The Effects of Misunderstood Corporate Strategies

Misunderstood Corporate Strategies Undermine Success

Misunderstood corporate strategies threaten your success.  Often developed during a formal strategy retreat, a corporate strategy is the plan you create to achieve specific goals.  Without the guidelines of a clear strategy, it is difficult for leaders and employees to collectively seek the right new opportunities, make aligned decisions, and conduct day-to-day business in a way that moves the strategy forward.

Strategic clarity sounds important, doesn’t it?

The Importance of Strategic Clarity
Our organizational alignment research found that strategic clarity accounts for 31% of the difference between high and low performance in terms of revenue growth, profitability, customer loyalty, leadership effectiveness, and employee engagement.

If you want to perform at your peak, you need your strategy to be clear, believable, and implementable enough across the organization.  And yet, as business consultants for over thirty years, we are constantly amazed at how few companies have designed a strategy that is coherent and well understood by their key stakeholders.

How Clear Is Your Strategy?
Our research found that employees on average find their company’s strategy to be half as clear as their boss.  Recent research by Timothy Devinney et. al. at Sydney, Australia’s University of Technology asked employees of 20 major Australian corporations with strategies that had been fully and publicly expressed to select their business’ strategy from among six possibilities.  Less than 33 percent identified their own company’s strategy!

Unfortunately, many corporate strategies are either unclear or not getting through to their employees.

The Consequences of a Misunderstood Corporate Strategy
Here are a few of the negative effects of a misunderstood corporate strategy.

• Lack of Focus
  If the priorities of the business are not clear, how do employees know what direction to take and what decisions to make? Without a true north, lots of time and effort can be wasted in organizational politics and “churn” where little gets efficiently accomplished and there’s minimal movement forward.
• Lack of Accountability
  A well-crafted strategy clarifies who is responsible for what and how success will be measured. Whether you are an organization with a traditional reporting hierarchy or one that works with a flatter structure, make sure that roles, responsibilities, scope, success metrics, and interdependencies are crystal clear.  Only then can you create an accountable culture and push for higher levels of performance.
• Lack of Smart Resource Allocation
  Another critical aspect of a well-constructed corporate strategy is defining how resources will be allocated. It sets out which projects and operations will need resources and where the resources (financial, personnel, technology) will come from.  Without a clear plan, resources may be mistakenly used for lower priority projects and put higher priority projects (and their teams) at unnecessary risk.
• Lack of Knowledge Sharing
  Businesses struggle to grow without a transparent process for sharing information with those who need it. Without a coherent flow of information, critical data may be lost or misdirected.  The result is most often confusion, frustration, and duplication of effort.

The Bottom Line
Can your employees articulate your strategic priorities and the rationale behind them?  Make sure they can in their own words, or you might suffer the negative effects of misunderstood corporate strategies.

To learn more about creating a clear, believable, and implementable corporate strategy, download 3 Big Mistakes to Avoid When Cascading Your Corporate Strategy