Strategy, execution and accountability

Last week I posted a note on the strategy vs. execution debate.  A friend and colleague emailed me to say he thought it was a good post … but he disagreed!  We’re having an interesting exchange off line, but he raised the issue of accountability.  His view: accountability for the success of a strategy rests with those who develop a strategy … they are therefore unable to walk away prior to execution as their job is not complete.  

Absolutely.  But I suggest a more layered approach to thinking about accountabilities for strategy. 

There are three distinctive layers of ‘activity’, with each one the primary accountability of a particular level in the hierarchy: viz. 

In practise, each ‘accountable’ layer should – in my experience always do – engage their teams in helping them develop their work stream.  (Whether they do this well enough is a question for another post: executives typically over-estimate the extent to which their reports understand the strategic context).  Or, put another way, each layer of the hierarchy should work ‘up one level, down one level’ when strategy is the focal issue. 

Thus, the MD/GM team works on strategic intent (shaping & framing); but this team often does the initial heavy lifting on the strategic translation because these are typically cross functional levers that the organisation is pulling. 

The GM/Manager teams expand this initial work on translation, incorporating more specificity into the programs and sub-programs, adding a richness which isn’t always possible in the early strategic translation.  The same approach applies to managers and their teams.  This hierarchical structuring gets a little fuzzy in practise if we are dealing with cross functional projects, but the layering principle will still apply. 

This layering of accountabilities serves a useful purpose in that it highlights the linked contribution of each part of the organisational hierarchy to the business strategy. 

However, let’s be clear: strategy is participative, not democratic; everyone has a voice, not everyone has a vote.  And so if the strategy is not delivering the expected results, the MD should expect a robust conversation at Board level.  There are no leave passes saying ‘good strategy, not my fault execution is someone else’s job’.

When I first started teaching business strategy nearly 15 years ago, there were two articles appeared on the same day on the front page of the Australian Financial Review.  One reported the failure of ‘strategy’ at Mayne Group; the other the failure of ‘execution’ at Rosemount Wines.  Both resulted in the MD losing his job.   

At the time, Peter Smedley was MD of Mayne Group, where he led a diversification strategy into health care, and where he waged an aggressive (and ultimately unsuccessful) attack on the health care system.  This ultimately led to heavy losses, and was seen as a major factor in Mayne’s failure in the health care sector.  The Board reported at the time that they felt it was a failure of ‘strategy’. 

Conversely, Bob Oatley sold his then renowned Rosemount Wines to Southcorp where his son-in-law became CEO. However, his son-in-law went on to preside over heavy losses relating to massive discounting and the merging of distributors in the US.  At the time it was reported that the Board saw it as a failure of ‘execution’ rather than a failure of ‘strategy’.  

I remember these two cases well, because at the time I felt both Board's public storyline was wrong.  I saw the Mayne case as a failure of 'execution'; the Southcorp case as just poor 'strategy'.  But perhaps the lesson from this is that it is hard to separate strategy and execution.  As my friend said: they are two sides of the same coin.  And yet, we can tell the difference between the two sides of a coin if we are able to hold the coin steady for long enough to look closely.