BS: Focus On Execution First

Over 10 years ago Larry Bossidy, former CEO of Honeywell, and Ram Charan, an academic and consultant, wrote the book Execution, The Discipline of Getting Things Done. As a student of strategy, I read it quickly.

One thing kept gnawing at me, though, that still gnaws at me today. Get what done?

In November, Rosabeth Moss Kantor, a professor at Harvard Business School wrote an article in Harvard Business Review titled Smart Leaders Focus on Execution First and Strategy Second. The corollary being that stupid leaders focus on strategy first.

She ends the article with this bromide: "In short, encourage innovation, begin with execution, and name the strategy later." 

To which I say: bullshit!

In fact, if HBR bothered to search their own site, they would read a well thought out article called The Execution Trap. Perhaps the author, Roger Martin, a former University of Toronto professor and Dr. Kantor could battle it out in an educator's cage match. 

Let me tell you a true story of a recent soccer injury to my daughter. She was diagnosed by the team doctor with one condition, and the team trainers put together a program to reduce her pain during and after games. Their treatment did not work.

After the season, she went to our family practitioner. More tests. The result was a different diagnosis. She had been misdiagnosed by the team physician. No matter how well my daughter and the trainers executed on the treatment plan, they were treating the wrong ailment. 

Reminds me of Bain & Co.'s Michael Mankins quote:

"If you have a bad strategy, no amount of good execution will help."

When you get in your car in the morning to travel to a place where you do not know how to get there, what do you do? Punch in the address on your GPS, and build your route to that destination from your garage. Not so if you don't think the destination matters. So long as you execute turns, navigate traffic, and follow signs extremely well. No matter where you end up, it matters only if you drove there well. C'mon.

In more practical terms, if a bank's head of branches is building development plans for branch managers, they make choices. For example, should branch managers have small business banking in their curriculum, or retail wealth management? One would think that they would turn to their strategy to make the decision. If the bank's strategy is to be the top business bank in the markets where they have branches, the answer is clear. But without strategy, either can be correct, so long as the branch manager does well. 

There are areas of Dr. Kantor's article in which I agree with her. For example, "we found the perfect strategy" is a statement that has the credibility of "and they lived happily ever after". Chasing the perfect strategy is a fools game.

Chasing no strategy is the same, in my opinion. However, once a strategic direction is struck, the bank should build flexible processes to allow for alterations of course based on customer preferences, markets, and team capabilities. 

In fact, I agree with Dr. Kantor's four implementation imperatives:

1.  Question everything

2.  Inform everyone, then empower champions

3.  Keep relationships tight, and rules loose

4.  Modify quickly

All are execution imperatives. But without strategic direction, the zigging and zagging would waste resources to the point of ineffectiveness. 

Yes, Dr. Kantor, strategy matters.

~ Jeff

P.S. All this talk about execution reminds me of John McCay, former Tampa Bay Buccaneers coach. I couldn't find the YouTube video of his quote, but here is Rick Carlisle, former Dallas Mavericks head coach delivering it brilliantly.

Bankers: Play to Win

I recently read Playing to Win: How Strategy Really Works by A.G. Lafley, Chairman and CEO of Procter and Gamble, and Roger L. Martin, Dean of the Rotman School of Management at the University of Toronto.

The book identified five choices businesses have to make to win, called the Cascade of Choices, because each one cascades from the prior one. And I thought, bravo! But then I tried to think of banks that are making these choices.

Banks rarely had to choose. Instead of focusing on small and medium sized, closely held businesses and the personal banking/wealth needs of their owners (note: Cobiz Financial), we choose to be everything to everyone in towns where we operate. This has sapped resources to the point of ineffectiveness, never committing to any particular path for fear of being wrong. 

In sports, you can never be the hero without the risk of being the goat. In our risk management meetings deep within the bowels of headquarters, we work diligently to avoid being the goat, never allowing us to be the hero.

Here are Lafley and Martin's Cascade of Choices, with my commentary following each one.

1. What is your winning aspiration? The purpose of your financial institution, the motivating aspiration.

I've called this vision, future-picture, high definition destination, and aspiration. It's all the same thing. What does your financial institution aspire to be? If you hear someone say that aspiring doesn't matter, ask yourself: Are they holding you down?

2. Where will you play? A playing field where you can achieve your aspiration.

Equally important, where will you not play in achieving your aspiration? I recall banks that went toe-to-toe with the old Commerce Bank of Cherry Hill, New Jersey on locational convenience. Commerce paid top dollar for prime locations touting extended hours and dubbing themselves America's Most Convenient Bank. Today, those banks are unwinding excess branch expenses that resulted from playing on Commerce's turf.

3. How will you win? The way you will win on the chosen playing field.

On Service! I take my liberties poking bankers on the service imperative because superior service must graduate beyond the platitude it has become. If you will win on your chosen playing field on service, then you focus on customers proven to appreciate service, price accordingly, hire capable employees that can be of service, develop them to hone their skills, and reward their success. 

4. What capabilities must be in place? The set and configuration of capabilities required to win in the chosen way.

The author of a recent American Banker article opined that it wasn't likely millenials will replace human interaction with financial technology. They still wanted someone to advise them and help them with their budget. Do banks have this ability now? If a millenial walked into your branch for financial advice or to help with their budget, could your bankers do it? 

5. What management systems are required? The systems and measures that enable the capabilities and support the choices.

I recently penned a BAI Banking Strategies article Linking Accountability to Strategy. I took the wild leap of faith that a bank would have branch and officer profitability reporting abilities. My experience tells me many don't, and they often revert to lender production and portfolio size to maintain accountability. This may have unintended consequences that is not consistent with your strategy. So in moving through the Cascade of Choices, make sure you have the management systems in place to execute on your strategy.

There you have it. I highly recommend the book. P&G thought so highly of Lafley that they brought him back shortly after he retired. In the introduction to the book on Amazon, the pitch read:

"This is A.G. Lafley's guidebook. Shouldn't it be yours as well?"

~ Jeff