Mind the execution gap

ONLINE DISASTER: ToysRUs lost customers because its delivery system was set up for bulk delivery to its stores and not for online sales. It was overwhelmed and failed to deliver children's toys on time for Christmas.


    May 06, 2014

    Mind the execution gap

    IT IS tough enough to create great ideas and even tougher to adopt them.

    Today in Singapore, we are under pressure to be more creative than at any other time. Businesses are changing faster than ever. We have increased competition at home and overseas, and today's success lasts for a shorter time.

    Just consider how fast Samsung caught up with and overtook Apple with its smartphone.

    It is striking that in 1985, according to Standard & Poor's, 35 per cent of organisations were regarded as high risk, 24 per cent average and 41 per cent low risk. In 2006, 14 per cent were regarded as low risk, 14 per cent were average and 73 per cent were high risk. And that was before the global financial crises.

    Economists call this a "secular shift" - a broad increase in uncertainty and volatility. What are the lessons we must learn to be successful and productive?


    We can no longer assume that what was successful for us yesterday will achieve the same success for us tomorrow.

    With the pressure of competition and having to change faster, we can also no longer afford to be wasteful. Companies that are lean and agile are the ones that will survive and thrive. Productivity has become the key towards long-term sustainable growth.

    On average, in a medium-sized to large organisation, up to 33 per cent of the work done is non-value adding. This means staff members are redoing work because it was not done right the first time, or sending out reports that no one reads, or checking something that has already been checked.

    To eliminate productivity barriers such as these, we need to implement effective ideas and strategies. Organisations must be prepared to change much more frequently than they have ever done in the past. We used to set strategies for 10 to 15 years; now, in many industries, it is three to five years.


    Strategy life cycles are becoming shorter and this naturally means that we need to implement new strategies more frequently. This places greater emphasis on the need to be excellent at execution. Most implementations fail.

    Our research in Singapore since 2002 has revealed that 90 per cent of implementations fail to deliver at least 50 per cent of their objectives. To be excellent at execution, it is not about doing one or two things well, such as training or communicating the strategy, but about doing eight things well.

    These are engaging your people; explaining the business case for change; communicating constantly; changing the measure to track the new strategy; aligning the implementation to the culture; redesigning processes; reinforcing the right actions and constantly reviewing performance.

    Innovation is the future and implementation is the bridge. Leaders are habitually underestimating the challenge of strategy implementation, which is a main reason nine out of 10 strategy implementations fail.

    Leaders must have the ability to create new ideas and the skills to execute them. Unfortunately, many leaders have been trained to plan and not to execute and this has created a skills gap.


    The challenges addressed in this article are exemplified by the experiences of Encyclopedia Britannica and ToysRUs.

    Encyclopedia Britannica was founded in Edinburgh, Scotland, in the 18th century. The first edition took three years to create. Twice in the last 20 years, it has had to reinvent itself and implement a new strategy to survive.

    In 1990, the business peaked. In 1991, people started owning their own PCs and could buy CD-ROMs. Encyclopedia Britannica reacted to this change by inventing in 1994 its first CD-ROM for US$1,200. In 1995, it started Britannica Online and, then, Wikipedia arrived.

    Once again, it was forced to redesign its model. It did not compete with Wikipedia but instead focused on editorial quality with Britannica Online. Scholars around the world were engaged to review, revise and refresh content.

    Today, 500,000 households subscribe to it and the digital edition is updated every 20 minutes. Over the past five years, it has seen 17 per cent compound annual growth in its digital education services business and a 95 per cent renewal rate.

    Britannica has been successful not only because it reacted to market changes and was able to reinvent itself, but also because it successfully implemented the changes.

    ToysRUs had built a very strong brand for physical shopping and when Internet shopping threatened its physical business, it did what you might have expected by extending the brand name into the online world.

    But it went terribly wrong and, for almost 20 straight years, it has seen declining cash flow.

    In the mid-1990s, ToysRUs had the right components in place to develop an online presence. It had the relationship with toy suppliers, it had the inventory in warehouses and it had a strong brand name. The launch of attracted millions of visitors, so what went wrong?

    ToysRUs was used to shipping large quantities of products to single stores to restock them. It was not set up or ready to ship single products to multiple addresses.

    At Christmas time, ToysRUs was overwhelmed and failed to deliver children's toys on time for Christmas because it had the wrong implementation model.

    The damage was devastating to the ToysRUs brand, with customers not only swearing they would never use the online shopping service again but also never visit the physical stores.

    After thinking through your latest innovation, make sure that innovation and implementation go hand-in-hand. Make sure your implementation structure bridges your new innovation.

    Robin Speculand is chief executive of Bridges Business Consultancy International and a best-selling author. His latest book is Beyond Strategy - The Leader's Role In Successful Implementation.