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Tips for the CEOs and Group Heads of Large Conglomerates
am 3. Mai 2004
Larry Bossidy is clearly a five-star leader, and Ram Charan is a gifted consultant and teacher. It surprised me that their book didn't work as well as I had hoped.
Execution's title confused me. Hopefully, you won't have that problem. I thought Execution would be all about how to take a strategy and operating plan and implement them well. Instead, Part III makes it clear that Execution is about meeting overall financial objectives through being an effective organization in setting strategies and operating plans to serve customers well while building an organization that can implement the plans for outperforming competitors. Part I, by contrast, makes it sound like Execution is only about implementation, noting that almost all organizations have the same strategies (or can quickly get them from consultants), access the same top talent and can easily acquire and employ competitively effective innovation.
I also thought Execution would apply to all business people. Instead, the context for most of the AlliedSignal (Honeywell International's name when Mr. Bossidy became CEO there the first time) and General Electric examples which dominate the book is that of the CEO or group executive to whom divisions report in a large conglomerate. In this sense, Execution is like reading the latter chapters of Mr. Welch's book, Jack.
The main difference between Jack and Execution is that Execution tries to build a framework for the book's concepts while sharing examples (mostly of failure) from other organizations. Mr. Charan's sections of the book mostly focus on that positioning. Mr. Bossidy mostly tells about his own experiences at AlliedSignal and Honeywell. Mr. Bossidy, of course, worked with Mr. Welch at General Electric for many years. Mr. Bossidy reports that you could take execution for granted at GE, but that it was lacking at AlliedSignal when he arrived. The two coauthors alternate in providing long monologues on the chapter topics and subtopics.
Three aspects of Execution are valuable to almost any business leader: how to hold a strategy review (chapter 8), building an organization (chapter 5) and the "Dear Jane" letter to a new leader (conclusion).
For those who would like to become CEOs and heads of divisions of large, disparate organizations, Mr. Bossidy's many anecdotes from his experiences at Honeywell International about how to do the leader's job will provide a valuable model that can be used repeatedly. In many such organizations, there are no good leadership examples and this book can help fill the gap.
Here's the book's structure:
Part I: Why Execution Is Needed
Chapter 1. The Gap Nobody Knows
Chapter 2. The Execution Difference
Part II: The Building Blocks of Execution
Chapter 3. Building Block One: The Leader's Seven Essential Behaviors
Chapter 4. Building Block Two: Creating the Framework for Cultural Change
Chapter 5. Building Block Three: The Job No Leader Should Delegate -- Having the Right People in the Right Place
Part III: The Three Core Processes of Execution
Chapter 6. The People Process: Making the Link with Strategy and Operations
Chapter 7. The Strategy Process: Making the Link with People and Operations
Chapter 8. How to Conduct a Strategy Review
Chapter 9. The Operations Process: Making the Link with Strategy and People
Conclusion: Letter to a New Leader
Execution addresses these problems. First, many company and division heads have little knowledge about the businesses or the most important functions and processes needed to prosper. Boards, for example, often bring in a brilliant person who has performed as a "role player" elsewhere, and they cannot scale up into the CEO job. When a company has had poor leadership, its processes and organization also become weak and it's hard to get anything done. There are several poignant examples including Richard Thoman at Xerox and Richard McGinn at Lucent Technologies. It's hard to fix that problem. It took years at AlliedSignal and can be quickly lost (which happened in the two years after he retired the first time). That's why Mr. Bossidy had to come back to restore execution (as he means it) at Honeywell International. Lacking these perspectives, the business system is misdirected (see The Fifth Discipline).
Second, many leaders make bad assumptions about their circumstances. Acting on those assumptions makes matters worse.
Third, companies plan to pursue strategies for which they lack the processes and organizations to implement. The strategies need to match the ability to execute.
As a solution, you as leader must:
"--Know your people and your business
--Insist on realism
--Set clear goals and priorities
--Reward the doers
--Expand people's capabilities
I was uncomfortable with many of the examples. The unending praise of Dick Brown at EDS didn't seem to make any sense knowing that EDS's stock melted down and he was asked to leave. He was in big trouble when Execution was written, having encouraged his people to grow by taking on large unprofitable new accounts. It seems like he might have been executing the wrong strategy, one that couldn't be executed. Most of the "failure" examples are anonymous which makes them less credible and less compelling. Finally, Dell is heralded for executing very well (which it certainly does). However, in describing how the company has evolved its business model to outperform competitors, Execution fails to notice that its business model innovation has been essential to success. No competitor has this business model. Execution's assumption that everyone can have the same strategy ignores research that shows that business model innovation creates unique strategies and superior execution compared to making the old business model and strategy more efficient.
Unless you are shooting to be CEO of GE or Honeywell International, I suspect that you would do better to read Good to Great for getting ideas related to improving effectiveness.
After you finish this book, ask yourself what one thing you could improve would make the most difference in your organization's performance over the next week, month, quarter, year and three years.