It is true! There is evidence that strategy is in crisis!
Strategy (not strategic planning) is often heralded as the cornerstone of organizational success. Yet, paradoxically, many strategies are doomed to fail even before they are implemented. This phenomenon isn’t merely a result of poor execution; it often stems from fundamental flaws in the strategy itself.
Drawing insights from the “Strategy in Crisis” study and references from the Financial Times, it’s time to blatantly identify reasons why strategy fails in execution.
Here are the five most common reasons why strategy fails. We provide recommendations that have been successful for our clients across various sectors and industries.
I. Over-reliance on Static Planning Processes – Static, annual strategy cycles cannot keep up with the pace of change, making choices and plans outdated shortly after they are created.
Recommendation:
- Shift to Dynamic Strategy Management: Implement a rolling strategy process that continuously revisits and updates strategic priorities based on new information. Replace annual reviews with quarterly or even monthly adjustments.
- Empower Teams with Micro-Strategies: Allow individual teams or business units to create short-term action plans within the broader strategic framework. This keeps the organization agile while maintaining alignment.
- Continuous Risk Assessment: Incorporate a dynamic risk management process to identify and mitigate emerging risks in real-time, ensuring strategies remain viable and resilient.
II. Overemphasis on Predictability in an Unpredictable World – Traditional strategies relied on linear, rear-view-driven projections, making them inflexible and irrelevant in a rapidly changing environment. They also fail to integrate risks into the strategy and its execution.
Recommendation:
- Adopt a “Compass, not a Map” Approach: Shift from detailed, step-by-step plans to a strategy framework that incorporates the conditions and actions for execution and allows for flexibility. Emphasize guiding principles and adaptive priorities rather than rigid milestones.
- Build Adaptive Capacity: Ensure your organization’s culture and infrastructure allow for quick strategy adjustments when new opportunities or risks emerge.
- Scenario Planning: Develop multiple plausible scenarios, not just the “most likely” one, and create strategies that can pivot depending on which scenario unfolds.
III. Misalignment Between Strategy and Capabilities – Strategies often fail because they clash with the organization’s existing norms and behaviors.
Recommendation:
- Audit of Capabilities: Before finalizing a strategy, assess the organization’s DNA – its individual and organizational capabilities. Identify potential blockers, patterns, and enablers for the strategy.
- Align Strategy with Core Purpose: Frame the strategy in terms of how it aligns with and supports the organization’s purpose. This creates emotional buy-in.
- Leverage Strengths: If the strategy requires a shift of strategically coherent strengths, implement change management initiatives to address gaps to make them future-fit.
IV. Lack of Genuine Commitment from Leadership – Leaders often cobble together a strategy to help them ‘make the numbers.’ That’s not a strategy; it’s a revenue target. When the goal is all there is, there is no direction, causing leaders to lose credibility and momentum.
Recommendation:
- Make Leadership Accountability Visible: Leaders should take ownership of specific aspects of the strategy and be committed to what differentiates the business. Their visible commitment creates a ripple effect throughout the organization.
- Walk the Talk: Leaders must demonstrate alignment between their actions and the strategy. If agility is part of the strategy, for example, they should model flexibility and openness in decision-making.
- Embed Strategy in Leadership Routines: Include strategy for discussion in every leadership meeting, decision-making process, and performance review. This ensures ongoing alignment and attention.
V. Inadequate Consideration for Building an Advantage – The strategy doesn’t focus on building an advantage through strategically leveraged capabilities; instead, it focuses on the uncontrollable external factors of market volatility and dynamics, competition’s activities, or technological trends, among others.
Recommendation:
- Strategic Intelligence Gathering: Make external scans (market trends, competitor analysis, regulatory changes) a core part of your strategy process. Use this data to continuously inform and refine the strategy, not raise the stress level over what cannot be controlled.
- Stakeholder Dynamics: Regularly identify and analyze external stakeholders (customers, regulators, partners) to understand how their priorities and pressures might influence your strategy and capabilities.
- Agile Feedback Loops: Create mechanisms to gather real-time feedback (e.g., customer insights, industry trends) and integrate it into strategic choices and decisions.
Connecting the Dots
In summary, we take note of alignment, adaptability, and actionable leadership as recurring themes in successfully executed strategies.
The recommendations above focus on integrated organizational and individual capabilities and the interconnectedness of strategy, risk, and change management.
The recommendations propose that . . .
- Alignment between culture, leadership, capabilities, and strategy ensures long-term success.
- Adaptability is a critical strategic capability, especially in volatile conditions.
- Practical methods (e.g., leadership modelling, dynamic processes) to ensure the strategy doesn’t just sit on paper but drives real, effective action.
