I remember a conversation with an investor ~ 6 years ago when raising funding for my first software company where they had funded an almost identical clone to 4–5 others in a specific space, and where each one now had vast funding. I asked how he thinks things will pan out, to which he replied “it’s now all about execution”. I probed into what that actually meant to him or how that manifests, and he gave a fluffy answer with lots of words and very little useful insight.

I’ve always been interested in why certain people or companies succeed, and others, ostensibly in the same environment with the same chances of success, fail. For a long while I was looking for a clear marker that I could then use and understand for my own companies. Was it always because the best companies did Y thing? Is that why there were better?

I’ve come to the conclusion that’s not the case, and actually it’s really the sum of millions of tiny decisions over a prolonged period of time that amounts to the degree of success of a company. I think this is one of the reasons why so many “business” books are completely useless, because they suggest there is a secret scroll of 10 clear actions that will turn you into a success. This is false. Counterintuitively, this is also why those types of books are so successful, as the people who read them are still looking for the scroll.

Before anything, base foundations are important. If you execute incredibly well on something terrible, you’ll still lose. I think you an roughly break this down to:

( VP / SOA * TAM * ACV )^ defensibility

Value prop over state-of-art (or status quo), how much better is the thing you’re building/doing than what’s out there? Multiple that by the group of people or customers you can deliver that value to (your TAM), multiplied by the money they pay you for that (which is really just relative to the delta in value prop at the start). Wrap this whole thing in the exponent of defensibility, e.g your ability to deliver this value regardless of other external competitors. I think having good arguments for each of those is a good place to start.

Once the blocks are there, it comes down to tiny decisions, every minute, over tens of years. I previously thought that there were only a few things that truly matters to a companies success, but I now believe almost everything matters. The smallest decision by an intern can have a ripple effect on a very large outcome years later. If you look at a huge achievement, and you apply functional decomposition, it’s really just a factor of millions of tiny actions or decisions. I think this is why it’s so difficult to articulate why certain companies are more successful than others, because all we see is the surface level achievements. In reality, the reason they are better is the intangible:

• One of their engineers only needed 1 iteration cycle for a new technical drawing before release for manufacture 2 years before launch
• Instead of doing a video meeting for a big client they turned up at their office instead and did it in-person, gaining more trust, more information, and cutting a week off the timeline
• They simplified a test-plan down to it’s base principles and got better data a week earlier than planned that unblocked an entire team
• They never leave meetings without ultra clean, succinct notes that tell everyone what now needs to happen by when
• They were curious enough to challenge a limiting technical requirement, enabling the deletion of 20% of the parts of a sub-system, speeding up and reducing costs of R&D
• They meticulously planned context for a new hire, meaning on day 1 they had impact on a project that was previously stalling
• They read every single line of a data-sheet before purchasing a critical component, picking up an issue before hardware was delivered, removing all rework

So on and so forth. In the limit, this is really just looking at every action, interaction, piece of work etc and trying to figure what the absolute best looks like. This is “execution in the margins” — as it’s not always evident on what better or worse looks like. Every little, seemingly innocuous decision matters. The cascade of making better, faster decisions has huge compounding impact down the line in companies. A good example of this is if you started with 2 identical companies, in identical markets, with similar teams and resources, and gave them 5+ years of execution, they would likely look like completely different companies. They would have different cultures, hierarchies, decision making criteria, customers, etc. This is another reason why so many companies fetish on copycats being their biggest energy is moot. This places too much importance on the idea or strategy, and not enough on the collection of tiny decisions every single day for a decade to bring it to life.

There is also a common belief that you can choose to move fast or do things better, and not both. I think this is flawed. This belief assumes single-action items, and ignores downstream outcomes. You can cut corners when building a reactor test-rig, shaving off 3 days because you didn’t run the calcs on whether some of the components would work at high flow rates or temperatures. Depending on what you’re trying to achieve, this may look like the right decision on the surface. But, what happens when it doesn’t work? When the entire top-end of the data set you needed just isn’t there? What impact does that have on every other sub-system and team? How many days are going to be lost downstream of this because of a short-cut? There’s always a trade-off, but I’m pretty sure the re-work of fast, poor decision making is the silent assassin that doesn’t surface until you’re in too deep, and executing better, even at the cost of short-term timeframes, enables much greater velocity downstream.

When outcomes aren’t as expected, blame is often directed to the “strategy”. Exec teams then go off into a boardroom and magically come out with a new strategy, that will solve all of our problems and deliver our goals. This almost never works, because in most (not all) cases the execution is the problem — and the strategy is just acting as guardrails. If the infection is in the fingers, replacing the head won’t help. The difficultly here is the delayed manifestation of poor decision making. You may not see the long term impacts of poor execution today until years down the line, making it very difficult to root out the cause unless you inherently know things should be better.

Poor execution often bubbles up in overfunded companies. If they didn’t have a great focus on high-execution at the start, more capital will express poor execution vs remedy it. Suddenly, your funding acts as a stamp of approval justifying your lack of execution, whilst even greater expectations and targets drive towards implosion.

Boiled down, I think the core tenets to increasing execution on the really small areas that matter are:

1. Do you have a product/service that is actually good? You need a positive feedback loop on good execution to justify the hard work — e.g I do X, we win more customers. This is why searching for PMF is so deadly, because you do seemingly good work but don’t have any good signals from the market, leading to frustration/lack of motivation etc.
2. People. Are your people world-class? This becomes extremely clear when you talk about the very small decisions made daily. If they are just a little bit worse, you’ll be in a completely different place in a year’s time. When looking at an entire team on whether they are “good enough” you can get lost in too many levels of abstraction and department labels etc. Where it really matters is in the individual decisions when the stakes are high, resources low, and there are loads of dependencies down the chain.
3. Culture. Mostly built by the people, but this can be distilled down to an acceptance of what is world class or not. You need to be self-policing as a team on anything that isn’t good enough. The best teams (and people) intuitively understand the impact up and down the chain of tiny actions done better. Michael Jordan in 1997/8. This needs to be a part of the company DNA, not just let by the CEO/founders — because again, this is about the tiny decisions made daily when the exec team isn’t looking.

Outcomes can vary massively based on the quality of the millions of tiny decisions that preceded them, specifically in the non-obvious ways to do things slightly better.