THE HIGH-PERFORMANCE ORGANIZATION
HARVARD BUSINESS REVIEW
Companies typically realize only about 60% of their strategies' potential value because of defects and breakdowns in planning and execution. By strictly following seven simple rules, you can get a lot more than that.
TURNING GREAT STRATEGY INTO GREAT PERFORMANCE by Michael C. Mankins and Richard Steele hree years ago, the leadership team at a major man-
ufacturer spent months developing a new strategy for its European business. Over the prior half-decade, six new competitors had entered the market, each deploying the latest in low-cost manufacturing technology and slashing prices to gain market share. The performance of the European unit - once the crown
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the plan, agreeing to provide the unit with all the resources it needed to make the turnaround a reality. Today, however, the unit's performance is nowhere near what its management team had projected. Returns, while better than before, remain well below the company's cost of capital. The revenues and profits that managers had expected from services and financing have not materialized, and the business's cost position still lags behind that of its major competitors. At the conclusion of a recent half-day review of the business's strategy and performance, the unit's general manager remained steadfast and vowed to press on. "It's all about execution," she declared. "The strategy we're pursuing is the right one. We're just not delivering the numbers. All we need to do is work harder, work smarter." The parent company's CEO was not so sure. He wondered: Could the unit's lackluster performance have more to do with a mistaken strategy than poor execution? More important, what should he do to get better performance out of the unit? Should he do as the general manager insisted and stay the course-focusing the organization more intensely on execution - or should he encourage the leadership team to investigate new strategy options? If execution was the issue, what should he do to help the business improve its game? Or should he just cut his losses and sell the business? He left the operating review frustrated and confused-not at all confident that the