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How is execution capability measured?
INTRODUCTION
Hello! Thank you for sharing your question about how execution capability can be measured with Wonder. The two most useful sources I relied on were from Harvard Business Review and FP Advance. The former detailed the strengths behind execution capability and the latter focused on ways to improve the strategies associated it. In short, execution capability can be measured by the ability of an organization to achieve their goals by developing a high-functioning workplace. Decision bias directly impacts an organization's ability to be able to achieve their goals and without clear strategies put in place, effective decisions are less likely to be made. There is no specified metric for this however, it can be measured in terms of how quickly a goal is achieved and whether or not the changes that were made were cost effective and led to better results.
EXECUTION GAP + CAPABILITY
Only 10% of business is the strategy, the remaining 90% should be execution. However, most companies would report percentages far below that. Most businesses struggle to bridge the gap between implementation and strategy with 61% reporting problems.
When using an xQ (execution quotient) test to evaluate gaps between setting goals and achieving them you'll find that after surveying 2.5 million people, only 9% believed that teams had clear measurable goals. It was also seen that there was only 10% team accountability, 22% of teams were focused on organizational goals, and 16% planned those goals in unison. The results also showed that only 15% believed they had the freedom and resources to do their job.
In the past 4 years, only 56% of strategic initiatives were successful. In order to succeed with execution capability, strategies must be put in place so that cost-effective goals can be obtained faster and with better results. All successful strategies will rely on positively influencing the behaviors of employees and managers.
BEHAVIORAL ECONOMICS + BEST PRACTICES
Behavioral economics can be measured by the goals you set and the structure you put around your employees in order to meet them. Up to 70% of the behavior in a company is related to the corporate culture and environment.
Make it clear to all employees what the plan of attack is and what their exact role is. Set strict quarterly goals that become the top priority. Pick between 3-7 goals and use them as your guide.
This way they can be held accountable for their actions and while they're working on that project they will be able to make clear and easy decisions. Too often, the decision-making process is unclear or too many choices exist. This leads to items getting held up because employees are unsure about who the decision maker on any given task is. This slows down production and decreases the chances of executing successfully.
When no one knows who is responsible for what middle managers can lose time. In some instances, 40% of managers lost time defending and relaying information upward or questioning the decisions of their direct reports. In companies with strong execution, 70% reported having a clear knowledge of the decisions and actions they were responsible for.
Detrimental behaviors like second guessing decisions, not understanding the impact of your actions on the bottom line and not evenly distributing information can also negatively impact execution capability. It's noted that 71% of people from companies with poor execution believe that work is constantly being second-guessed but only 21% of them believed the information was being shared and 28% understood their impact on the bottom line.
In strong execution companies there is also a focus on performance measures, improved flow of information from the field to HQ, increased coordination across the organization, focusing HQ on larger strategic questions and more. Widening the flow of information across the company and clearly defining roles, goals, and metrics are the secrets to successful execution.
INFLUENCE OF DECISION BIAS
When there is no clear definition of an employee's role and what decisions they are and are not responsible for their decision making is put at risk. As Joe Nigro, CEO of Constellation states, "Everyone needs to know how each metric fits into the big picture…why and how we’re measuring something, and how it’s relevant to performance."
Without this information, someone can end up making decisions that aren't in their best interest. However, it's also important to not blindly follow a set standard and to always be on the lookout for emerging trends and metrics. Someone may be partial to using a given tactic because it's been proven for years but there is no guarantee it will remain relevant.
Some hidden biases that can influence decision making are confirmation, selection, anchoring, irrational escalation, overconfidence, group attribution and optimism bias as well as others. The way you interpret a report can easily be impacted by any of these.
Group attribution biases can lead to employees assuming the results from one group can be applied to the larger whole. Confirmation biases come when someone seeks out information to bolster their own claim. Irrational escalation can lead to someone investing more time into a tactic that isn't bearing any fruit simply because they've already spent so much time on it.
In all of these scenarios, someone is vulnerable to making potentially ineffective decisions based on their own bias. There is no way to remove this possibility entirely since human brains are always susceptible to bias. Still, the impact of these biases can be minimized when effective strategies are put in place to maximize employee roles and company workflow.
CONCLUSION
To wrap things up, execution capability strategies must be put in place so that cost-effective goals can be obtained faster and with better results. There isn't a designated metric for this but it can be measured by a company's ability to achieve their goals once best practices are implemented and behavioral economics are properly leveraged. Decision bias does have the potential to impact decision making but optimized behavior economics can decrease that impact.
Thank you for choosing Wonder to answer your question! Feel free to reach back out if you have any further questions.