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How to Actually Execute Change at a Company

As important as it is to make great change decisions, equally important is to consider what happens after the decision to act is made. It is well documented that on average just 60% of planned value is realized. To what can be attributed the “lost” 40%?

Analyzing project teams tasked with change initiatives in 257 firms globally, after controlling for decision viability and talent capability, I found that four factors help to explain the gap between the intentions expressed in an action plan and the value created from its effective implementation. Think of them as: ACE the memo, master the means, amplify with mechanisms, and measure to account.

ACE the Memo

Initial communication sets the tone for how change is perceived. A clear and compelling message influences execution in three ways. First, it provides shared understanding about expectations and a specific vision of the path to meet those expectations. Amazon founder Jeff Bezos famously required narrative memos “with real sentences, verbs, and nouns” when outlining important updates because this is how the brain processes information. Effective memos reduce ambiguity and help groups develop a shared objective. They are especially effective when they lay out what needs to happen in the foreseeable future. A good way to do this is to use three subheads in the memo: Now, next, and then.

Second, a great launch message inspires confidence that the direction has a strong rationale behind it. There are three types of implementation actions — enhance the current path, reimagine the activities to achieve the current path, or shift to a different path. Describing what is needed should be supported by a clear explanation of how the decision was derived and why it is needed. Rather than leaning on the privilege of authority, effective change communication embraces the burden of proof and shares a compelling story anchored in the best available facts.

Finally, it is harder to do something different than nothing at all, so outlining incentives provides motivation to turn words into actions. People reserve their best effort for what they find important (“this needs to be done”) and meaningful (“I want to be the one to do it”). When incentives are clearly communicated, trusted, and related to practices viewed to be worthwhile they positively influence effort.

The ACE approach is helpful for considering the caliber of a memo when launching a change implementation plan:

Actionable: Does the message set reasonable expectations and describe the path forward in now, next, and then terms?
Credible: Does the message provide the rationale for the decision?
Emotional: Does the message outline the relevant incentives?

Master the Means

Despite strong views regarding their desire to drive change, the majority of the project teams analyzed had moderate to low confidence that they could access the right resources for the job or had the latitude to get the job done. Their most common sentiment was, “we often don’t have the right amount of time or tools or autonomy to do the project well.”

Emerging neuroscience shows that people who believe they have the right skills for a given job and freedom in how they apply those skills better solve problems and deal with challenges along the way. While asking people to do more with less is increasingly common, asking them what is really needed to achieve the goal is more likely to yield the desired results. British multinational retailer Marks & Spenser makes a virtue of this practice both at the outset of a project and through regular check-ins. Google, Mastercard, and Nvidia have tailored approaches to seek resourcing input from the team tasked with implementing a change project. Common among these firms is consistently higher returns and employee engagement ratings than their peers.

Amplify with Mechanisms

Positive mechanisms step in when improvement is the goal, but discipline alone is not enough. Call them amplifiers — they sharpen implementation efforts by increasing transparency, improving precision, and diffusing power.

Costco’s “risk-free 100% satisfaction guarantee” policy is an example of an amplifier. Their execution goal is to be the leading retailer for customer experience. To support this goal, they have one of the industry’s most liberal return policies. This mechanism diffuses power to the customer to use at any time. Costco is in the sales and not returns business, so it does not take many returns for a store to get serious about unpacking the root cause of customer dissatisfaction — directly linking the goal’s intention and the firm’s actions.

Money back guarantees are just one type of amplifier. Latin America’s Familia (majority acquired by Sweden’s Essity in 2021) set the goal to win their region’s award for best customer service. This required them to rethink how to quickly gather and transparently share information about service success and failures — confronting difficult facts along the way. They have since won the award multiple times in the last 15 years.

Closer to daily life, apps that track and sound alarms related to lifestyle habits, groups that form to pursue weight-loss goals, and budgeting technologies that notify users when they’re near their spending limit are other examples of amplifying mechanisms. They help their adopters to align their behaviors with their desired result.

While the type of mechanism used to improve execution will vary by situation, all will benefit from considering three questions: Does it increase or decrease transparency? Does it generate more or less precision? And, does it concentrate or diffuse power?

Measure to Account

The adage “you are what you measure” is useful but insufficient. It is more helpful to realize that effective measurement not only reflects past events, but can also influence achieving the desired goal. To do this, measurement strategies should account for the needs of each implementation stage rather than focusing on results without regard for their influences.

In the immediate term of an implementation effort, gaining directional insights is crucial. These insights are needed before results can reasonably be expected, so measurement should focus on the quality of input actions. For example, if the change goal for a sales team is to increase year-over-year revenue growth by 20%, then the first thing to measure is the quality with which actions expected to improve sales are conducted. Like a plane course correcting just after leaving the airport rather than in mid-flight, these first-order measures allow for near instantaneous adaptation.

Next, output production signals the effectiveness of input actions. Continuing with the sales team example, rather than emphasizing quantity-based activities like meetings booked, meetings held, or calls made, which may tempt the sales team to cloud their pipelines with dubious activities or defer responsibility, these measures focus on relevant outputs, such as: purchased, reactivated, referred, or not interested. The power of second-order measures is that they indicate goal advancement, provide return-on-input-action insights, and rationalize rewarding progress to bolster motivation.

Then, outcome measurement captures the sum result from the implementation effort relative to the goal. Action, production, and outcome ordering has at least two benefits beyond those already stated. When measurement is context-focused and occurs both at the end of the project and along the way, understanding the relationship between input action quality and output production happens faster, owed to improved transparency and more useful data. In the process, these measures can better shape practices that will positively influence the outcome — a bedrock of skilled adaptation. Change value realized and time to achieve that value both benefit from this approach.

When asked by a group of founders how to manage the risk of others stealing their ideas, one recalled the late Steve Jobs responding, “That’s so much the wrong focus. You can’t steal execution.” In between the idea to act and maximizing the idea’s potential reside several inflection points. Turning these inflection points in your favor is the job of effective execution. And improving four execution practices can make the difference.

By Tom Hunsaker- March 2024
Harvard Business Review