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What is business execution? Why must good business leaders learn to execute?

The term “execution” has a few different meanings when it comes to business. The definition we’re using is the one from Larry Bossidy and Ram Charan’s book Execution. According to the authors, business execution is a discipline that leaders must follow in order to advance the company’s goals.

Keep reading to learn about the meaning of execution in business, and why it’s so important.

What Is Execution in Business?

Contrary to what many people think, being a leader entails more than just casting a lofty vision, unveiling a grand strategy, and delivering inspirational speeches. Bossidy and Charan argue that effective leaders get their hands dirty through execution. Let’s explore what execution is and why it matters.  

The Definition of Business Execution

So, what is business execution? Bossidy and Charan describe execution as a set of key systems and behaviors for a leader to implement at their company. It’s a discipline that requires leaders to constantly engage in actions and communications that advance company goals—not a checklist of tasks that a leader can delegate. 

Ultimately, execution is the thread that ties together strategy, goals, and people in a successful company. In practice, it looks like motivated people collaborating, speaking candidly, and relentlessly seeking solutions to fulfill big goals, all led by their leader. 

Clearing Up Confusing Terminology

Not everyone defines execution in the same way as Bossidy and Charan. By their definition, creating strategy, defining goals, managing people, and coordinating operations all fall under the “execution” umbrella. But, in The 4 Disciplines of Execution, Chris McChesney, Jim Huling, and Sean Covey differentiate between strategy (the big-picture plan) and execution (the actions needed to carry out that plan)

However, McChesney, Huling, and Covey’s definition of execution doesn’t totally diverge from Bossidy and Charan’s. Similar to Bossidy and Charan, they describe people management as a key part of execution. This includes clearly communicating the company’s goals to all employees and identifying actionables so employees know what they need to do to achieve these goals. 

Why Execution Matters

We’ve explored what execution is—but, why does it matter? According to the authors, execution matters because it helps leaders construct strong, realistic strategies that lead to focused effort, bottom-line results, and motivated team members. When a leader is constantly assessing progress toward company goals, supporting free-flowing communication, and seeking real-time updates, they can create a strategy that reflects the company’s capabilities.

Bossidy and Charan note that execution also helps leaders to create strategies that mitigate known risks and advance the company’s interests. Leaders play a critical role in surfacing risks by staying vigilant and getting input and insights from people at all levels of the company. Leaders cannot possibly detect all risks from a single vantage point, so engaging with others through execution is essential to expanding their awareness. 

As Bossidy and Charan caution, without execution, leaders often formulate strategies that look good on the surface but that their companies cannot realistically achieve. For example, imagine that before crafting a strategy, you research the competition, study market fluctuations, and analyze detailed financial data. The strategy looks sound and excites eager investors, but ultimately, the strategy fails. 

Why? You didn’t execute effectively, meaning your view of your company’s capabilities and weaknesses wasn’t accurate. The production and sales teams were not in communication, the production team couldn’t fulfill the high volume of new orders that the sales team generated, and delays ruined the customer experience. And nobody told you there was a problem until it was too late to adjust. 

When leaders and their companies fail to produce promised results as a result of poor execution, the consequences can be devastating. People can lose their jobs, investors might give up their stocks, and team members can become demoralized. 

(Shortform note: That said, no matter how thorough you are in gathering information, assessing risks, and constructing realistic strategies through execution, failure is an inevitable part of doing business, which Bossidy and Charan don’t address. Failure may not be fun, but it can produce valuable benefits, such as sharpening your focus and boosting your credibility. Why does failure lead to those positive outcomes? When we fail, it often prompts us to revisit our purpose for being in business, which gives us an opportunity to ensure the trajectory of our company still aligns with our authentic vision. Also, when we’re forthcoming about our challenges and stories of perseverance, we become more relatable and trustworthy.)

Manage Risks Wisely

Bossidy and Charan encourage leaders to use execution to constantly scan for risks to their company. But once you’ve identified these risks, how can you best manage them and avoid negative consequences for your company? 

One wise risk management strategy is to train your employees to understand and assess risks. This will help them make smart, risk-assessed decisions on a day-to-day basis. One way to train your employees in this area is to use simulations or scenarios of risky situations so they can practice making decisions in a safe training environment before facing them in real time on the job.

Another way to handle risk management in your company is to hire professional risk managers and auditors to help you identify, diagnose, and manage risks. These experts can provide a degree of objectivity and can help you pinpoint options you might not have considered otherwise. Also, many professional risk managers employ sophisticated analytics tools that reveal ways to streamline your business processes in ways that mitigate certain types of risk.  

The Benefits of Free-Flowing Communication

Further, because execution involves information-sharing, truth-telling, and collaboration, it keeps all the big players in a company aligned with its game plan and informed about what it’s going to take to fulfill that plan. When this information flows freely, Bossidy and Charan emphasize, team members can trust that the strategy is sound and the goals are attainable. They’ll be clear about their role in achieving the company’s goals and motivated to perform at a high level. When everyone in the company is engaged in this way, you’re likely to see the bottom-line results you want and need.

The Benefits of Sharing Information Internally and Externally

Many business leaders and analysts elaborate on the benefits of sharing information company-wide. In Extreme Ownership, Jocko Willink and Leif Babin explain that when everyone in a company is informed about its goals and everyone’s respective roles in fulfilling those goals, they’ll know how they can support each other as they work together for a shared purpose

Also, open communication fosters innovation and idea sharing and helps avoid workplace conflict. The more information employees have about a company’s goals and challenges, the more likely they are to generate innovative ideas to overcome obstacles.  And when they know they can speak freely with each other and with their managers, they’re more likely to identify and resolve conflicts quickly.

Though Bossidy and Charan discuss the importance of sharing information internally with employees—particularly about the company strategy—they don’t address if and how to share information about strategy externally. In Understanding Michael Porter, author Joan Magretta writes of Porter’s view that sharing your strategy externally can help secure support from customers and capital markets and might deter your competition

For example, you could make a bold public announcement that your company is planning to eventually launch a new product that—although more expensive—will last much longer. This would appeal to customers who recognize the value of saving money in the long term and would distinguish your company as forward-thinking and innovative. Going public with your strategy could also deter competitors from making a similar move, as they don’t want to deal with the hassle of vying with you for market share.
What Is Business Execution and Why Does It Matter?

Hannah Aster

Hannah graduated summa cum laude with a degree in English and double minors in Professional Writing and Creative Writing. She grew up reading books like Harry Potter and His Dark Materials and has always carried a passion for fiction. However, Hannah transitioned to non-fiction writing when she started her travel website in 2018 and now enjoys sharing travel guides and trying to inspire others to see the world.

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