The Double Meaning of Business Execution

I just finished reading an excellent book called “Execution” by Larry Bossidy, Ram Charan, and Charles Burck. My father gave it to me, and I’m usually wary of the latest “sage” business books but I said I would take a look. I literally could not put it down. It is so well written, and on such a simple, but not so simple to do, premise: In order to succeed, you must become a master of execution.

It also really got me thinking about how the lack of execution by today’s business “leaders” has at least partly brought us into this death spiral economy. Until now, being qualified to be CEO of a major American corporation has only entailed having the schmutz of corporate leadership on you. Never mind whether you have actually been successful in leading a company. If you fit a certain profile, you were going to be paid handsomely, even if you have previously lead a company down the tubes.

Take for instance, Chrysler CEO Robert Nardelli. He has been in the news the last couple of weeks for asking Congress for an auto-industry bailout. Now, here is a guy that wants billions of dollars to save a failing corporate icon. In early 2007, when Chrysler was searching for a seasoned executive to lead the struggling auto-maker back to glory, you would expect they would pick someone fresh off a victory lap of leading some other company back into prosperity.

Not so, in August 2007, they instead chose to go with Mr. Nardelli, who had most recently been the CEO of Home Depot. So what did he do at the Depot de Case? I think an article Fortune did on Chrysler’s pick summed it up quite nicely:

Nardelli angered Home Depot shareholders when he refused to take questions during a shareholder meeting in May 2006 as the stock was floundering. His rich pay package drew fire; he earned $38.1 million last year. Ultimately he was forced out of the company in January 2007, but left with a $210 million golden parachute in cash and stock options that included a $20 million severance payment and retirement benefits of $32 million.

To be sure, plenty of executives before Nardelli have gotten away with big paychecks and imperious behavior. In the end, it was the stock price that got him. As Bernie Marcus, co-founder of Home Depot, told Fortune after Nardelli’s departure, “if the stock had doubled, who would have cared? Instead it went nowhere, and that’s what this is all about.”

By the time Nardelli left the retail chain, its shares were trading at about the same price as when he arrived in 2000. Moreover, analysts said that the stock had actually lost about 40% of its value because a series of stock buybacks had reduced the amount of shares available. (Go to http://money.cnn.com/2007/08/05/news/companies/chryslernardelli.fortune/index.htm for the full article)

So in August 2007, Chrysler went with a guy covered in leadership schmutz who lowered the stock value of his previous company by 40% and walked away with a $210 million golden parachute, instead of a guy who actually executed a strategy and would not accept failure.

So fast forward to December 2008, and Mr. Nardelli has not only failed to turn around the prospects of Chrysler, he is now asking us to bail them out.

What we need now more than anything is a leadership renaissance. From local government, to the halls of America’s most hallowed companies, we need change in which real leadership is measured by what someone sets out to realistically accomplish, and what they ACTUALLY get done.

Even on a tremendously smaller level, many start-ups never realize their full potential because they are big on dreams, ideas, and even intellectual property, but short on execution. Whenever I work with a client, the first thing I say is that we need to set out a plan of what we are specifically going to do, and how we are going to do it. Not in theory, but in real concrete steps. Do we need independent testing of results? Great, who specifically can do that for us? Do we need to get funding? Awesome, which venture capitalists, or what NIH grants are we going to focus on?

If on the other hand you prefer to rely on ”high level” strategy and setting amorphous goals, the only executing you will be doing in the long run is killing your entrepreneurial dreams.