January 2013 | Strategy
As Procter and Gamble relocates its global skin, cosmetics, and personal-care unit from its Cincinnati headquarters to Singapore, it joins a list of companies including General Electric that are moving closer to growing markets. “What’s interesting,” notes Wharton management professor Larry Hrebiniak, “is that these organizations aren’t just putting a presence there. They’re moving unit headquarters. These are centralized companies making significant structural changes to meet strategic demands. They need to get closer to important markets and they’re making big moves to do it.”
Hrebiniak, author of Making Strategy Work, stresses that these structural changes are just one example of the kinds of new demands strategy is placing on organizations. “Execution is much more difficult than it once was. Ten years ago, the emphasis was on developing strategy, with a belief that execution would take care of itself. It was, ‘just hand the ball to someone and let him or her run with it.’ Today, there are more issues to contend with, including those involving globalization, and those issues are interdependent. It makes implementation much more complex.” But Hrebiniak says that by understanding the key factors involved, and determining which need your attention, you can approach execution logically and improve the odds for success.
For executives attending Making Strategy Work: Leading Effective Execution — who come from manufacturing, professional services, and government organizations — those factors are identified through an Integration Audit. Hrebiniak, who serves as faculty director of the program, designed the Audit to help participants start with their strategy and then work through potential obstacles to implementation, including coordination, structure, incentives, and control. Participants address these challenges during the program, and then have an opportunity to follow up with faculty, including Hrebiniak. “I just got an email from one of the participants seeking my feedback. She described some of the changes she was implementing to address issues she identified during the audit and I provided feedback about additional factors she might consider.
“People are coming to [the program] looking for a roadmap that can help them execute strategy better. For my book I collected data from over 400 managers involved in strategic execution. We use that research that’s grounded in real-world problems to build an understanding of why execution is so difficult. And although it is harder than it once was, empirical evidence shows that there are specific actions managers can take to better their chances for successful implementation.”
Those actions include identifying and then meeting the demands of strategy. “Look at what’s demanded in terms of your organization’s capabilities, talent, and resources. If you don’t have what it takes, you’re going to have to get it, or modify the strategy to be more realistic. If your strategy focuses on low cost, for example, standardization, repetition, volume, and economies of scale are going to be critical.”
Coordination within increasingly diversified and complex organizations creates other structural problems. Critiques of silos are nothing new, but insular business units in larger, global organizations create complex integration issues. Hrebiniak cites GM, which went from using more than 20 different design systems that were unable to collaborate to one system worldwide. The company is also consolidating information systems (which at one time numbered over 7,000) to make communication and knowledge sharing possible throughout the organization.
But complexity isn’t just an internal issue. For Boeing, outsourcing the design and manufacture of about 30 percent of its Dreamliner parts — a strategic move meant to save money — created unforeseen problems that significantly delayed development and caused cost overruns and canceled orders. It was by all accounts a colossal and very public integration disaster. To right its wrongs, Boeing recently announced a reorganization of its commercial jet development programs, creating a new unit responsible for the design, development, testing, and certification of new planes.
These highly complex integration issues highlight the current difficulties with implementation. Ultimately, says Hrebiniak, “You need to coordinate a host of factors. There is greater interdependence across key processes and activities, and execution depends on the ability to tie them together. It’s clear that execution is no longer just about handing the ball off and getting it done. Careful thinking and analysis must be part of the process”
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