Effective Execution: 7 Reasons Why Leadership Teams Fail

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Written by Mike McKenzie

I’ve spent much of my career listening to business owners talk confidently about the Growth Potential of their business. Yet the vast majority of them struggle when it comes to building a cohesive team that can fulfil that potential.

If there is a documented growth strategy, it often lacks clarity and conviction. Leadership alignment is low, effective board meetings are rare, and the plan is poorly executed. The senior team quickly falls into bad leadership habits and routinely fails to deliver profitable and sustainable business growth.

My own experiences are consistent with the multiple research projects that have been conducted over the last 20 years. A 2016 study concluded that 67% of well-formulated growth strategies failed due to poor execution. A review of all major studies would suggest that between 50% and 90% of strategies fail to be implemented. Whilst some purists argue with some of the more extreme research findings, it is plain to see that the vast majority of businesses struggle with effective strategy execution.

Put simply, no matter how great your Growth Potential, it’s the leadership team’s ability to realise this potential that ultimately determines business success.

This demands focus, discipline and a commitment to action. It requires an ability to combine cash with the confidence to take controlled risks. It relies on the right leadership skills and experience to make well-informed, timely decisions. Sadly, all this is undermined when the business owner fails to build a cohesive team and everyone starts pulling in different directions.

Effective Execution

In the Quarterli® leadership alignment tool, there are seven success factors that influence your Effective Execution rating. These seven Growth Probability Indicators (GPIs) help determine whether you and your executive team have what it takes to maximise Shareholder Value:

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GPI 7. Appetite for Risk/Effort

Are you all on the same page?

Work/life balance is important, but I haven't seen many successful businesses achieve sustained, profitable growth when the leadership team sticks to a strict nine-to-five shift and won't take calculated financial risks.

A multitude of factors, both inside and outside the world of work, will influence how much time and effort you are personally prepared to invest to fulfil your organisation's growth potential. If you are the business owner, then the same applies to the amount of financial risk you are prepared to take.

Even in successful small businesses, these factors will change over time, so this area can be a 'minefield' if there are multiple shareholder directors and/or family members involved. Your fellow shareholders may now be at a very different stage of life to you, have a different attitude to risk or simply be seeking a different work/life balance.

I have lost count of the number of challenges I've seen that stem from this single underlying issue. This can be addressed, often with a small amount of outside help, but don't let it fester! 'Sweeping it under the carpet' will only build frustration and undermine your chances of success.

Even if everyone is in tune, it pays to make sure that your appetite for risk and/or effort also aligns with your growth goals.

GPI 8. Management Capability.

What got you here probably won't get you there!

You might be part of a great board of directors that has got you to where you are today. However, that does not necessarily mean that the same senior team can get you to where you want to be.

It defies logic to make this assumption; yet this happens in many growing organisations. There are countless, hardworking people in senior positions whose areas of accountability will soon outgrow their capabilities and qualifications. They may have done a fantastic job so far but they and your business risk being exposed as you grow further. 

Effective leadership means addressing this even in a small family business. And this doesn't just apply inside your organisation - it might apply to your accountant, bookkeeper, solicitor, consultant, non-exec etc. 

You may want to show loyalty but that could be at the expense of the organisation and/or the individual. Will the inevitable stresses of being unable to cope really help you or them in the medium term?

You can't address this until you have a clear view of the professionals that you need inside and outside your business and a plan for how you will attract and/or develop this new talent as the business scales. This senior team development plan must also address how to help those who will need to be freed from (or better supported in) some of their current responsibilities.

These individuals will often breathe a huge sigh of relief when you finally broker the conversation.

GPI 9. Debates & Decisions

The elephant in the room!

Many organisations fall into bad habits when it comes to management meetings, quarterly boards and 'off-sites'. Things get stale and the quality of the discussion weakens over time.

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This can have a direct impact on the quantity and quality of the decisions being made. Some board members seem to forget how to listen to their fellow directors. They think they've heard it all before, so instead of listening, they are preparing what they are going to say next. 

Meetings become less a place for enlightened discussions and more a stage where people come to perform. They drag in their usual 'baggage' and 'soapboxes' and then drag them out again at the end, ready for the next meeting. In the very worst cases, certain discussions are simply avoided, which can only weaken the organisation over the long term. 

Put simply, a business can only get stronger if the senior team can express and listen to different views and explore them in a constructive manner before reaching a decision. This ‘healthy conflict’ is essential to leadership team cohesion. But once a decision is made, it's critical to then present a united front to the rest of the organisation.

GPI 10. Planning & Performance

A plan for all seasons?

Some organisations don't have a meaningful Business Plan; others get bogged down in a cumbersome strategic planning process and it becomes the main deliverable of the year.

The most important thing to note about any business growth strategy is that it will have very little effect until it is implemented! So, it's important to agree and monitor a plan that covers short, medium and long term goals.

However complex or concise your plan is, it's crucial to measure performance at the departmental and individual level. That way you can learn from what you do; improve target setting, address training needs and 'correct your course' as things inevitably change.

