Execution vs Strategy

Impact = (Execution ^ Strategy) × Market

Obviously, this is not a formal mathematical formula. Its goal is to help us understand & explain to others the *relative* roles of the factors that determine long-term impact. To understand it, it’s useful to assign a value of 0 to each factor (while keeping the others non-zero). 

Let’s start with:

Strategy = 0 (others non-zero)

You get:

Impact ≈ Market

What it tells us:

A very bad strategy won’t kill you. But if you don’t fix it, it will severely limit the impact of your execution over the long term.

Now let’s set:

Execution = 0 (others non-zero)

You get:

Impact ≈ 0

What it tells us:

Abysmal execution almost always assures zero long-term impact, regardless of our strategy or market.

That is why I’d rather have some execution with no strategy, and not the other way around.

Finally:

Market = 0 (others non-zero)

You get:

Impact ≈ 0

What it tells us:

Lack of a market (or at times, a rapidly shrinking market) also kills our future impact over the long term.

As I said above, I’d rather have some execution and no strategy. But also note that strategy has an exponential effect on your execution. So I’d rather have excellent strategy & just OK execution vs. excellent execution & just OK strategy. This is counterintuitive for many people

In practice, if you make superb strategy choices i.e. how you differentiate your product and/or distribute it to create lasting competitive advantage, you can afford to have OK execution and still end up in a very good place over the long term.

Of course, the very best teams nail both strategy and execution. And that is what you should aim to do too, as a leader of a product team. When your business and your team’s future is at stake, why become dogmatic about an extreme position just for some Twitter likes & retweets?

As a leader, you need to obsess over both your strategy and your execution. How much you obsess over each of them depends on your product’s context. That also changes over time as you assess current reality and decide what it will take to reach where you want your product to be.

Last thing: 

(for leaders who are very good at strategy)

When you’re just starting to build a team, it is usually a better idea to hire people such that your team will be excellent at execution, even if that comes at the expense of your team being somewhat weak on strategy.

Because it is easier to add strategic discipline to a team that's excellent at executing than to add execution discipline later on.

How a new team executes sets its early culture a lot more than how (or if) it strategizes. 

And that early culture is very hard to undo later.