Albu On Strategy

3 Reasons Strategy Fails

At Albu Consulting, our key message to clients and prospects is “Strategy without execution is useless and Execution without strategy is aimless.”  We believe those words speak for themselves, but let’s look at the facts.  In a recent McKinsey & Co. survey of 197 companies, 97% of leaders believed they had the right strategy, but only 33% reported significant strategic success.  Other studies from The Balanced Scorecard confirm this gap between strategy and execution.  And we can attest to these statistics with our own experiences over almost 20 years in business.

From personal experience, we could make a long list of reasons why leaders fail to achieve the results they want from their strategic plans, however, there are a few that stand out from all the others.

Employees don’t understand the strategy
Too often strategy is a well-kept secret of the CEO, Owner and the Leadership Team.  After the strategy is agreed upon, there is little effort to help employees understand, a) what the overall company strategy is, and b) what role they can/will play in helping the company achieve its strategic objectives.  Without this type of engagement, there will be very little commitment.  Therefore, there needs to be a concerted effort by the CEO and leadership team to explain, very specifically, how each employee can/will contribute to the strategy.  Remember, strategy happens at the individual level, so as employees roll up their sleeves to participate in the work, they have gained a much deeper understanding of the long term goals of the company.

Silo-focused structure
Most companies are organized by function (finance, IT, HR, Sales, Marketing, Operations, Supply Chain, etc.), and each is an important spoke in making the wheels of the organization turn.  Function leaders have a responsibility to ensure their respective groups are supporting the day-to-day running of the business.  What is often missing is how these functions join forces to deliver on the long term strategic objectives.  Silo focused functions can lead to a failed strategy.  Resource conflicts arise, decisions are made without considering cross function impact, and valuable management time is wasted working at cross purposes.

Lack of a disciplined approach to governance of strategic initiatives
The “urgency” of day-to-day problems will often hijack attention from “important” strategic initiatives.  Recent studies have shown that less than 5% of senior team’s time is spent on strategic issues (Michael C. Mankins, Stop Wasting Valuable Time). Too often the justification for not achieving a strategic initiative is that “we were too busy.”  Bottom line, without a viable, repeatable process in place to manage strategy execution it will be very difficult to gain any momentum.  Success is the result of keeping strategy front and center monthly, quarterly and annually.  A disciplined approach with clearly stated expectations on strategic initiatives is another key factor of success, and as a result strategy will become a part of everyone’s day-to-day responsibility.

The stakes are high—70% of the CEOs who get fired do so not because of bad strategy, but because of poor execution (Ram Charan, Why CEOs Fail, Fortune Magazine).  What barriers have you encountered to achieving your strategic objectives and how have you overcome those challenges?  If you are interested in learning more about how we have helped our clients increase the value of their companies through strategy execution management, please give us a call.

Posted in Newsletter, Strategy Execution, Strategy Management.