Do You Know About the Most Common Leadership Strategy Traps to Avoid?
Just about every successful business knows the leadership strategy traps to avoid. Leaders rightly invest a lot of time, money, and energy trying to devise a clear 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.
Strategic Clarity Accounts for 31% of the Difference
Our Organizational Alignment Research found that an effective strategy accounts for 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.
The Strategy Challenge
However, in our twenty five years of helping companies grow, we have found that far too few business strategies are actually set up to succeed in terms of strategy execution.
The Two Most Common Leadership Strategy Traps to Avoid
Here are two of the most common strategic traps that cause leaders problems before the strategic plan is even out the door:
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 Strategically
The strategy Digital Equipment Corporation (DEC) finally adopted after a contentious meeting of its senior executives as outlined by UCLA management professor Richard Rumelt is an example of trying to do too much. 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 and direction did not provide clear focus; 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.
An Example of a High Growth High Tech Services Firm Trying to Do Too Much Strategically
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. While all 32 areas felt important, they were not equally important in terms of high growth for the next twelve months. Significant trade-offs had to be made to move the strategy forward.
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 decisions.
Their direct contribution to the goal should drive everything they do. It is all about aligned execution.
An Example of An Actionable Strategy
A high-tech Silicon Valley company, NVIDIA, 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 problematic leadership strategy traps. 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 your strategy is not being consistently implemented across the organization, it is probably time for you to step back and create more strategic clarity and commitment.
To learn more about leadership strategy traps to avoid, download 7 Ways to Stress Test Your Strategy
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