Strategic Failure, Strategy Design, Strategy to Performance Gap

10 Reasons Why Strategic Plans Fail

Looking at the failure of strategy is the broad basis of my DBA so I am always interested in articles or commentary on this area.  In my personal view there is a serious bias to writing about the positive and ignoring how and why we fail.

Here is an article from Forbes listing the 10 reasons that strategic plans fail.  All 10 are valid though in my experience within Australian companies  1, 3, 4 & 6 are most common.

1. Having a plan simply for plans sake. Some organisations go through the motions of developing a plan simply because common sense says every good organisation must have a plan. Don’t do this. Just like most everything in life, you get out of a plan what you put in. If you’re going to take the time to do it, do it right.

2. Not understanding the environment or focusing on results.Planning teams must pay attention to changes in the business environment, set meaningful priorities, and understand the need to pursue results.

3. Partial commitment. Business owners/CEOs/presidents must be fully committed and fully understand how a strategic plan can improve their enterprise. Without this knowledge, it’s tough to stay committed to the process.

4. Not having the right people involved. Those charged with executing the plan should be involved from the onset. Those involved in creating the plan will be committed to seeing it through execution.

5. Writing the plan and putting it on the shelf. This is as bad as not writing a plan at all. If a plan is to be an effective management tool, it must be used and reviewed continually. Unlike Twinkies or a fine vino, strategic plans don’t have a good shelf life.

6. Unwillingness or inability to change. Your company and your strategic plan must be nimble and able to adapt as market conditions change.

7. Having the wrong people in leadership positions. Management must be willing to make the tough decisions to ensure the right individuals are in the right leadership positions. The “right” individuals include those who will advocate for and champion the strategic plan and keep the company on track.

8. Ignoring marketplace reality, facts, and assumptions. Don’t bury your head in the sand when it comes to marketplace realities, and don’t discount potential problems because they have not had an immediate impact on your business yet. Plan in advance and you’ll be ready when the tide comes in.

9. No accountability or follow through. Be tough once the plan is developed and resources are committed and ensure there are consequences for not delivering on the strategy.

10. Unrealistic goals or lack of focus and resources. Strategic plans must be focused and include a manageable number of goals, objectives, and programs. Fewer and focused is better than numerous and nebulous. Also be prepared to assign adequate resources to accomplish those goals and objectives outlined in the plan.

Business Strategy, Strategy Design, Strategy Implementation

Strategic Triggers

Have you identified your strategic triggers before you start rolling out the strategy?

A key aspect of the strategic planning process is that once you have decided and agreed your strategic plan – and while you still have the design team together – that you identify what the events, conditions or circumstances are that will force a strategic response.  A strategic response is a change to the plan.

What are the things that will

  • you will ignore,
  • that you will review separately (i.e. not as a group)
  • that will warrant an immediate review of your strategy and a regroup of the strategic design team?

If you don’t agree these at the time of the planning process you leave yourself open to over or under responding to things that either do or don’t siginificantly affect your strategy.  Over-responding will potentially waste valuable time, break the momentum in your strategy and cast doubt over the strategy as a whole.  Under-responding could mean that you exposure the business to increased risk or miss a key opportunity.

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Business Strategy, Strategy Design, Strategy to Performance Gap

Strategy = How

We are all using the same words but we mean so many different things.

This comes up frequently in my research, my general discussions about my research and in my consulting work.  Whilst I have already written that at the heart of this issue is not the particular jargon but the organisational understanding of the jargon, it is worthwhile to give a simplistic view as a start point.  *What I mean by that comment is that it doesn’t really matter which term you use, what matters is that when you say it that everyone in your organisation associates the same meaning and application as you do.  Beware of assuming that your staff or colleagues  have your exact definition.

So here is the simplistic view;

Mission = Why
Vision = What / Where
Strategy = How

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Business Strategy, Strategic Failure, Strategy Design, Strategy to Performance Gap

Interesting Research on Strategy

In support of my “why does business strategy fail” work here is some research that asks some very direct questions of senior executives about their strategy with disappointing results.

In 2011 Booz & Co conducted a survey of 2,800 executives from companies of various sizes, geographies, and industries. According to this survey, most executives don’t feel their company’s strategy will lead to success, two out of three respondents admit that their company’s capabilities don’t fully support their strategy, only one in five are fully confident they have a right to win, and the majority say their company has too many conflicting priorities.

Executive frustration is unmistakable
The survey results show that setting priorities is a significant challenge for companies — and that linking priorities to decisions is a hurdle that few companies get past. According to the survey:

  • A great majority of executives (64% of survey respondents) say that their biggest frustration factor is “having too many conflicting priorities.”
  • Executives report that their biggest challenges are (a) allocating resources in a way that really supports the strategy (56%) and (b) ensuring that day-to-day decisions are in line with the strategy (55%).
  • Half of the executives (50%) consider setting a clear and differentiating strategy a significant challenge.
  • In fact, most executives (54%) do not feel their company’s strategy will lead to success.
  • Only 20% say their company has a right to win in all the markets in which it competes.
  • Most executives (82%) say growth initiatives lead to waste, at least some of the time.

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Business Strategy, Strategy Design

Can you say what your strategy is?

One of the more provoking articles in my study is Collis & Rukstad (2008) “Can You Say What Your Strategy Is?” which was published in the HBR.  It is provoking because as a CEO it really challenges you to be able articulate your organisation’s strategy.  It also drives home the reality that in many organisations the people charged with executing the strategy do not have a ‘clear line of sight’ in terms of understanding how to do their jobs within the strategy.

If you, as CEO can’t succinctly articulate your strategy, how can you expect your managers or staff to do so?

Collis and Rukstad offer the following hierarchy of company statements as a guide for the use of the key terms used in strategy.  The correct use of which will result in a concise strategic statement which covers scope, objective and advantage.

An example of a good strategic statement is given;

“grow to 17,000 financial advisers by 2012 [from about 10,000 today] by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions, through a national network of one-financial-adviser offices.”

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