Why Do So Many Fail at Strategy Execution: Strategy Execution Risks
Despite better data, smarter tools, and more experienced leadership teams, most organizations still struggle to turn strategy into results. According to Korn Ferry’s recent CEO & Board Survey, only 11% of leaders feel extremely confident in their organization’s ability to manage risk — a signal that execution remains a critical vulnerability.
This is not a new challenge. Research from IBM continues to show that fewer than 10% of well-crafted strategies are successfully implemented. The gap between intention and impact is both persistent and costly. The real question is not whether strategy execution is hard — it is why so many organizations continue to get it wrong.
Why do companies struggle to execute even their most carefully conceived strategies? Where does the breakdown actually occur? And more importantly, what does it take to overcome strategy execution risk and consistently deliver results?
What We Have Learned: Strategy Execution Risks
We know from business strategy simulation data that 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 Strategic 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, leadership effectiveness, 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?
After your initial strategy retreat facilitation has been completed, 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 people 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 accountabilities, so you are not hampered by silos, internal battles, and conflict.
- 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 having culture of 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?
To learn more about how to upgrade your strategic planning process, download 3 Big Mistakes to Avoid When Cascading Your Corporate Strategy
Tristam Brown is an executive business consultant and organizational development expert with more than three decades of experience helping organizations accelerate performance, build high-impact teams, and turn strategy into execution. As CEO of LSA Global, he works with leaders to get and stay aligned™ through research-backed strategy, culture, and talent solutions that produce measurable, business-critical results. See full bio.
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