banking? A typical retail bank doesn’t really need a distinctive strategy to produce an attractive return on capital as long as it executes well. Most retail banks have strategies that are virtually indistinguishable from one another. Have you experienced any retail banks that have created distinctive, coherent strategies that enable them to have superior execution?Booz & Company
So when you hear statements like:
- “I’d rather have great execution with a mediocre strategy.”
- “You don’t win by having better strategy; you win with superior execution.”
- “We don’t need a new strategy to improve performance; we just need to execute the one we have.”
The response is:
- You need a good strategy to have good execution.
- Yes, having a good strategy alone isn’t enough to win, but your ability to execute well depends on how good your strategy is and how well it’s understood by everyone who makes major decisions for your business.
Executive Summary: When your business or company is not executing well, take a look at your strategy. Improving it will be the key to unlocking better execution.
© 2021 David Paul Carter. Examples sourced from Ken Favaro, Evan Hirsh, and Kasturi Rangan of Booz & Company.
Photo Credit: Pict Rider | iStock