Is Strategy or Execution More Important to Success?

Wednesday, October 17, 2012 | Category :

By Henrik Ekelund

Henrik Ekelund

A recent article by Booz & Company explores a core challenge for all of us working hard to drive profitable growth in our business: the relative importance between strategy and execution. The conclusion of the article is that you need both a good strategy and good execution to be successful. Most of us knew that before reading the article, I think…

Let us see if we can go a bit deeper into the question; which is really the most important- strategy or execution?

The last research I saw specifically targeting this question is almost ten years old and was led by Ram Charan. His approach was interesting. He looked at hundreds of CEO’s who had been fired from public companies over a decade. This was his way of exploring the question: what is the biggest driver of failure – strategy or execution? The data showed that 67% of the fired CEO’s were terminated because of poor execution, often while having a good strategy.

It is easy to misinterpret the question if you see strategy and execution as separate. The classical text book view would be, first we analyze to decide the strategy, then we execute. Is this reality?

Consider IKEA. Very successful. Continuous profitable growth for 50 years and still going. Has created one of the ten wealthiest families on the planet. Seems to have a totally coherent strategy from market segments, offering logistics, products and so on. A beautiful strategy where each piece fits so well into the totality. The product of a perfect strategy development project!?

No. Not at all. It is the product of a continuous trial and error, continuous testing and learning. And this is how most successful strategies are developed – we learn while executing and refine the strategy over time.

From my opinion – confirming the data Ram Charan found – the world will reward the great executors because the better you execute, the faster you will learn. And the faster you learn, the stronger your strategy will become.

So which is more important- strategy or execution? The short answer is that, in business, great executors will more often win over great strategic thinkers than the other way around. And if you ask 100 successful business executives or entrepreneurs why they won, a majority will answer great execution before great strategy.

About the Author: Henrik Ekelund is the President & CEO of BTS Group AB.


BTS is a public company traded at the OMX Nordic Exchange Stockholm under the symbol BTS b
© BTS All Rights Reserved