10 simple reasons companies keep failing at strategic execution
Tuesday, January 19, 2021
Whenever I hear strategy being discussed, someone invariably says that strategies fail because of poor execution. Other times, people say that execution is more important than strategy. But you could also argue that working hard and efficiently on something that is not part of an overarching plan does not create the best outcomes. If you Google the phrase, “strategies fail because of…,” the top answer is “poor implementation.”
In their book “The Balanced Scorecard,” authors David Norton and Robert Kaplan note that 90% of organizations fail to execute their strategies successfully. While that seems a little high, the message is clear: this low success rate has caused many leaders to abandon strategy as a tool. They believe they need to focus all their attention on execution without having a strategic platform since most plans fail.
If 90% of strategic planning fails, is it the plan or the execution of the plan that is poor? The truth is that most of the time, we cannot honestly answer that question. You cannot pick one or the other, because they are completely connected, blended, and shared. An organization cannot realize its potential if there is a good plan with poor execution or the reverse, a poor plan with good execution.
It is important to look at strategy and execution together. Accordingly, here are 10 simple reasons companies keep failing at strategic execution:
No. 1: Strategy is treated like an event, not a system.
Most companies are familiar with the annual strategy event — a multi-day process where the executives get together to create the strategy for the organization. Sometimes there are guest speakers, followed by nice dinners mixing in some high-quality bottles of wine.
The group typically leaves the event with several strategic objectives, but little time is spent identifying if these objectives connect with the future of their industry or the internal capabilities to deliver on the objectives.
No. 2: Strategy is reserved for the executive elite.
The strategic objectives agreed on at the strategy event typically remain in the executive team’s control. In some cases, the executives believe the strategy is too complex for employees to grasp or over the head of the rest of the company to integrate into organization-wide operations.
No. 3: Strategic plans are stagnant and inflexible — while markets, consumers, and employees change rapidly.
Many companies engage large, expensive strategic planning consulting firms to lead the strategy process. These consulting organizations rely heavily on their ability to conduct comprehensive data analysis that is supposed to support the strategy. After six months, the company receives a spectacularly developed PowerPoint deck with pages of research and analysis with several strategic objectives.
Like the strategy event, the goal of these types of programs is to generate a strategic plan, not to execute one. As the consulting company was doing research and the executives were waiting for access to information, the customer and market continued to change. The plans that result from traditional strategic planning are not created to be implemented in an agile fashion. Just think of the countless number of strategic plans that became obsolete and rendered useless when COVID-19 began to spread.
No. 4: Strategies are not connected to the organization’s potential or culture.
Strategic planning and strategic plans generally focus on generating financial outcomes. This is understandable, considering positive cash flow is the fuel that enables companies to realize their potential. However, the reason strategic plans are created is to pursue something meaningful for the organization and its employees.
This meaning motivates and energizes employees and keeps them focused when there are distractions. Regrettably, leaders fail to build a plan that specifically leverages and ties to the company’s cause or mission. This oversight tends to negatively impact the entire organization, as the plan neither connects with nor considers the company’s cause and culture.
No. 5: Strategic Focus is not shared or visible.
When completing a vision or mission statement, the first thing company executives do is post the mission statement, both internally and externally. However, when leaders develop a strategic focus, there is little done to socialize it or make it visible for others to see.
If strategic execution is done effectively, there are clear strategic focus statements that are visible and adopted into daily meetings and conversations. This is when strategic execution becomes part of the culture.
No. 6: Strategies are not set up with clear measurements and outcomes.
Most companies use some form of KPI or other goal measurement tool. Generally, these KPIs are not developed directly in connection with the strategic platform. In order to maximize the effectiveness of strategic execution, Strategic Outcomes should be developed that set specific, measurable outcomes that align with the Strategic Focus.
No. 7: Strategies are not created to connect with the actions necessary to succeed.
In the traditional strategic planning process, executives meet and outline several strategic objectives. These objectives are then rolled out or emailed to the rest of the company.
The people that are responsible for executing on the strategies do not realize how it impacts their job and are unable to connect specific actions to the outcomes and objectives. This lack of connection between strategic development and strategic actions reduces the effectiveness of strategic execution.
No. 8: The people executing the strategy do not understand their work is strategically significant.
Inside of every human being is a desire to realize earned success — that is, accomplishing something that is hard. To keep things easy and simple, company leaders fail to challenge employees to pursue and accomplish significant outcomes. Employees want to know their work has meaning. Helping employees understand where they and their jobs fit into the strategic platform is essential to achieving positive results.
No. 9: Strategic Outcomes are not tracked and shared in a structured, repeatable system.
When executives go away for their annual strategy retreat, the strategies that come out of the event typically reside in a PowerPoint deck and are discussed at the highest levels of the company after the retreat. These items are sometimes discussed at a quarterly strategy update meeting within the Executive Committee.
The strategies typically are not integrated into the operations of the company through a shared reporting structure. If something is worth pursuing, it is worth tracking and sharing.
No. 10: There is no intentional system where strategies become part of the organization’s operations through regular communication, thus failing to embed the strategies in the culture.
While reports are important, the purpose of reports is to generate solution-based conversations supporting agile execution and behavioral alignment. Reports are used to enhance communication, leading to improved strategic actions. As a result, internal communications on strategic execution and outcomes need to be established. The strategy needs to be integrated into sales and production meetings. It must be repeatedly discussed so that the strategic execution becomes part of the culture.
When leaders fail in creating a strategic execution platform, it leads to a lack of trust in the organization, and employees look at strategy as another corporate initiative that does not create an opportunity to achieve success. Remember, employees have an innate desire to succeed and accomplish something that has meaning. It is the responsibility of the leadership team to avoid the pitfalls above and build an organization where the culture is based on a foundation of strategic execution.
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