Clear Decision Rights and Effective Information Flow Are Keys to Executing Strategy,...

Clear Decision Rights and Effective Information Flow Are Keys to Executing Strategy, Finds Joint Booz & Company/Booz Allen Hamilton Study

Structural changes are half as effective as those focused on
decision-making and information

Nearly three in five employees give their organizations low marks
on execution
NEW YORK & MCLEAN, Va.--(Business Wire)--
Clear decision rights and effective information flows have the
greatest impact on a company's ability to successfully execute its
strategy, concludes a new global research report produced jointly by
global management consulting firm Booz & Company and its legacy
partner, Booz Allen Hamilton. However, senior executives more often
rely on reorganizing an organization's structure when trying to fix
lagging performance, even though decision rights and information flows
are twice as important to successful performance.

The report, titled, "The Dominant Genes: Organizational Survival
of the Fittest," builds on nearly five years of study through December
2007 of more than 125,000 responses to an online assessment tool, the
Org DNA Profiler(R) (www.orgdna.com), which diagnoses distinct
organizational traits and behaviors by examining a company's
structure, decision rights, motivators, and information. In addition
to the general dataset, the report features analysis of 44,000
observations from company-specific samples called the "Dominant Genes
Strength Index," to identify the specific organizational traits that
correlate most strongly to effective execution.

"We have seen that when performance problems appear, leadership's
instincts are to first look to the organization's structure as either
its source or solution," said Gary Neilson, Senior Partner of Booz &
Company. "Just as often, executives change an organization's structure
anticipating that other changes will follow. They seldom do."

Eight of the top ten traits for top-executing organizations relate
to either decision-making or information flow, and two to motivational
practices. None of the top 10 traits relate to changes in the
organization chart. Indeed, traits relating to organization structure
rank no higher than 13th among the total of 17 traits identified.

"Sustainable success is a matter of execution. Performance is
based on two fundamentals: execution--how quickly a company can
convert intentions into actions, and agility--the degree to which a
company deals successfully with discontinuous change in its
environment," said David Kletter, Vice President at Booz Allen.

The study revealed:

-- The most dominant trait in high-executing companies is
"decision clarity." More than seven in 10 executives (71
percent) who say their companies are strong in execution
report that "everyone has a good idea of the decisions/actions
for which he or she is responsible." In weak execution
organizations, that figure drops to 32 percent.

-- Another critical performance trait is "Cross-organization
information flow." In strong execution organizations, 55
percent of respondents believe that "information flows freely
across organization boundaries," compared with only 21 percent
in weak execution organizations.

Additional key findings of the study include:

Most organizations perceive themselves as "weak" in execution, and
half are "low agility." Nearly three in five (58 percent) respondents
reported that their organizations have difficulty in quickly
translating important strategic and operational decisions into action.
Forty-seven percent dismiss their employers' ability to respond
quickly to change.

Strong execution and high agility companies report superior
profitability and growth. Twice as many employees of "strong
execution" and "high agility" companies report better-than-average
profitability and faster-than-average growth in their industry,
compared with employees of "weak execution" and "low agility"
companies.

Senior management is more bullish about execution capability than
other levels. When it comes to executing well and adapting to change,
senior management is more optimistic than middle management and other
staff levels. Fifty-three percent of senior managers believe their
organizations execute well, while only 39 percent of middle management
and 36 percent of corporate staff agree. When it comes to adapting to
change, 61 percent of senior managers express confidence in their
companies' capability, compared to 51 percent for middle management
and 49 percent for corporate staff.

North American organizations have an inferiority complex about
execution ability. Only 37 percent of North American respondents
believe that their organizations execute well, the lowest rating of
all the geographic regions studied. In contrast, nearly half of
respondents from Europe (46 percent), Asia/Australia/South Pacific (45
percent), and Latin America (44 percent) ranked their organizations as
strong on execution.

Some industries are stronger at execution than others. No one
sector held an overwhelming edge in its ability to turn critical
decisions into action nor to adapt quickly to discontinuous change.
Overall, the private sector received the highest marks for execution,
compared to the public and non-profit sectors:

-- The highest rankings for execution went to the
hotel/restaurant/leisure sector and the pharmaceuticals
sector, each at 49 percent, followed by healthcare, consumer
packaged goods, and retail.

-- The sectors weakest in execution were the public sector (30
percent), academic/association/research, and utilities (each
at 33 percent).

Execution ability decreases with company size. Larger
organizations ($10 billion in revenues or greater) are least likely to
quickly translate strategic and operational decisions into action:

-- Only 33 percent of larger organizations believe they are
strong at execution compared to companies with $500 million or
less in revenues (44 percent); $500 million to $1 billion in
revenues (37 percent); and $1 billion to $10 billion in
revenues (35 percent).

Methodology

The Booz & Company/Booz Allen Org DNA research sample comprises
more than 125,000 respondents from organizations of all sizes in the
private and public sector, representing more than 1,000 companies,
government agencies, and not-for-profits from more than 50 countries
around the world. Represented are twenty-eight sectors and more than
ten internal departments/functions (e.g., human resources, information
technology, legal, etc.). Each respondent's position or level within
the company (e.g., top management, corporate staff, etc.) is included,
as well as organization size in terms of annual revenues. In addition
to this dataset, authors collected and analyzed company-specific
samples. The Dominant Genes Strength Index, which was used to identify
17 organizational traits that correlate most strongly with effective
execution, is based on a regression analysis of 31 datasets from
specific companies which each include more than 150 responses and
collectively represent 26,743 observations. All data were collected
over a period of nearly five years ending December 2007.

A copy of the report is available for download at www.booz.com and
www.boozallen.com.

About Booz & Company

Booz & Company is a leading global management consulting firm,
helping the world's top businesses, governments, and organizations.

Our founder, Edwin Booz, defined the profession when he
established the first management consulting firm in 1914.

Today, with more than 3,300 people in 57 offices around the world,
we bring foresight and knowledge, deep functional expertise, and a
practical approach to building capabilities and delivering real
impact. We work closely with our clients to create and deliver
essential advantage.

For our management magazine strategy+business, visit
www.strategy-business.com.

Visit www.booz.com to learn more about Booz & Company.

About Booz Allen Hamilton

Booz Allen Hamilton has been at the forefront of strategy and
technology consulting for more than 90 years. Every day, government
agencies, institutions, and infrastructure organizations rely on the
firm's expertise and objectivity, and on the combined capabilities and
dedication of our exceptional people to find solutions and seize
opportunities. We combine a consultant's unique problem-solving
orientation with deep technical knowledge and strong execution to help
clients achieve success in their most critical missions. Providing a
broad range of services in strategy, operations, organization and
change, and information technology, Booz Allen is committed to
delivering results that endure.

With more than 18,000 employees in 80 offices across the US, Booz
Allen is continually recognized for its quality work and corporate
culture. In 2008, for the fourth consecutive year, Fortune magazine
named Booz Allen one of "The 100 Best Companies to Work For," and
Working Mother magazine has ranked the firm among its "100 Best
Companies for Working Mothers" annually since 1999.

To learn more about the firm, visit www.boozallen.com.

Booz & Company
Karen Guterl, 212-551-6516
karen.guterl@booz.com
or
Makovsky + Company
David Rosen, 212-508-9690
drosen@makovsky.com

Copyright Business Wire 2008