A multinational company I worked for was having losses from the day of inception despite having the best of machines, systems, procedures and the products. This company was doing very well in most of other countries but unfortunately bleeding in India from last many years. I did work in this company in India for a year before working in Europe in the parent company. The bleeding continued and I was asked to return to India as MD and turn around the organization.
Competitors were doing well and there was no visible reason for this company to perform poorly. Company had focused on different strategy using the best of available consultants but some how did not work.
First few weeks after taking over as MD, I removed the consultants who were too busy making simple things complex. I started asking myself the critical questions about the products, the product positioning, productivity, cost competitiveness, quality of people etc. I saw every one in the organization was working very hard but with little results. There was a big business plan file containing lots and lots of pages but had big gaps on all the above critical parameters must for a company to succeed.
Work for people had become a routine as people were in the same job from 10 to 20 years and with the passage of time even the accountants were running the factory instead of the capable and technically qualified personnel. The marketing was not aware what factory was doing and factory did not know what was expected by marketing .There was a huge gap between the departments and within the organization resulting in complaints from customer. In short there was work without planning and improper execution of the plans.
Surprised but very true, normally a company would rejoice bagging one of the largest orders ever in history but this order proved to be suicidal. After taking over the organization I spent few weeks in understanding the reason and came across every possible excuse but I could realize and sum it in one word to the board members, ‘Poor Execution’ resulting in company loosing millions of dollars and of course credibility internationally.
Let me take you through the major gap areas for our learning. First and the major mistake was marketing manager bagging the order in isolation without taking the other departments into confidence or agreeing with them. I suppose marketing manager thought his job begins and ends with getting the order. The marketing manger gave no or little thoughts on the resources required to execute such a huge order for the first time by its organization. He assumed that getting the order is very difficult and executing is very easy. As always we feel the others job is easy and interesting too.
Everyone was so excited on getting the order that people started counting the profits instead of working to execute the order. Also always the approach was to fix the problem as and when it comes instead of planning and then executing to perfection.
The complete order was to be executed in few installments and the problem started with the first delivery. There were issues of higher cost then the budgeted on Raw material, Packing material as well as the logistics and some of the cost such as quality testing by the 3rd party was not even considered .To cut the story short in the first delivery itself the costing was redone and the marketing manager realized he has done a blunder of giving cost lower by at least 15 to 20%.So over night company knew there would be losses of few million dollars.
Knowing all these, the problems compounded further as the company missed the culture of execution. The accountability of people was missing. The promises made to the customer were not fulfilled with respect to quality, delivery and above all lack of communication with the customer.
This resulted in wrong people were made the scope goats and asked to leave the organization further compounding the problem as the organization was left with non executors. The situation became worse from every shipment and unfortunately customer had to take tough action against the company resulting in losses running in millions of dollar.
It was poor show and unfortunately the company did not know what execution means.
What is Execution?
It’s a simple word and not an attractive management jargon and hence not understood and taken seriously. Execution is one of the major and most important responsibilities of a CEO in an organization but unfortunately never considered. It’s taken lightly and delegated to down line resulting in major issues most of the time
The difference between a performer and non performer lies in execution. Companies executing the strategies are winner’s .One can make the biggest of plans but they are of no use unless executed to perfection.
Execution in simple words is discussing thread bare the details to complete the work on schedule and not leaving anything to chance. It’s facing the facts and taking action to reach the target. Or its step wise action plan with dates, accountability and follow ups to reach the target or destination
• Know the facts
• Know your team
• Mearureable, Simple Targets
• Follow up follow up
• Performance based and a culture of learning
Know the Facts
Knowing facts is key to execution. It’s the blood line of successful execution. A company needs to know all the facts so as to be ready to take actions where ever needed. Let me carry the above example further. The company did not know all the facts before they took the order or else I am sure no CEO of a company in his normal sense can do this. The company took such a huge order despite not having the capacity or the right manpower as well as the equipments to execute. It started coming as surprises as they started executing. There was total gap between the customer’s and the company understanding. Various expenses considered in the budget were far lower then actual, thus resulting in major over run on Budget. An order of few million dollars which was expected to give good margins now seemed to be turning into a night mare. Let me list the critical facts so critical to the successful execution but were totally ignored:
Can you imagine a company getting successful with huge gaps as above .I am sure not.
When I took over the company, I was surprised to see different facts from our employee and our customer. As a principle I made it a point to know the facts from the company first and then meet the customer to understand his perception which eventually matters. Every customer I met in domestic or international market was crying for quality issues in every supply this company made. Unfortunately no one in the company felt there was any quality issue. On the other hand the senior mangers in the company were quick to find faults in the customer understanding of the product.
