Formulating strategy is one thing. Executing it throughout the entire organization . . . well, that's the really hard part.
Any mug can formulate strategy. Executing that strategy throughout the organization is an altogether tougher proposition. Here the devil, says Lawrence Hrebiniak, professor at the Wharton School at the University of Pennsylvania and business consultant to many Fortune 500 companies, is in the details. And it is in the provision of information in support of those details where too many CIOs are letting their organizations down.
"When I deal with line managers - people who are actually charged with the responsibility, the accountability of executing strategies - they'll often complain about IT, about not having the information they need to make decisions," Hrebiniak says. "They'll say: 'Yes, it's nice having an IT unit but it's sort of independent; it doesn't work with us to define common problems'.
"If I ask the IT people what's wrong, they'll say: 'Well, they [the business managers] never define the metrics for us. They never come to us and say, well here is the data that we need, or here's the information that we need.'
"So I think basically that line people and staff people including information [technology] people aren't working together well," Hrebiniak says.
Nor, all too often, are their functions and systems. Execution cannot happen without integration, and integration demands the dedicated attention of someone with a company-wide perspective embracing all the systems, functions and parts of the company. After all, a new model of execution frequently necessitates a new organizational structure, which naturally creates an IT issue. Who is better than the CIO to grasp the full implications? "Integration is where CIOs can shine bright, if they know how and what to do," Hrebiniak says.
"The IT people or the CIOs are becoming increasingly important because of this need for integration that we're finally waking up to."
It's the Execution, Stupid
The essential argument of Hrebiniak's book, Making Strategy Work (Wharton School Publishing, January 2005), is that many of today's top executives are far better at developing strategy than executing it and overcoming the political and organizational obstacles stacked in their way.
Execution should be a disciplined process that enables an organization to take a strategy and make it work. The trouble is, Hrebiniak argues, no one is teaching business graduates how that is done. Business schools drill MBAs in planning, and many managers may be conceptually brilliant but most do not have as much as a passing acquaintance with the theory and the practicalities of execution. Instead they find themselves being forced to learn on the job.
The consequences can be unfortunate, to say the least. A recent survey of senior executives at 197 companies conducted by management consulting firm Marakon Associates and the Economist Intelligence Unit found organizations achieve just 63 percent of the expected results of their strategic plans. Michael Mankins, a managing partner in Marakon's San Francisco office, says he believes much of that gap between expectation and performance is a failure to execute the company's strategy effectively.
To compensate for that deficit, Hrebiniak's book offers senior executives a disciplined process model for making strategy work in the real world, it explains just how vital execution is to business success, and it sheds powerful new light on why businesses fail to deliver on even their most promising strategies.
As one book reviewer noted, "Making Strategy Work is a good reminder that there are still organizations out there that have never picked a strategy that worked or implemented a workable strategy successfully. Yet these organizations are full of graduates of the most stellar business schools who know all the strategic management and planning lingo."
Even a master strategic plan can be demolished by poor implementation, Hrebiniak explains, since no business strategy can succeed unless properly executed. Managers charged with implementing strategy must understand the "big picture", and have an intimate knowledge of all the sequential steps that lead to it - and that is where CIOs come in.
How well are today's CIOs rising to that challenge? Indeed, how well do they understand the need to rise to that challenge? Not very well at all, Hrebiniak says. Most CIOs excel at the work of creating, developing and building the frameworks for running operations. What they do not do well is either execution or providing the foundations on which others can execute. In fact, he says, when it comes to execution, too many CIOs fail to understand either the important role they can play or even the fact that integration is key to execution.
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