Executing Strategy in a Downturn

Based on recent Fed projections from the April 28-29 FMOC meeting, the economic outlook is getting darker. Unemployment is projected to be between 9.2% and 9.6% at year end. For more info on the worsening pessimism checkout Sudeep Reddy's blog at WSJ (http://blogs.wsj.com/economics/2009/05/20/fomc-forecasts-the-pessimism-worsens/ ). So this so called downturn may last longer and possibly claim more companies. What are you doing to stay out of the economy's wake? Do you have a strategy to lead your company out of the downturn? If you do, can you execute that strategy? How do you know?

According to an American Management Association survey, "62% of more than 1,500 executives describe their organizations as mediocre – or worse – at strategy execution". Those statistics are from 2006 when the economy was much stronger. The economy and the Obama administration are going to influence these numbers and I'm betting they move in the wrong direction. If you are like one of the executives in the survey and describe your organization as mediocre or worse at executing strategy, you better figure out why. How long will you last with that level of performance?

Companies that have clearly defined strategies based on a deep knowledge of the external environment, ability to execute, and alignment of human, financial, and information capital to that strategy are going to be the ones that take the lead out of the downturn. They know the threats facing their company and the opportunities they should pursue. They seek "blue waters" (Blue Ocean Strategy). If they don't have the capability, they build it. All employees in these companies understand the corporate strategy and how they contribute towards execution. In these companies Performance Management is a business function, not just an HR function.

You must have knowledge of your organization's external environment. Know how economic and political factors might threaten your business or create opportunities. Know what your competitors are doing. Know what your customers needs are. Be on the lookout for fads, trends, and mega trends that might change the way you do business (i.e. globalization, the internet, web 2.0). Do you have this deep knowledge of your external environment? How do you know?

Your ability to execute is critical to bridging the strategy/execution gap. It's been said by many that your strategy is only as good as your ability to execute. You can have the best strategy in the world, but if you can't execute its worthless. Do you have the resource capability (financial, people, information) to execute? How do you know?

Aligning human, financial, and information resources to your strategy is also critical to execution. If you are not aligned in these areas, you will likely have similar results to those companies in the AMA survey. Measure your degree of alignment. If you are poorly aligned, you are widening the strategy/execution gap and not closing it. Do you have alignment? How do you know?

Jim Collins, author of Good to Great and Built to Last, has an excerpt of his new book How the Mighty Fall in this week's businessweek (http://www.businessweek.com/magazine/content/09_21/b4132026786379.htm?chan=magazine+channel_cover+story). The book was conceived with the idea of answering the question, "How would you know if you were on the path to decline?" One pivotal finding is the Five Stages of Decline and that you "can reach stage four of decline before deterioration becomes fully apparent." YIKES!

-RH