For the past 10 years, London Business School professor Donald Sull has studied firms that have excelled at execution in some of the world's fastest-growing markets, such as China and Brazil, and tough industries, such as financial services and fashion. In Harvard Business Review, he shares seven questions from that research to assess your company's readiness to rebound from the recession:
Do you miss opportunities that others spot?
Despite massive investments in information technology and sophisticated data systems, many companies miss market shifts that rivals sense and exploit. To continually identify gaps in the market, you need real-time data, the ability to share it in your company, and the wisdom to supplement that data with direct observations in the field. He notes that Spanish retailer Zara, known for its capability to respond speedily to market shifts, has its designers, marketing managers and buyers work side-by-side in an open office setting that stimulates sharing and discussion.
Are your hydraulics broken?
Organizational hydraulics, Prof. Sull explains, are the mechanisms that senior executives use to translate corporate objectives into aligned actions by individuals across the organization. But in many companies, top executives deluge staff members with multiple, often conflicting, priorities, and everything plugs up. Alex Behring, chief executive officer of Garantia Investment Bank in Brazil in the 1990s, set out to repair the deteriorated organizational hydraulics in a railway bought from the government through such measures as capping the number of corporate priorities at five per year and requiring every employee to meet and negotiate with his or her boss both team and individual priorities for the year, again limited to five.
Do you reward mediocrity and call it teamwork?
In many organizations, he says, executives socialize bonuses in the name of teamwork, believing that differential payouts can stifle co-operation and long-term thinking. Variable pay represents a small portion of overall compensation, with the range of bonuses narrow. He argues instead for rewarding individuals who do what they say they will with outsized bonuses.
Are your core values a joke?
The most agile organization that Prof. Sull studied shared a core set of values: strong achievement ethic; personal responsibility by all employees for results; creativity to challenge the status quo; and integrity, to offset the temptation to cut corners when taking on ambitious goals. "Rather than print posters listing the values that then languish on conference room walls, executives should breathe life into the corporate culture by hiring and promoting individuals on the basis of the adherence to values," he says, noting that Reckitt Benckiser, a consumer goods company, created a pre-screening tool that allows potential employees to assess their fit with the organization.
Are you talking about the wrong things?
Managers spend about three-quarters of their time in discussions, and need to be adept at four different types of conversations that facilitate execution: making sense of volatile situations; deciding what to do, not do, or stop doing; soliciting and monitoring commitments by others to deliver; and making corrections in mid-course. Beware of executives who excel at only one type of discussion, and struggle with or avoid the others.
Have your Vikings become farmers?
Effective executives are like Nordic Vikings, who attacked when they saw an unprotected spot, and retreated when they realized they couldn't win. Do some of your executives have that same instinct, or are they all like farmers, more interested in protecting and tilling their current fields?
Do you rely on heroic leadership?
The economic crisis forced many executives into firefighting mode but, over the long haul, you need leaders who can build up your organization's execution strength in a disciplined way. "Senior executives who dash from crisis to crisis are a sign of organizational weakness, not leadership strength," Prof. Sull warns.
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