Playing To Win
Why You Should be Afraid of ‘Great Execution’
I started Year III with an execution piece — Why ‘Execution’ is a Bankrupt Management Concept — and spurred by three miserable recent episodes as a customer on the receiving end of ‘great execution,’ I decided to commence Year IV of the Playing to Win/Practitioner Insights (PTW/PI) series with a yet another piece on ‘execution.’ Honestly, it feels like a losing quest — tilting at a proverbial windmill — but I have got to keep trying. So off we go with Why You Should be Afraid of ‘Great Execution’: The Dark Side for Customers. You can find the previous 169 PTW/PI here.
The Dominant View
As I have argued before (above and elsewhere), the near universal view in management is that there is a thing called strategy and a different thing called execution, and a belief that once strategy is formulated, it needs to be executed. And the dominant view is that there is a hierarchy of importance. “A mediocre strategy well executed is better than a great strategy poorly executed” is the oft-repeated nostrum. I have argued in the pieces cited above that it is illogical rubbish and won’t repeat the arguments here.
Another favorite is that “the only strategy that a customer ever sees is what is executed.” The latter is, I believe, true but the implication isn’t what is intended. The intended implication is that since execution is what the customer sees it is paramount in importance, relative to strategy. The actual implication is quite to the contrary, as I will seek to explain.
Three interactions as a customer with ‘great execution’ in the past month convinced me to tackle this notion that “the only strategy that a customer ever sees is what is executed.” The three were in the transportation, insurance, and telecom industries. I will tell the telecom story for context — though the others are similar in content and structure.
The telecom story is bittersweet because it concerns my interaction with Rogers Communications, Canada’s leading mobile/Internet provider. For me, Rogers is sentimental because, way back in 1983, I served as strategy consultant for the bid of the troika of Ted Rogers, Phillipe de Gaspé Beaubien and Marc Belzberg — named Cantel — for the second national cellular license. The Canadian government gave half of the cellular spectrum to the legacy wireline carrier, Bell Canada, and held a competition for the other half of the spectrum (this was before the days of spectrum auctions, so it was a $10+ billion giveaway). Cantel was an underdog to numerous competitors including the formidable and favored joint venture of CNCP Communications (the national telex provider at the time) and American giant and cellular pioneer, Motorola. Cantel won in a longshot upset and because of my connection to the winning bid, I have been a loyal Rogers (which bought out the partners) customer ever since.
My wife and I had Rogers service in our Toronto condo but since we are only there occasionally, we suspend our service when we are gone. It has always worked well under the Rogers plan for suspensions and restoration. We had the service restored before we went to Toronto over the holidays and contacted Rogers to suspend the service when we left, at which point we were told that we had violated a new policy and because of that were not permitted to suspend. When I asked about the ‘new policy’ I was told that it limited the suspension period to six months and because we had violated the policy by suspending service for seven months, we no longer had the right to suspend. When I asked why we weren’t informed of the new policy or warned near the end of six months, the representative said it didn’t matter, the rule was that we lost the right to suspend.
As you can imagine, lots of back and forth and escalation occurred, but each person reiterated that the rule is the rule, and they couldn’t make an exception even though the policy was being applied retroactively — in fact, the suspension/restoration system wouldn’t allow any deviation.
I could have gone to the top. Not only had I worked multiple times for the late Ted Rogers but also subsequent Rogers CEOs, the last being Nadir Mohamed over a decade ago. But I was sufficiently disgusted that I terminated our service after being a customer for 40 years.
I did the opposite in the insurance case, which was similarly stupid. In that case, I just went to an EVP (who I knew well) of the parent of the parent (I.e., two levels above) of the insurance company in question and the stupid decision was reversed with an apology in less than a day.
The nostrum is correct: this only thing this particular customer experienced was ‘execution.’ Somebody at the top set strategy. In the Rogers case, it (if we can call it a strategy) was to extract more revenue from customers who suspend services for part of the year. It was obviously a stupid approach. If Rogers wanted to extract more, it would have been smarter to just raise the monthly cost of suspended service (it was arguably too low) rather than force customers to continue taking a service they don’t want or need. The same profitability goal could have been accomplished in a more intelligent way.
That notwithstanding, they did get ‘great execution,’ if by ‘great execution’ it is meant that customer-facing employees followed the strategy dictates exactly. Each representative I spoke with knew that it was profoundly unfair to apply new rule and mete out punishment without informing customers of the rule. And during the discussions, I made it clear that I was going to terminate the service, which is obviously the worst thing for Rogers. Once they have a subscriber, it is guaranteed revenue on a fixed-cost network and nearly 100% gross margin. All I asked for was that the rule (stupid as it was) be applied proactively not retrospectively.
