Two Common Leadership Strategy Traps to Avoid

a businessman stands on a huge strategy map and looks puzzled

Just about every successful business is bolstered by a sound strategy.

Leaders rightly invest a lot of time, money and energy trying to devise a strategic direction that will take them where they want to go. Experienced leaders know that a well-conceived strategy can keep their focus on what drives the business now and into the future.

LSA’s Organizational Alignment Research found that an effective strategy accounts for up to 31% of the difference between high and low performing organizations. And to be “done right,” a strategy needs to be just clear enough, believable enough and implementable enough to propel the business forward.

However, in our twenty years of helping companies grow, we have found that far too few business strategies are actually set up to succeed. Here are two of the most common strategic traps that cause problems before the strategic plan is even out the door…

Leadership Strategy Trap #1: The business strategy is too broad and too vague.
Strategies should not be wishful thinking. You can’t do everything well. Instead, strategies should be built around what truly matters most. Not all options hold the same value. You need to direct your finite resources and passion toward where they can do the most good.

An example of trying to do too much is the strategy Digital Equipment Corporation (DEC) finally adopted after a contentious meeting of its senior executives as outlined by UCLA management professor Richard Rumelt. According to Rumelt, one leadership faction wanted to strengthen its computer business; another wanted to focus on solving customer problems; and a third believed they should concentrate on building better chips. They eventually reached a compromise stating, “DEC is committed to providing high-quality products and services and being a leader in data processing.”

This vague statement did not provide clear direction; it was simply a consensus outcome of leaders who could not agree. Rather than selecting an objective when, if accomplished, would lead to a series of positive results, DEC executives chose a plan that was unclear and too general. In about 5 years, DEC lost so much ground that it was bought out by Compaq in 1998.

A recent LSA client started the year with 5 strategic pillars and 32 key strategic initiatives. Needless to say, they faltered mightily until they narrowed down to 3 key strategic initiatives for the year.

The lesson is that it is important to take a strategic stand about where you should play and how you should win. Effective leaders make the tough choices.

Leadership Strategy Trap #2: The business strategy is not actionable.
A strategic plan is no good unless there are clear action steps that lead to achievement of the overall strategic goal. Every employee should understand the fundamental strategic purpose, the plan and just what they need to do to accomplish their piece of the plan. Their direct contribution to the goal should drive everything they do. It is all about aligned execution.

Here’s another example from Rumelt. Nvidia, a high-tech Silicon Valley company, was founded in 1993. It struggled in its early years in the very competitive field of designing 3-D graphic chips for the gaming industry. The strategy they adopted to compete more effectively was to “release a faster, better chip three times faster than the industry norm.” In order to accomplish this goal, they focused on just two ways to implement the strategy:

  1. They created three teams of developers who worked on overlapping schedules.
  2. They invested heavily in simulation facilities so they could test new products extensively on site before release and thus avoid the typical delays.

The strategy worked so effectively that the company thrived, began a series of acquisitions and, in 2007, earned Company of the Year status by Forbes magazine.

The Bottom Line
Strategic ambiguity creates exponential problems for companies, leadership teams, front-line managers and employees. If people do not agree on where they are going or how they will get there, the path to success is riddled with unnecessary hurdles. If you see any of these strategic warning signs in your organization, it is time for you to step back and create more strategic clarity, believability and implementability:

  1. There are too many (more than 5) strategic priorities.
  2. Strategic priorities shift frequently (quarter-by-quarter).
  3. Relationships trump performance. Who you know becomes more or equally important to the value you contribute to the company.
  4. Goals, roles, success metrics and accountabilities are unclear and finger pointing occurs when things go wrong.
  5. There is minimal collaboration between functions, departments, teams or individuals.
  6. People need to ask a lot of questions and have a lot of discussions before moving to action.

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