…and How to Avoid Them
A recent study of 163 CEOs by Forbes Insights and FD in conjunction with the Association for Strategic Planning and the Council of Public Relations Firms found that nearly a third of all business strategies never reach their mark.
Of these failures, they also pinpointed the following five reasons why they didn’t work:
- Unforeseen external circumstances (24%).
- Lack of understanding among those involved in developing the strategy and what they need to do to make it successful (19%).
- The strategy itself is flawed (18%).
- Poor match between the strategy and the core competencies of the organization (16%).
- Lack of accountability or of holding the team responsible (13%).
How can they be avoided?
Now that we know why strategies don’t work, what steps can organizations take to ensure that their strategies have the best chance at being successful? Below we break down the reasons for failure and what you can to do avoid them.
Unforeseen external circumstances
This is the only reason where you’re off the hook. Well, sort of. By definition, there’s nothing that anyone can do to predict unforeseen external circumstances. On the other hand, you can make sure that your strategic plan is crafted to be a flexible, living document that’s able to adjust to outside events. According to the study, the most common unforeseen circumstance was the current economic downturn. Of course, now that the downturn is upon us, organizations can adjust their strategic plan using our recession planning toolkit in our resources section.
Lack of understanding among those involved
While Forbes believes that tackling communications issues can be tricky, their findings point to the need to get help and do it quickly.
When the problem is a lack of understanding, it generally points to internal issues and the underlying causes are complex. Sometimes it is a broad lack of communications. Those reasons cited by respondents in verbatim included lack of communications across the enterprise, between a subsidiary and corporate, and even between management and the board of directors. Communications professionals even reported they were sometimes brought in too late or not given enough information to effectively support initiatives.
In addition to problems with understanding, outright resistance of strategies was also observed, citing “lack of acceptance internally of ideas developed externally.” In order to ensure stakeholder buy-in, organizations should include employees in the planning process.
The strategy itself is flawed
Forbes states that poor strategy “is usually the result of overestimating the potential of the market.” By conducting proper and thorough external analyses, organizations should be able to best gauge market potential. Know the size of the potential market, whether a it is growing or shrinking, which opportunities or threats exist, and how many potential customers exist within it and make sure to research further to ensure a solid estimate of its potential.
Poor match between the strategy and core competencies
Is your mission aligned to your core competencies? Is your strategy aligned with your mission? Make sure that whatever strategy you choose isn’t just a noble goal, but that it builds on what you’ve already established: company history, customer base, strengths, and unique capabilities, resources and assets.
Lack of accountability
Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner. If you and your team don’t have to report to anyone on your progress, the plan may find itself further and further down your to-do list or at the bottom of your stacks of paper. You don’t need an elaborate accountability system, but you do need something.
Don’t forget to discuss the consequences for non-performance with your team. Just like rewards, consequences are critical in any action plan. Often, the consequences are removal from the team that’s working on the goals. Peer pressure creates such an intense expectation of performance that it causes action, so hold monthly strategy meetings where everyone has to publicly report on their progress.
What Does Successful Strategy Look Like?
Gary Hamel, a famous strategist, once observed that the real problem with strategy is that while we can all recognize a great one when we see it, no one really knows where it comes from. According to the study, though, organizations can strive to replicate the following success factors:
Success Factors of Strategy:
- Alignment across multiple functions to create shared accountability
- Senior management setting clear expectations along with the right tone and a definition of success
- Involvement of the right people
- Making decision-making transparent
While at first glance, all of the reasons for failure may seem overwhelming, the good news is that the vast amounts of them are preventable! Good luck strategizing and making your plan work for your organization.