A quote from my last post on Inc.com generated some significant responses. 'This explains why management teams are so important; if new offerings are commodities it's execution by the management team – what I like to call execution intelligence – that makes the difference in the market.'
What does this mean? It means that a management team has to be focused enough not to be distracted, while at the same time flexible enough to respond to the market. It means there is a management team not a single super-hero entrepreneur, but a super-hero entrepreneurial leader that has developed a management team with collective execution intelligence. This collective execution intelligence covers all the key business areas critical to the business category you're operating in.
How do you develop a team with execution intelligence? It just doesn't show up because you think or talk about it. It needs to be a conscious, step-by-step assembly process. That's why this is so important: Keep execution intelligence in mind when you build the management team and bring on advisors and board members.
Because twenty people will have the same great idea for a business, the idea is not the key. The idea is not what wins. What does? The ability to build a team that can execute.
Execution intelligence has the following characteristics.
- Domain knowledge. Experience in the market space equals special insight into customers' unique problems. Is your management team experienced in the market space where you will compete?
- Fast-growth scar tissue. Growth is hard. The more you've experienced it, the more effective you'll be. Without it, you can't deal with the ups and downs of rapid growth. At some point, a large, well-financed competitor will loom up overnight and bellow loudly. Can you deal with that?
- Experience in competitive markets. Appreciate the competition. Know how to handle it. Know how to respond judiciously versus reacting emotionally.
- Risk management. Those who can anticipate market trends can adapt more easily to market changes. Shifts in strategy or product lines are inevitable. Are you nimble? Can you cope?
- A comprehensive experience profile across your management team. Marketing. Sales. Product development. You also need solid advisors. Taken together, your team members must have the marketing, technical, sales, and executive expertise it takes to grow and run a company.
- Leadership know-how. Who can hire, motivate, and retain strong employees? Great leaders. As you grow, your corps of employees will expand faster than you can imagine and leadership will be critical. Can you recruit, retain, and effectively manage these people?
The following profile on Dell is from 'A Good Hard Kick in the Ass, Basic Training for Entrepreneurs' by Rob Adams (Random House/Crown, 2002) pages 30-32.
If anybody illustrates the truth that ideas are commodities, it's Dell. Here's a company that had the 'great idea' of selling something as ubiquitous as paper clips. As you can guess, it was hardly this idea that served as a breakthrough. What did? Execution to dominate. Read on . . .
Ideas are a commodity. Execution is scarce.
Nobody embodies this fundamental business principle more fully than Michael Dell. As much as any Fortune 500 company in operation today, the company he founded in 1983 vividly illustrates the fact that when it comes to starting and running a successful business, execution counts for far more than a unique idea.
Michael Dell originally began Dell Computers based on a simple concept: Sell high-performance PC computer systems directly to buyers, avoiding the middleman. 'The direct model is based on direct selling,' he has said, 'not using a reseller or the retail channel— and it's not new. Mainframes and minicomputers were originally sold directly, but [manufacturers] used the retail channel or resellers to sell to their lower-volume customers. We, however, sold—and continue to sell—directly to all our customers.'
So, the difference was not that Dell had the idea to sell direct. That, after all, wasn't new. What was new was the way Dell creatively implemented the old idea—the way he combined an existing sales model (direct sales) with an existing computer market to create a revolutionary way to sell computers. All of this in a low-margin, highly competitive, commodity-oriented space.
While Dell was first to pursue the notion in a major way, this first-to-market advantage had little or nothing to do with the company's success. Within a year or two of being in business, the landscape was littered with competitors aiming to dominate Dell's space.
What made the difference? Why did Dell triumph and most of these competitors fail? One thing: execution.
Early on, Michael Dell recognized the elements of execution intelligence that were needed to supplement his own—and wasted no time recruiting experienced business executives to advise him and help lead the company. Lee Walker, a former venture capitalist and management executive, signed on as president of the company; a strong early advisor was George Kozmetsky, co-founder of Teledyne and former dean of the University of Texas school of business.
From those early beginnings to the present day, Michael Dell has executed relentlessly, based on his belief that 'the key is not so much on a great idea or patent as it is on the execution and implementation of a great strategy. '
'Look at Wal-Mart or Coke,' Dell continues. 'You can understand their strategy—it's really not that complicated. But it's genius! It's completely comprehensible, yet few companies can really replicate their success.'
'Why? It's all about knowledge and execution.'