Spotlight

Who gets to shape strategy?Companies are more top-down than bottom-up in their approach to strategy formulation.

72%

A slide show highlighting other fi ndings from the survey can be found at hbr.org/spotlight/eff ective-organization.

How Hierarchy Can Hurt Strategy Execution

Can you state your strategy?A lot of people say they can’t. The situation is particularly bad among those who aren’t involved in strategy development.

In March, we surveyed members of the HBR Advisory Council (a representative group of readers we periodically turn to

for insights) about strategy and execution in their organizations. We asked how well they think strategy is developed, which obstacles prevent implementation, how the downturn has aff ected performance, and so on. A total of 1,075 respondents weighed in. Four data points stand out: First, readers think the biggest execution challenge is making strategy meaningful to frontline workers. Second, a lot of people can’t even tell you what their fi rm’s strategy is. Third, strategy still comes mainly from the top. And fourth, people involved in its development are the most likely to buy in. Those fi ndings suggest that leaders should consider making strategy formulation more bottom-up and should communicate more clearly—throughout the ranks—about what the company is trying to achieve.  HBR Reprint R1007E

Do you think your company is good at developing strategy?The answers people give depend on where they sit in the organization.38%

21%

AGREECOMPLETELY

AGREESOMEWHAT

38%OF ALL RESPONDENTS CAN PARTIALLY STATE THE STRATEGY

5%CAN’T STATE IT AT ALL

57%CAN COMPLETELY STATE IT

NOT COMPLETELY

NO

YES

RESPONDENTS INVOLVED IN STRATEGY DEVELOPMENT

48%BELIEVE THEIR ORGANIZATION IS GOOD AT IT33%

BELIEVE THEIR ORGANIZATION IS GOOD AT IT

RESPONDENTS NOT INVOLVED IN STRATEGY DEVELOPMENT

59% Agree at least somewhat with the statement “There is an imaginary line in my company’s organizational chart. Strategy is created by people above the line, while strategy is executed by people below the line.”

74 Harvard Business Review July–August 2010

SPOTLIGHT ON THE EFFECTIVE ORGANIZATION

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What is the most important aspect of strategy execution?Most respondents give clear communication top billing. Other high priorities include eff ective leadership and a commitment to putting the right people in the right jobs. The lowest-ranked factor? Encouraging managers to make decisions generally in line with strategy. SOURCE XXX

What are the obstacles to executing strategy?IN THE CURRENT ECONOMY

IMPO

RTA

NCE

OF

OBS

TACL

E

POPULARITY OF RESPONSE

LOW HIGH

HIG

H

Too focused on short-term results

Too focused on tactics rather than strategy

Lack of accountability; lack of measurement

Making it meaningful to frontliners; translating strategy to execution

Inability to respond quickly to opportunities

Confl icting priorities

Too busy; lack of time; resource constraints

72%

23%

SPELLING OUT STRATEGY IN CLEAR LANGUAGE

STEERING MANAGERS TOWARD ALIGNMENT

IN GENERAL

IMPO

RTA

NCE

OF

OBS

TACL

E

POPULARITY OF RESPONSE

LOW

Poor communication of strategy

HIGH

HIG

H

Everyone too busy; lack of time; resource constraints

Resistance to change

Silos or units with competing agendas

Too focused on short-term results

Lack of clear and decisive leadership; leadership actions inconsistent with strategy

Lack of accountability or follow-through; inability to measure impact

Making it meaningful to frontliners; translating strategy to execution; aligning jobs to strategy

Failure to communicate strategy causes frontline workers to invent their own strategy. —Survey respondent

HBR’S READER SURVEY adds support to the notion that companies maintain a sharp divide between strategy and execution. For example, 59% of respondents acknowledge that there’s an imaginary line separating thinkers and doers, and only one-third say that strategy creation is part of everyone’s job.

Given the pervasiveness of the problem, it’s not surpris-ing that 72% of respondents think communicating strategy in clear terms is a top prior-ity in execution. But no set of concrete instructions can cover all strategic situations.

I’ll give you an example. I recently moved to a condo equipped with a high-end appliance that didn’t work properly. The repair people were fl ummoxed; the issue wasn’t covered in their cus-tomer service script. So they invented their own response strategy—which was to present the company as arrogant and full of itself.

How can your fi rm avoid that kind of destructive improvisa-tion in its ranks? By recogniz-ing that everyone is a strategy maker and helping employees develop a deep understanding of the organization’s beliefs. Every worker should have the authority to size up customers individually and provide them with appropriate solutions.

— Roger L. Martin, author of “The Execution Trap,” page 64

Mind the Gap

Thinkers and Doers

July–August 2010 Harvard Business Review 75

HBR.ORG

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