5 Reasons Why Strategy Fails

The 5 reasons why strategy fails: making choices, communicating choices, enforcing choices, measuring choices, and the people factor.

1/ You don’t actually make choices

Michael Porter is known for saying “The essence of strategy is about making choices”. 

Michael Porter describes “the worst mistake – and the most common – is not having a strategy at all. Most executives think they have a strategy when really they don’t” (Porter’s thoughts are captured in Forbe’s article on The Collapse of Strategy and Its Implications).

Most company strategies involving doing everything. If you can’t clearly articulate “We will do A…if we did A this means we won’t do B-Z”, then you haven’t made any choices. Without choice, there’s no strategy. 

Strategy is about making the choices that allow you to focus finite resources for disproportional gains. If you’re doing everything, then you’re not focussing your resources.

Make a choice: The only thing worse than bad decision is indecision.

2/ You didn’t communicate the strategy to your team

The best strategy, if not understood by the organisation will fail. There are two ways the communication of your strategy could trip you up. 

Firstly, you’ve made your choices, but spend the next six months trying to wordsmith it to perfection. In his book Hit Refresh, Satya Nadella described how getting his message 80% right and out in the organisation was more important than trying to spend time perfecting it. 

Perfection is the enemy of progress: Don’t try and perfect the messaging – a communicated strategy is better than one that stays on your laptop. 

Secondly, the choices are not articulated to the organisation in a way that helps people to understand what it means for their role. In most cases, people will struggle to understand what it means for them day to day. 

Translate your strategy: When communicating your to your organisation, translate what the top level choices mean for the types of decisions people will make in their role or department. “In my role, I will stop doing XYZ, and start doing ABC”. 

3/ You make choices but then don’t enforce them

Even when the strategy known across an organisation, you can fail to realise the benefits if you don’t enforce these. 

For example, you may have identified industry sectors to focus on, but the sales team continue to pursue any immediate opportunities that come along even if it’s off strat. 

Checks and balances: Ensure each department has criteria to help them make the right choices. For a sales team that can be qualification criteria that needs a nod of approval from the head of sales. There’s no need to introduce new processes and levels of decision making – you can do it leanly – a simple conversation can make the difference. 

Feedback loops: Don’t treat your strategy as a set and forget. The world changes and the strategy is built on assumptions. Ensure you plan for regular strategic reviews – either quarterly or mid-way through the year. The reviews shouldn’t be used to redefine the strategy. Instead, look at actual data points through the year to see if the assumptions of the strategy are holding. Make deliberate pivot or persevere decisions based on data – but avoid shifting your choices every three months.

4/ Your strategy says one thing, your KPIs encourage something else

People will behave how they’re measured. KPIs are the clearest signal to your people as to what you want them to do. 

In many cases, the simple act of making choices should remove KPIs for people. If you’ve created focus, but people are still measured on what they were doing before, you’re signalling to your organisation that you want them to keep doing everything. Or in other words, that you’re not serious about your choices. 

Simplify performance measurements: Keep measurements simple and when you make choices remove redundant performance measures. 

Ensure everyone knows the intentions of the performance indicators your setting and how it links back to the strategy. If your performance measures start driving behaviour that’s off strategy or counterproductive, you want people to know. 

Nothing is set in stone: If the new performance measures aren’t driving the right behaviour, listen to your people and adapt the measures. 

5/ Your strategy requires such a large mindset shift, but habit betrays people’s intention

Strategies often make choices on a different ‘what’, a different ‘how’, or both. 

‘What’ strategies are typically launching into adjacent sectors or markets (e.g. new market entry, the same product or service for a new segment). These are easy for people to transfer their existing skills and experience to execute. 

‘How’ strategies are doing the product or service in a fundamentally different way (e.g. changing from licenses to subscription business models, reorganising teams to deliver a new proposition). When changing how people need to do things, their existing skills and experience can become inertia against change. 

For example, organisations who restructure their teams to be cross-functional and autonomous, still find old reporting lines informally at play such as the developer reporting back to the head of IT to know their priorities. 

People aren’t deliberately derailing the strategy, they may have the best of intentions to change, but find that old habits die hard.

Feedback: Encourage feedback on how successful the choices are working. Give people the option to say, “it doesn’t feel like anything has changed” and be attentive to it when you hear it. Gather the data points from people to identify where and why this is happening and incorporate this into your strategic review. 

SO WHAT?

Overall, focus on making simple, understandable choices, even if the rationale behind it is deep and complex. Clear choices will keep you honest as to whether you’ve actually got a strategy as well as making it easier for everyone to get behind and execute.

References:

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