I like to read the Harvard Business Review. While their articles are often deeper than I need, I find that many of the business principles they present are applicable to more than just business.Their online presentation is interesting and generous with articles you can view without payment. You can check it out here.
Recently, there are two that have my attention. One says strategy and execution are separate, the other says they are not.
The first dealt with a survey that discovered that only 8% of managers are good at both strategy and execution. The same survey found that 35% were good at neither. The authors suggest five leadership acts that help businesses close the gap. With some minor emphasis changes, these can apply to personal financial planning where the strategy execution gap can be quite large.
The second suggests that the first idea is incomplete and argues that strategy and execution are together a single activity. Separating them does not help. The author points out that while 35% are weak-weak, 23% are average-average and 8% are great-great. The great at one and weak at the other are very rare.
“The problem with making this distinction is that a mere 1% of leaders were characterized as great strategists who execute poorly. The finding for executors of strategy is identical: only 1% of leaders are great at execution and poor at strategy making. If there were a meaningful distinction to be made between strategy and execution, you would expect bigger numbers in those cells.”
The author goes on to state:
Calling some of those choices “execution” is at odds with the facts and may lead to counterproductive conclusions because it could distract people from thinking in terms of choices.
That is a good argument and likely true in a business. But businesses differ in their composition and skills from individuals.
A business has executive level people who decide strategy and they have mid-level people who decide tactics and operational level people who implement. (logistics) These people can and do communicate, share insight, have different viewpoints on the opportunity and the world at large, learn from set-backs and gradually evolve a successful program.
The individual is possibly somewhat competent in all aspects of developing a personal plan, but is likely not excellent at any. Certainly the differing viewpoint value, the insights and the learning from setbacks is inefficient and possibly completely absent. Motivation is an issue as well.
Just as a business needs three levels of thought and execution so too does an individual. Find a strategic vision for your financial life. Find tactics and implement. The combination of them is the value and when done properly the whole is all that anyone can see.
A client together with a financial advisor and professionals like a lawyer, investment manager, insurance professional, and accountant make up the opportunity/problem solving team for individuals.
Being the strong, independent, go-it-alone individualist is not the way that works best in a complex and constantly changing world.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.