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Execution, The Disciple of Getting Things Done (Hardcover)
by Larry Bossidy, Ram Charan, Charles Burck
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Execution, Leadership, Management |
| Market price: ¥ 298.00
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| MSL Pointer Review:
You know you can never emphasize enough the importance of execution. So why not listen to those tough get-done guys such as Bossidy and Welch? |
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Author: Larry Bossidy, Ram Charan, Charles Burck
Publisher: Crown Business; 1st edition
Pub. in: June, 2002
ISBN: 0609610570
Pages: 288
Measurements: 9.6 x 5.8 x 1.0 inches
Origin of product: USA
Order code: BA00009
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- Awards & Credential -
The #1 New York Times Bestseller. It ranks #600 in books on Amazon.com as of December 7, 2006. |
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- MSL Picks -
Everybody knows about companies with brilliant strategies that don't deliver. They don't execute. The fact is that the greatest strategy in the world is useless if the company or other organization can't make it work. Strategy without execution is impotent.
So, this is a book about execution. Well, not exactly. Actually, it's a book about the structural processes that lead to executing strategy effectively. The three processes, as identified by the authors, are the people process, the strategy process, and the operations process.
They're all important and you have to get them all to work and to work together. The authors should know how to do this. Larry Bossidy is one of the world's most successful and effective executives. He was effective at General Electric, at Allied Signal, and at Honeywell. Ram Charan is a consultant who has worked with lots of companies for a number of years and been successful there.
Not only do they know what they're talking about, they convey their knowledge well. The organization of the book helps them get the message across. The contents are divided into three parts: Why Execution is Needed; The Building Blocks of Execution; and the Three Core Processes of Execution. Each of those sections includes chapters which are well laid out and thoughtfully developed.
Also, throughout the book, the two authors, Bossidy and Charan, put in short pieces in the first person. I found these particularly helpful, because they gave me insight into the basic text, and they also gave me the flavor and style of the way these men think.
A big plus for the book - and something that makes it easy reading - is the selection of Charles Burke as writer and editor. Burke was an excellent editor and writer when he was at Fortune, and he brings those skills to the book.
If this book has a weakness, it's the way examples are presented. Since both Bossidy and Charan don't necessarily want to name names, we get a lot of descriptions of people without knowing exactly who they are. That means that you have to put up with a lot of "X's" and "Y's" and descriptions of people as, "A marketing executive for a mid-size chemical company."
Personally, I found that very irritating, but not irritating enough to get me to stop reading. This is a book that will help you get your culture, your strategy, your people processes, and your operations in order. You can read it in a couple of different ways.
You can read this book straight through from front to back. This will give you the material as a logically developed argument.
If you're a working manager you may not want to take the time to read that way, but you can get lots of value from this book by finding a section of interest and then scanning the subtopics to help you decide where to start reading.
For example, in the chapter on getting the right folks in the right jobs you'll find a major subhead called "What kind of people are you looking for?" Scan the subheads under that and you'll find "They energize people," "They're decisive on tough issues," "They get things done through others," and "They follow through." None of these subheads show up in the table of contents, so you've got to start your browsing in the text itself.
Don't worry if you aren't running a business as big as Honeywell. This is a good book for managers in far smaller organizations. The advice is solid, practical and easy to understand and adapt. (From quoting Walter Bock, USA)
Target readers:
Executives, managers, entrepreneurs, government and nonprofit leaders, professionals, and MBAs.
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Larry Bossidy is chairman and former CEO of Honeywell International, a Fortune 100 diversified technology and manufacturing leader. Earlier in his career he was chairman and CEO of AlliedSignal, chief operating officer of General Electric Credit (now GE Capital Corporation), executive vice president and president of GE’s Services and Materials Sector, and vice chairman of GE.
Ram Charan is a highly sought advisor to CEOs and senior executives in companies ranging from start-ups to the Fortune 500, including GE, DuPont, EDS, and Colgate-Palmolive. He is the author of What the CEO Wants You to Know and Boards That Work and the coauthor of Every Business Is a Growth Business. Dr. Charan has taught at both the Harvard Business School and the Kellogg School of Northwestern University.
