“It’s a pleasant way to view leadership: you stand on the mountaintop, thinking strategically and attempting to inspire your people with visions, while managers do the grunt work. This idea creates a lot of aspirations for leadership, naturally. Who wouldn’t want to have all the fun and glory while keeping their hands clean?” – Larry Bossidy and Ram Charan, Execution: The Discipline of Getting Things Done

This quote illustrates an important point: executives often emphasize formulating strategy because of the perception that formulating strategy is more meaningful than implementing it. However, evidence suggests that between 70 and 90 percent of formulated strategies are never fully executed, and executive teams are often held culpable for these failures.

Many consider establishing goals to be a function of strategy formulation, rather than strategy implementation. However, both carry their own unique set of goals. A defender strategy — a type of formulated strategy — wards off competitors by maintaining market share and relying on existing products and services. This goal, however, does not consider what organizational members must do to fulfill the goal or formulated strategy. In other words, merely stating that employees should use a defender strategy is not enough because it’s too ambiguous. Instead, executive teams need to perform a set of actions to enable coordination not only within, but also throughout, the organizations they lead. 

What can an organization, and particularly a CEO, do to prompt executive strategy implementation coordination?  

Our research, published in the Journal of Management Studies, suggests that either of two team attributes enable the quality of the executive team’s strategy implementation actions:

#1: Executive team problem solving. Problem-solving as a team isn’t limited to the shop floor. In 1992, Jürgen Weber, the struggling Lufthansa Airlines’ CEO, understood the business was on the brink of bankruptcy. Rather than trying to fix everything himself and come up with a solution, Mr. Weber gathered his senior executives in a room and presented the problem to them. Because they felt the pain and did the thinking, they quickly came up with great ideas that they would “own” to completion. This case demonstrates the importance of CEOs’ effort in galvanizing their executive teams to solve problems. Weber became a role model for developing a combined problem-solving mindset, as seen in the Lufthansa example, in which team members became oriented toward stressing and addressing problems as a collective team in their joint problem-solving efforts.

#2: Executive team interdependence. All aspects of organizational life are characterized by mutual dependency, and its breakdown frequently ends in dysfunction. A primary cause of executive team dysfunction is a lack of shared commitment among executive team members to the same compelling vision, strategy, or goals. On his first day as Merrill Lynch CEO in 2007, John Thain stated that he believed insufficient cooperation and coordination among senior Merrill officials played a role in the bank’s disastrous $8 billion mortgage write-down and risk management posture. Thain did not move quickly enough to remedy this, but he could have stressed the importance of executives working together to complete tasks in their separate areas of responsibility, rather than focusing on their own areas at the expense of everyone else’s. Additionally, he could have changed policies so that members would be evaluated and rewarded on the extent to which they achieve overall organizational objectives (e.g., profit sharing, stock options), rather than evaluated and rewarded only on the performance of their own function, department, or group. These reward systems would have likely placed a combined emphasis on mutual dependency — executive team members’ working together to achieve firm- and unit-level performance objectives.

Do you need both executive team problem solving and interdependence to optimize firm strategy implementation and, ultimately, organizational performance? A word of caution. Our research reveals that although either of the two team attributes can be used to improve the quality of executive team strategy implementation coordination and, as a result, company performance, pursuing both might be counterproductive. CEOs may find it more effective to focus on the intensity of executive team joint problem solving rather than executive team interdependence, depending on factors such as the composition of the executive team, company culture, industry, and others. According to our findings, CEOs should avoid dedicating time and energy to developing both because they substitute for each other meaning focusing on both is unnecessary and wasteful of resources.

Photo by Denise Jans on Unsplash