The company and the team were far away from reality resulting in all the problems.
Know your team
A leader needs to know his team well. Team means not only his direct report's but down the line in field, plant etc. I have seen companies where lot of reports and charts are generated but are of no use. Normally the critical information is filtered in such sheets or reports thus leaving the leader to take decisions based on half truth .And you can understand the results of such decision.
I use to get lot of reports and figures daily in this company and everything seems perfect at least on the paper .Though customers were not happy and company was loosing market as well as money, I started meeting people down the line in all areas of the business from Sales, marketing, finance, factory, etc and realized the following key issues:
A leader needs to put the right people in right place and should be personally responsible for hiring them too. It’s a job I would always keep to myself as people are critical to the success of any organization. You need the right people to execute.
The company hired the right managers and gave them the complete support as well as shifted rolls of other people in the same position for too long .It is unfair for a person to be in the same position for over a decade and still be contributing new ideas with same passion. Still most of the companies do this mistake.
We initiated lot of new activities in the company with complete personal involvement of self. Most of the new initiatives are a big failure in organizations unless the leader gets personally involved. Employees have seen and experienced over the years that any new initiative lasts for few months and eventually fades. The moment employees see the involvement of the top/leader then they start taking it differently and slowly the momentum gathers which is then difficult to stop
Measurable, Simple and few Targets
A leader believes in making for self and for the team simple and few measureable targets. I have been to the organizations where people are excited by the number of targets .More complex targets even better and targets with no clarity the best. Unfortunately such targets remain as targets only on the paper and are never achieved. The targets need to be just few for which one has the resources as well as the energy and passion to execute. The targets need to be simples and measurable or else they become vague.
Targets depend on the organization and the vision of the leader. This needs to be understood by every single employee of the company irrespective of the hierarchy. This means the leader has to find a way to effectively communicate to all the employees.
The above process was followed with lot of success in this company with having just maximum 4 targets per manager with clear time lines, measureable parameters as well as the rewards. The impact was unimaginable. We could get over 90% of the targets achieved in the first year with people getting excited with there achievements and no wonder with rewards.
Follow up, Follow up and Follow up
You need to learn the follow up technique from you child. Have you noticed the follow up child does for his demand on you until he gets his job done? The child makes sure by repeated follow ups and ensures you are successful in fulfilling your commitment. Although you did it but it’s the child’s follow up who made you do it successfully.
This is very similar in our professional life too. A leader needs a follow up mechanism so that the objectives or the targets set are followed up regularly to make sure they are achieved. You must have come across many meetings which end up without a proper conclusion .Many times they end up with minutes which are never implemented as there is no follow up. Leader needs to design his own follow up mechanism depending on the situation. The follow up mechanism which we have designed is simple and is working effectively
1. Every meeting in the organization end with action plan giving the responsible and deadlines.
2. The next meeting starts with the review of earlier action plan .This gives lot of seriousness to these minutes as people know they will be questioned in the next meeting
3. As a principle all objectives and targets are reviewed at a fixed frequency
Performance based and a culture of learning
Performance based rewards are key for any organization to be successful or to have people executing perfectly. Most of the organizations fail in performance linked reward resulting in treating performers almost same as non performers. Normally organizations work of percentage increase in salaries .The differential percentage of a performer to a non performer is too low to excite performers. In fact instead of motivation, it acts as a demotivation resulting in either the performer becoming a non performer or worst leaving the organization.
A good leader has to have a mechanism set to reward the performers differently by way of bonus or stock options or any special means the way a performer has shown to be different from others. It’s critical for a leader to identify ways to excite the performers and make them more passionate and motivate them to do better.
Also a leader needs to have a culture of learning. Organizations need to learn to be in touch with the world. I am sure we buy and read the books during our school and college days. And they were paid by our parents. Now that we start earning, then I would expect people to buy more books as they have now the money to do so. Unfortunately buying a book is big pain and reading it even bigger. I have seen young managers not minding spending few thousands of rupees buying the latest phones or jackets or evening for a dinner outing but not ready to invest even a hundred rupees to buy a book. The book will help them to grow and learn and earn more eventually.
A leader needs to put impetus on training. But again it has to be done in spirit and not just on paper. I have seen organizations where in the training manager does training to complete his target and every department nominate at person who is least required in the organization. People take training as the waste of time or leisure time. We all know the story of a wood cutter from our childhood but unfortunately rarely apply to self learning.
Design and Developed by: inerun