Charles Burck is a writer and editor who collaborated with Larry Bossidy and Ram Charan. Earlier in his career he was an editor at Fortune magazine.
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From the Publisher:
This book shows you How to Get the Job Done and Deliver Results…whether you're running an entire company or in your first management job.
Larry Bossidy is one of the world's most acclaimed CEOs, a man with few peers who has a track record for delivering results. Ram Charan is a legendary advisor to senior executives and board of directors, with unparalleled insight into why some companies are successful and others are not. Together they've pooled their knowledge and experience into the one book on how to close the gap between results promised and results delivered that people in business need today.
After a long, stellar career with General Electric, Larry Bossidy transformed AlliedSignal into one of the world's most admired companies and was named CEO of the year in 1998 by the Chief Executive magazine. Accomplishments such as 31 consecutive quarters of earnings-per-share growth of 13% or more didn't just happen; they resulted from the consistent practice of the discipline of execution: understanding how to link together people, strategy, and operations, the 3 core processes of every business.
Leading these processes is the real job of running a business, not formulating a "vision" and leaving the work of carrying it out to others. Bossidy and Charan show the importance of deeply and passionately engaged in an organization and why robust dialogues about people, strategy, and operations result in a business based on intellectual honesty and realism.
The leader's most important job - selecting and appraising people - is one that should never be delegated. As a CEO Larry Bossidy personally makes the calls to check references for key hires. Why? With the right people in the right jobs there's a leadership gene pool that conceives and selects strategies that can be executed. People then work together to create a strategy, building block by building block – a strategy in sync with the realities of the marketplace, the economy and the competition. It's then linked to an operating process that converts the strategy into specific programs act actions and that assigns accountability. This kind of effective operating process goes way beyond the typical budget exercise that looks into a rearview mirror to set its goals. It put reality behind the numbers and is where the rubber meets the road.
Putting an execution culture in place is hard, but losing it is easy. In July 2001, Larry Bossidy was asked by the Board of Directors of Honeywell International (it had merged with AlliedSignal) to return and get the company back on track. He's been putting the ideas he writes about in Execution to work in real time.
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Execution will help you, as a business leader, to choose a more robust strategy. In fact, you can't craft a worthwhile strategy if you don't at the same time make sure your organization has or can get what's required to execute it, including the right resources and the right people. Leaders in an execution culture design strategies that are more road maps than rigid paths enshrined in fat planning books. That way they can respond quickly when the unexpected happens. Their strategies are designed to be executed.
Execution paces everything. It enables you to see what's going on in your industry. It's the best means for change and transition – better than culture, better than philosophy. Execution-oriented companies change faster than others because they're closer to the situation.
If your business has to survive difficult times, if it has to make an important shift in response of change – and these days just about every business does – it's far, far more likely to succeed if it's executing well.
To understand execution, you have to keep three key points in mind: 1) Execution is a discipline, and integral to strategy. 2) Execution is the major job of the business leader. 3) Execution must be a core element of an organization's culture.
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CHAPTER 1
The Gap Nobody Knows
The CEO was sitting in his office late one evening, looking tired and drained. He was trying to explain to a visitor why his great strategic initiative had failed, but he couldn't figure out what had gone wrong.
"I'm so frustrated," he said. "I got the group together a year ago, people from all the divisions. We had two off-site meetings, did benchmarking, got the metrics. McKinsey helped us. Everybody agreed with the plan. It was a good one, and the market was good.
"This was the brightest team in the industry, no question about it. I assigned stretch goals. I empowered them-gave them the freedom to do what they needed to do. Everybody knew what had to be done. Our incentive system is clear, so they knew what the rewards and penalties would be. We worked together with high energy. How could we fail?
"Yet the year has come to an end, and we missed the goals. They let me down; they didn't deliver the results. I have lowered earnings estimates four times in the past nine months. We've lost our credibility with the Street. I have probably lost my credibility with the board. I don't know what to do, and I don't know where the bottom is. Frankly, I think the board may fire me."
Several weeks later the board did indeed fire him.