The key takeaway is that this bad-for-the-company stupidity is the direct consequence of the strategy versus execution framing. You can’t have subtle, nuanced execution. No such thing exists in space or time. That is, in fact, strategy choice: the customer-facing employee taking in nuanced information and making an intelligent decision — with the customer — under uncertainty, competition, and constraints.
There will always be nuance. The idea that the strategy geniuses (or in this case strategy goofballs) on high can imagine and predict all situations in advance is ludicrous — and in this case they couldn’t even predict that customers who have a punitive rule applied to them retroactively won’t like it. (Parenthetically, it is like the self-driving vehicle problem. No amount of mapping and coding can predict perfectly what will happen in the streets in real time.)
The problem is particularly acute in the service economy, which now makes up 70% of US private sector GDP and nearly 80% of private sector jobs. In service businesses, there is usually more customer contact with lower-level employees than in product businesses, where lots of lower-level employees (e.g. factory workers) don’t interact with customers at all.
Those lower-level, customer facing employees have two alternatives. The first is to follow the rule set by the strategy — as was the case here where the rule was strictly enforced. The second is to understand the strategy established above and make the best strategy choice consistent with the overall strategy based on the specifics of the customer situation. Rogers made sure it was the former. In enforcing that, they prevented the company from getting help from its customer-facing personnel to fix their stupidity — or at a minimum generate the best joint outcome for this customer and the company.
But the same happens in product companies. Alan Malally is credited with saving Ford during the global financial crisis — which he probably did by bulking up financially before the credit tsunami hit. And he is also credited with transforming Ford’s execution — getting its vehicles out on time and on budget through application of a rigorous ‘cycle plan.’ But I got to observe up close the impact of this focus on unquestioning execution. It produced on-time, on-budget vehicles that with few exceptions (e.g., F150/250, Transit Van, Mustang) customers either didn’t want or wouldn’t pay a price that enabled the vehicles to turn a profit. But dutiful Ford people kept dutifully “executing the strategy” until a new CEO from outside helped executives understand that dutifully and unthinkingly executing a flawed strategy is not a meritorious activity.
This is why strategy versus execution is a dangerous conceptualization. It never worked. Companies could get away with it to a greater extent in the product economy, but not entirely by any stretch. But it is genuinely deadly in the service economy.
Unless you are the CEO of your company, you will be told by superiors to ‘execute their strategy.’ Instead of dutifully doing whatever you think that means, ask your superiors what exactly do they mean? Don’t expect your superiors to be happy because they won’t have a good answer. They will probably say things like, “just make my strategy happen.” Don’t take the bait. Ask what that implies for what you should do? Again, expect your superiors to be unhappy. They will probably raise their voice and say something like: “That is what we pay you to do.”
Hang in and don’t take that bait either. Tell your superiors that you understand that you are paid to do something, but you still wonder what it means for them to call it ‘execution.’ Then give them an example to enable them to test their thinking. Note (and I am making this example up) that they have said that their strategy is to differentiate the company on the basis of service quality and ask them what actions they want you to take to achieve that goal. If they repeat “That is what we pay you to do,” say: “Ah, I hear you saying that you want me to figure out among all the ways to differentiate on service quality, I should pick the one that has the best chance of competitive success and figure out how much investment it will take to achieve that goal, right?” If they say yes, and they probably will, ask them what makes it different from what they have just done in creating the ‘strategy’ that they want you to ‘execute?’
They will be really angry at this point because they will realize that you have exposed their desire to do something that they call ‘strategy’ and, to make it special, they want you to do the same thing as they just did — i.e., make choices under uncertainty, competition, and constraints — but call it a different name, which facilitates them saying that you screwed up the ‘execution’ of their awesome ‘strategy,’ or if everything works great, take 100% of the credit for having a ‘great strategy.’
But you will have helped your company be less silly and more effective — and maybe even taught your superiors to be less clueless.
Because of the dominant training on strategy versus execution in the world of management, you will also be in a position to ask your subordinates to ‘execute your strategy.’ At this point, I encourage you to recall the Golden Rule: Do unto others as you would have them do unto you. Instead, ask them to help you ensure that there are great strategy choices from the C-suite all the way to the front lines. That will give you a chance to avoid becoming (well) another Rogers!