Posted by Lancing Farrell 530 words
This is the fourth post in a series of five. The first post discussed the myth that strategy execution equals alignment, the second post discussed the myth that strategy execution means sticking to the plan, and the third post covered the myth that communication equals understanding.
Sull, Homkes and Sull disagree with executives who believe that a weak performance culture is the reason strategy isn’t translated into results. They say that the ‘official culture’ may not support execution, however, the organisation’s true values will reveal themselves when managers make hard choices from day to day, which usually have a focus on performance.
Two thirds of managers cited past performance as the performance most valued when promotion decisions are made. Underperformers are generally not dealt with well. The majority of organisations studied delay action (33%), deal with underperformance inconsistently (34%) or tolerate it (11%). Overall, the companies surveyed had a strong performance culture, yet they struggled to execute strategy.
The authors believe that the reason is that organisations that value execution must recognise and reward factors other than past performance. For example, they list agility, teamwork, and ambition. They believe that companies place much less emphasis on a managers ability to adapt to changing circumstances (agility) than they place on whether they have hit performance targets in the past. Part of the explanation is that agility requires a willingness to experiment with the potential for failure.
‘Trying new things inevitably entails setbacks, and honestly discussing the challenges involved increases the odds of long-term success. Fewer than one third of managers say they can have open and honest discussions about the most difficult decisions, while one third say that many important issues are considered taboo’.
Sull, Homkes and Sull also believe that excessive emphasis on performance can have another subtly influence on strategy execution. If managers believe that they must hit targets above all else, they tend to make conservative performance commitments and set readily achievable targets. They say that ‘playing it safe’ tends to lead managers to focus on cost reduction rather than taking opportunities for growth or other riskier options.
In local government top management tends to set readily achievable targets because it is politically risky to report failure to achieve goals. Have a read of an annual report for your local council and they are likely to have achieved every goal and hit every target. Recently there has been a trend towards including ‘near misses’ where targets are not achieved, possibly in an attempt to appear balanced and not too perfect. When this happens the failures are usually attributed to trying too hard or overplaying a strength – ideas straight out of the guidebook for answering interview questions about your weaknesses.
The most pressing performance problem identified by the authors is the failure to improve coordination across functions. When hiring or promoting organisations are twice as likely to recognise past performance than a track record of collaboration. They agree that performance is critical, but if it comes at the expense of coordination it can undermine effective execution of strategy.
This tale of corporate performance management mirrors local government. Past performance is the most important factor in senior appointments. Interviews for direct reports to the CEO will often only be offered to people already in a similar role elsewhere. If a particular profession usually manages a function, for example, engineers and infrastructure services, only engineers will be interviewed. The questions in interviews are usually about past behaviour and performance. The ‘STAR’ (situation, task, approach, result) interview approach is widespread and although questions could focus on the applicants track record in collaboration, they are more likely to focus on achievement of targets. Councils like to quantify performance and numbers ‘speak for themselves’.
The inherent risk aversion in local government comes into play when someone has been appointed. Making mistakes is frowned upon and there is little flexibility in organisational planning and reporting systems to accommodate a result that wasn’t anticipated. The lack of focus on cross-functional processes mentioned earlier further impedes councils in effectively implementing their strategies.
Sull, Donald, Homkes, Rebecca, and Sull, Charles 2015. ‘Why Strategy Execution Unravels – and What to Do About it’, Harvard Business Review, March.