Why Do So Many Fail at Strategy Execution Strategy execution risks are not new. We know from experience and from a recent IBM survey that less than 10% of carefully crafted strategies are being successfully implemented. The question is why. Why do so many companies struggle and then fail to execute on their carefully conceived strategies? How can we overcome strategy execution risks?
What We Have Learned There are 5 major reasons why business strategies fail. Here’s the list and our recommendations on how to overcome the top strategy execution risks:
Lack of Clarity and Understanding Our organizational alignment research found strategic clarity accounts for 31% of the difference between high and low performance in terms of revenue, profitability, customer loyalty, and employee engagement. If your strategy is not clear enough, not agreed to, not perceived to be equal to the challenge, or not supported by adequate resources to truly succeed, it won’t.
Part of the problem is that, according to our client data, only 1 in 20 employees fully understand their company’s strategy. How can we expect employees to commit to a strategic direction if they cannot fully articulate it?
Make sure that each member of your work force can spell out the company strategy and understand how their job fits into the overall plan.
Lack of Agility Not even the most well researched and well-designed strategies can predict all the events that could hinder strategy execution. Those in charge need to be equipped with the authority and experience to adapt to changing facts on the ground. Not only should they be able to overcome unexpected hurdles but also to take advantage of unforeseen opportunities.
Teams need to be able to pivot in a timely way to channel resources where they are most needed and to leave behind initiatives that have proven unsuccessful and counter to strategic priorities.
Make sure that your workplace culture is aligned and allows for a reasonable amount of flexibility in decision-making at appropriate levels within the organization.
Lack of Coordination The good news is that most managers report that they can rely on their boss and their direct reports all or most of the time. However, the story is completely different when looking at reliability across functions and business units. The bad news is that only half of managers feel that they can rely on colleagues in other functions and units even most of the time.
If teams are fragmented and working in silos, chances are they are having trouble distinguishing what matters most and how all the pieces fit together. Goal and role confusion is the root cause of most internal clashes.
Make sure your strategy points your key players in the same direction with clear goals and roles, so you are not hampered by silos, internal battles, and confusion.
Lack of Rewards for Desired Behaviors Organizations are generally good at rewarding performance. Past performance is a key factor in promotions, in financial and non-financial rewards, and in hiring decisions. But there seems to be little recognition for other factors such as agility and teamwork. If strategic execution relies on effective collaboration on teams and across functions, collaboration is a trait that deserves praise and encouragement.
Find a way to recognize and reward employees who exhibit the desired behaviors required for you to execute your strategy – like collaborating, being agile, creating buy-in, connecting to the big picture, building strategic relationships, and accountability. All have a high correlation to strategy implementation.
Lack of a Distributed Leadership Execution of strategy is hampered when all the authority resides at the top. When top executives insist on making all the decisions, they lessen middle management’s ability and willingness to make decisions themselves. Yet middle managers and technical experts are closest to knowing how to get things done.
Top executives should provide overall guidance but should extend authority to key decision-makers throughout the organization.
The Bottom Line It is the job of the executive team to not only create a clear and compelling strategy, but also to ensure that it gets implemented. Have you taken the steps to overcome strategy execution risks?