This story-it's a true one-is the archetypal story of the gap that nobody knows. It's symptomatic of the biggest problem facing corporations today. We hear lots of similar stories when we talk to business leaders. They're played out almost daily in the press, when it reports on companies that should be succeeding but aren't: Aetna, AT&T, British Airways, Campbell Soup, Compaq, Gillette, Hewlett-Packard, Kodak, Lucent Technologies, Motorola, Procter & Gamble, Xerox, and many others.
These are good companies. They have smart CEOs and talented people, they have inspiring visions, and they bring in the best consultants. Yet they, and many other companies as well, regularly fail to produce promised results. Then when they announce the shortfall, investors dump their stocks and enormous market value is obliterated. Managers and employees are demoralized. And increasingly, boards are forced to dump the CEOs.
The leaders of all the companies listed above were highly regarded when they were appointed-they seemed to have all of the right qualifications. But they all lost their jobs because they didn't deliver what they said they would. In the year 2000 alone, forty CEOs of the top two hundred companies on Fortune's 500 list were removed-not retired but fired or made to resign. When 20 percent of the most powerful business leaders in America lose their jobs, something is clearly wrong. This trend continued in 2001 and will clearly be in evidence in 2002.
In such cases it's not just the CEO who suffers-so do the employees, alliance partners, shareholders, and even customers. And it's not just the CEO whose shortcomings create the problem, though of course he or she is ultimately responsible.
What is the problem? Is it a rough business environment? Yes. Whether the economy is strong or weak, competition is fiercer than ever. Change comes faster than ever. Investors-who were passive when today's senior leaders started their careers-have turned unforgiving. But this factor by itself doesn't explain the near-epidemic of shortfalls and failures. Despite this, there are companies that deliver on their commitments year in and year out-companies such as GE, Wal-Mart, Emerson, Southwest Airlines, and Colgate-Palmolive.
When companies fail to deliver on their promises, the most frequent explanation is that the CEO's strategy was wrong. But the strategy by itself is not often the cause. Strategies most often fail because they aren't executed well. Things that are supposed to happen don't happen. Either the organizations aren't capable of making them happen, or the leaders of the business misjudge the challenges their companies face in the business environment, or both.
Former Compaq CEO Eckhard Pfeiffer had an ambitious strategy, and he almost pulled it off. Before any of his competitors, he saw that the so-called Wintel architecture-the combination of the Windows operating system and Intel's constant innovation-would serve for everything from a palm-held to a linked network of servers capable of competing with mainframes.
Mirroring IBM, Pfeiffer broadened his base to serve all the computing needs of enterprise customers. He bought Tandem, the high-speed, failsafe mainframe manufacturer, and Digital Equipment Company (DEC) to give Compaq serious entry into the services segment. Pfeiffer moved at breakneck speed on his bold strategic vision, transforming Compaq from a failing niche builder of high-priced office PCs to the second-biggest computer company (after IBM) in just six years. By 1998 it was poised to dominate the industry.
But the strategy looks like a pipe dream today. Integrating the acquisitions and delivering on the promises required better execution than Compaq was able to achieve. More fundamentally, neither Pfeiffer nor his successor, Michael Capellas, pursued the kind of execution necessary to make money as PCs became more and more of a commodity business.
Michael Dell understood that kind of execution. His direct-sales and build-to-order approach was not just a marketing tactic to bypass retailers; it was the core of his business strategy. Execution is the reason Dell passed Compaq in market value years ago, despite Compaq's vastly greater size and scope, and it's the reason Dell passed Compaq in 2001 as the world's biggest maker of PCs. As of November 2001, Dell was shooting to double its market share, from approximately 20 to 40 percent.
Any company that sells direct has certain advantages: control over pricing, no retail markups, and a sales force dedicated to its own products. But that wasn't Dell's secret. After all, Gateway sells direct too, but lately it has fared no better than Dell's other rivals. Dell's insight was that building to order, executing superbly, and keeping a sharp eye on costs would give him an unbeatable advantage.
In conventional batch production manufacturing, a business sets its production volume based on the demand that is forecast for the coming months. If it has outsourced component manufacturing and just does the assembling, like a computer maker, it tells the component suppliers what volumes to expect and negotiates the prices. If sales fall short of projections, everybody gets stuck with unsold inventory. If sales are higher, they scramble inefficiently to meet demand.