Worryingly, far too many organisations have a culture where failure to deliver the plan becomes the norm.

So, if a department or senior individual accepts but then routinely fails to deliver targets, then this must be addressed. If you just 'roll your eyes' and accept it then, not only will it continue, it will most likely 'infect' the whole organisation.

GPI 11. Risk Management

A chance worth taking?

Quarterli helps you recognise and manage risks more effectively.jpg

Sustained growth doesn't come without risk. Managing this risk isn't a precise science but thankfully, many risks can be eliminated, minimised, shared or transferred with a bit of advanced planning.

Every organisation has external risks. For example, changes in legislation or raw material prices or an aggressive move by a competitor who might target a key customer or infringe your trademark or patented technology.

Organisations also have internal risks. For example, the loss of a key employee or the failure of a critical piece of machinery or disclosure of confidential information.

The importance of proactively managing these risks increases as a business grows. Yet, from my experience, many growing organisations fail to even discuss, let alone document, assess, prioritise and, where possible, mitigate these risks.

Do you discuss and rate risks in terms of their ‘Likelihood’ of occurring and the ‘Impact’ on the business if they do happen? Do you agree and document your approach to mitigating each of these risks? Do you review this regularly?

GPI 12. Cash

Cash is King!

Decades on, I still vividly recall one of my MBA lecturers drumming home the message 'Cash is King' every Friday morning. That expression is never more true than in a growing business.

All growing businesses need cash - and as they accelerate their growth, they need even more cash. So, unless you and your fellow shareholders have very deep pockets, you will need to find 'fuel' for your growth journey. As a starting point, you must be able to model your future cash flows to understand when you will need cash and for how long.

There are many ways of getting this 'fuel' from bank loans, invoice discounting and grants to investment by Angels, Venture Capitalists or 'The Crowd'.

Whatever your preferred option, it will be difficult to secure many of these without first preparing a compelling growth plan. I hear a lot of senior teams talking vaguely about 'getting some funding' but this will be of little practical use when that time comes.

Start to build a picture of the financing options available and weigh up what might be right for your business and in what order. There are pros and cons for each route, so speak to your accountant and a variety of experts.

Whatever you do, don't just follow what a fellow business leader has done. Just because it's right for them does not mean it's right for you and your business.

GPI 13. Shared View

Are you driving with the brakes on?

Quarterli Improves Team Cohesion and Executive Team Alignment

Every organisation's chances of success are improved when a cohesive leadership team builds a shared view of the business; its capabilities, its opportunities and its priorities.

Of course, you want to hear different opinions and have healthy conflict but, if that doesn't ultimately result in a shared commitment and accountability for common goals, then you are 'driving with the brakes on'.

Working on the business not in the business in order to improve leadership team alignment often represents the single biggest challenge for any business that aspires to grow. If you believe that the others in your senior team don't have a shared view of where things stand today, then it will be virtually impossible to make meaningful progress in the right direction.

At best, it slows progress like an invisible anchor. At worst, it creates a 'hole below the waterline' that will ultimately sink the ship!

The Growth Probability Matrix

These are 7 of the 13 Growth Probability Indicators used in the Growth Probability Matrix™. The Matrix draws a crucial distinction between the Growth Potential of your business and the ability of the senior team to unlock this potential through Effective Execution. Both are key to building long-term shareholder value, but one is often, subconsciously, prioritised over the other.

The Growth Probability Matrix a leadership alignment tool

The Growth Probability Matrix provides an invaluable filter that helps cut through the overwhelming amount of business advice out there and helps you establish the Growth Objectives that your business needs to focus on now in order to improve its chances of long-term success.

It’s tuned to your level of ambition for your business and helps you reflect on the likelihood of achieving it. This means that Matrix is not just for ‘Scale-ups’ or ‘Gazelles’. It's designed for any established business (or business unit) that has achieved a level of success and wants more.

It is much easier to recall than a long ‘To-Do’ list or a complex chart. When shared with your senior team, it helps you discuss and ultimately align behind a deliberately uncomplicated view of where your business stands today. Whether you are “Missing the Boat” or “Heading Off Course” or even “All at Sea”, a well-aligned leadership team can prioritise actions to do something about it!

Leadership Alignment: How Quarterli® can help.

Quarterli® is based on the Growth Probability Matrix. It’s a unique leadership alignment tool that is designed to help business owners develop better leadership habits and increase team cohesion.

Every quarter, a short introspection, based on 13 Growth Probability Indicators, helps you and the whole leadership team reflect on your chances of success and explore what might be holding you back.

It’s more than just a business health check, it supports leadership team development by creating a powerful new routine for the whole senior team. It helps build a shared view of what needs to be done and introduces a quarterly rhythm that keeps everyone pulling in the same direction.

Find out more about this unique leadership alignment tool and take a look at the free demo.

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Download the free book to find out more about the Growth Probability Matrix™ and the thirteen predictors of business success.

The Growth Probability Matrix a leadership alignment tool

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