Execution: An Interview with Ram Charan
 What’s the difference between GE and the average corporation, or between a legendary CEO and one who continually stumbles? In a word, execution.
Ram Charan has seen start-ups and corporate giants from the suite at the top, and the view has not always been pretty. He has advised dozens of C-level executives and board members, with clients including top executives at GE, Ford, DuPont, Universal Studios, and Verizon. He has written for Harvard Business Review and Fortune and has published several successful books. His new book, written with Larry Bossidy, is titled Execution: The Discipline of Getting Things Done. In this interview with the Journal of Business Strategy, Ram shares his views on what execution really means and how it relates to a company’s strategy.
Some business journalists have derided strategic planning as being irrelevant in today’s constantly shifting business environment. With things changing so fast, do you think it’s more important "to do" rather than "to plan?"
I wouldn’t say strategic planning is dead, but it is now required to be more of an action plan. The most brilliant strategy in the world won’t work if your assumptions are wrong, especially in relation to whether you have the right people in place to make it happen. A strategy is not even worth writing down unless you can see how your company is going to make it happen. Once that road map is in place, you must have the people and mechanisms in place to continually adpat to a changing climate.
Criticism of the strategic planning process often centers on the cycle of long meetings, endless reports, and internal bureacracy. Is there still too much of that in corporate America?
Too often, most of this effort is complication for the sake of complication. While a business strategy may be 50 pages long, anyone involved should be able to summarize it in one page or describe it in 20 minutes. What are the core building blocks? If the managers involved can’t boil it down to key points, how are investors, analysts, or customers going to be able to figure it out?
Have investors become less patient and less willing to let a long-term strategy develop?
Companies can no longer say, "Our strategy will take time to produce results." Success is not measured over years. A company can win or lose market share before it even realizes what has hit it. Most often today the difference between a company and a competitor is the ability to execute. Leaders who can’t execute don’t get a free run anymore. In order to succeed in both the short and long term, execution must be built into a company’s strategy, its goals, and its culture.
How involved does a company’s leadership need to be in the day-to-day execution of their quarterly and yearly goals?
A leader cannot issue edicts from a mountaintop and expect to get things done, nor can he or she only be a "big picture" thinker. Those at the top must be deeply involved in three areas: picking other leaders, setting the strategic direction, and conducting operations. These things cannot be delegated, no matter what the size of the organization.
Who else should be involved in the actual strategic planning process?
The business leaders must be involved in developing the substance of the strategic plan, but not without the intimate involvement of the people who will have to live with it day in and day out. The line people know the business environment and the organization’s capabilities. They’ll see competitive obstacles nobody in upper management has considered and will find creative solutions that only someone who really knows the process will see. Developing the plan as a group, with a designated leader who can keep things on track, will also benefit the individual members, who will learn from the process. It’s one of the best ways to develop leaders internally.
What should happen to a strategic plan once it is approved and in place?
First of all, it needs to be adaptable, balancing short-term issues and long-term goals. It can’t be a thick binder that gathers dust on a shelf. This is another reason to have the people who will carry it out be involved in the planning process. When the strategy is ready to execute, these members will quickly know what’s working well and what needs to be tweaked. As owners who have the essence of the objectives in their heads, they’ll help management make the necessary changes that any new environment requires. Most strategies fail because the short term and medium term issues have either not been addressed or have been made too rigid to work.
Should there be a strategy review before the plan sees the light of day?
It depends on how it’s done. In too many companies, a strategy review is a mind-numbingly dull affair that accomplishes next to nothing. It’s a dry discussion of numbers, with no real creativity or productive debate. This should be a lively meeting where managers test assumptions and honestly assess the landscape. Is this idea consistent with the realities of the marketplace? Does it fit it with our real capabilities? Are we pursuing more ideas that we can handle? Will the idea or ideas make money? The answers may not be positive or polite, but they need to be asked before resources are committed.
Some plans get bogged down in territorial fights, especially over budgets. How important is the budgeting process?
A budget is only useful if it reflects the reality of the marketplace, which means it can’t contain static assumptions. In Execution, I argue that a company can put a budget together in three days and I outline how to go about it. The key ingredient is dialogue between business leaders, with each understanding how their revenue and spending affects other parts of the big picture. After three or four rounds of discussion and trade-offs, what’s left is an adaptable budget that can be revised to fit the circumstances. It can be quickly adjusted in response to new opportunities, creative ideas, or external surprises that impact revenue.
Many of the principles you and Larry Bossidy discuss in Execution will seem quite obvious to MBA students, yet all of us have seen highly-paid CEOs kill a great brand or business in the space of a few quarters. Why is good execution so difficult for many leaders to accomplish on a regular basis?
To begin with, leaders don’t focus nearly enough on follow-through, on actually getting things done. Leading for execution is not rocket science, but it does require you as a leader to be deeply and passionately involved in your organization and have an honest feel for your capabilities and potential.
Walk into any large bookstore and you’ll find dozens of books on strategy and leadership development. There is an endless supply of material on business tools and processes. Execution, however, is a specific set of behaviors and techniques that companies need to master in order to win. It is not a single "concept" or million-dollar idea. It is a discipline of its own, and the critical one for ongoing success, quarter after quarter.
Some of the principles you discuss are most applicable to executives at the top level of the organization. What advice would you give to MBA students who are striving to become great leaders in the future?
Looking over some 35 years of progress of my MBA students, three things seem to stand out for personal happiness and personal progress. 1. Keep your eye on what skills, perspectives and attitudes you need to continually improve, build and expand. Find ways to achieve those dreams. 2. Always adopt an attitude of learning from anybody at anytime. However, be able to separate fads from the real thing. 3. Leaders and managers will succeed. They succeed through people and through getting things done. Ideas can be rented. The skill in leading people and making them prosper is not rentable. Practice it, practice it, practice it.
 Execution: The Discipline of Getting Things Done is available at all major bookstores or can be ordered here.
- ### -
© 2003 Journal of Business Strategy - www.journalofbusinessstrategy.com
Interview conducted in August 2003 by Tim Leffel, Editor. |