Building to order, by contrast, means producing a unit after the customer's order is transmitted to the factory. Component suppliers, who also build to order, get the information when Dell's customers place their orders. They deliver the parts to Dell, which immediately places them into production, and shippers cart away the machines within hours after they're boxed. The system squeezes time out of the entire cycle from order to delivery-Dell can deliver a computer within a week or less of the time an order is placed. This system minimizes inventories at both ends of the pipeline, incoming and outgoing. It also allows Dell customers to get the latest technological improvements more often than rivals' customers.
Build-to-order improves inventory turnover, which increases asset velocity, one of the most underappreciated components of making money. Velocity is the ratio of sales dollars to net assets deployed in the business,
which in the most common definition includes plant and equipment, inventories, and accounts receivable minus accounts payable. Higher velocity improves productivity and reduces working capital. It also improves cash flow, the life blood of any business, and can help improve margins as well as revenue and market share.
Inventory turns are especially important for makers of PCs, since inventories account for the largest portion of their net assets. When sales fall below forecast, companies with traditional batch manufacturing, like Compaq, are stuck with unsold inventory. What's more, computer components such as microprocessors are particularly prone to obsolescence because performance advances so rapidly, often accompanied by falling prices. When these PC makers have to write off the excess or obsolete inventory, their profit margins can shrink to the vanishing point.
Dell turns its inventory over eighty times a year, compared with about ten to twenty times for its rivals, and its working capital is negative. As a result, it generates an enormous amount of cash. In the fourth quarter of fiscal 2002, with revenues of $8.1 billion and an operating margin of 7.4 percent, Dell had cash flow of $1 billion from operations. Its return on invested capital for Fiscal 2001 was 355 percent-an incredible rate for a company with its sales volume. Its high velocity also allows it to give customers the latest technological improvements ahead of other makers, and to take advantage of falling component costs-either to improve margins or to cut prices.
These are the reasons Dell's strategy became deadly for its competitors once PC growth slowed. Dell capitalized on their misery and cut prices in a bid for market share, increasing the distance between it and the rest of the industry. Because of its high velocity, Dell could show high return on capital and positive cash flow, even with margins depressed. Its competition couldn't.
The system works only because Dell executes meticulously at every stage. The electronic linkages among suppliers and manufacturing create a seamless extended enterprise. A manufacturing executive we know who worked at Dell for a time calls its system "the best manufacturing operation I've ever seen."
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| View all 12 comments |
L.R. Raymond (Chairman and CEO, Exxon Mobil), USA
<2006-12-21 00:00>
Good practical insight and advice on managing for results at firms of any size. Execution is key and this book clearly explains what it means and how it brings together the critical elements of any organization – its people, strategies, and operations. |
Ralph Larson (Chairman and CEO, Johnson & Johnson), USA
<2006-12-21 00:00>
The best thought-out plans in the world aren’t worth the paper they’re written on if you can’t pull them off. And that’s what this book is all about. |
Jack Welch, USA
<2006-12-21 00:00>
A great practitioner and an insightful theorist join forces to write a compelling business story of “how to get it done”. |
Rolf Dobelli, Switzerland
<2006-12-21 00:00>
Most companies, like most individuals, excel at making plans, but are not as talented when it comes to actually carrying them out. Thus, execution - the ability to get things done, particularly on a strategic level - has become the sine qua non of management science. Authors Larry Bossidy and Ram Charan observe that some people grow when promoted to executive leadership, while others merely swell. Those who lose touch with the operational realities of their businesses soon find themselves boldly leading a company going nowhere. The practical value of achieving objectives and getting things done must be instilled at every level of your company, and injected into the very DNA of your corporate culture. Anything less, and your company will under perform. Bossidy and Charan have sterling credentials when it comes to getting things done for America's leading corporations. They say execution is nothing more than faithfully practicing the right techniques with a disciplined approach. We recommend reading this book to help you turn your plans and strategies into accomplishments and victories. |
View all 12 comments |
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