Why does business strategy fail?

On average, most strategies deliver only 63% on their potential financial performance, many executives put the figure at 50%

(Mankins & Steele 2005)

46% of the catastrophes stemmed from misguided strategies (Carroll & Mui 2008)

Positive Bias

Only looking at success stories is like interviewing winners at the roulette wheel and assuming that their strategies will help you win, too. To get a true picture of your odds of success, you also have to interview the losers (Carroll & Mui 2008)

Financial results versus stated financial objectives of strategies (Mankins & Steele 2005)

Writing off major investments, or shuttering unprofitable lines of business, or filing for bankruptcy (Carroll & Mui 2008)

By failure I don’t mean the spectacular crashes that make the front pages, and I don't mean those due to chicanery. I mean the invisible failures behind targets we don’t hit, the promotions we don’t get and the profits we don’t earn (Chussil 2005)

What is Failure?

Design vs. Implementation

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Implementation is different from execution. One has an end result run by a designated team and the other is a daily or hourly activity that is charged to everyone in the

organisation.

The Strategy Process

STEP 1

DESIGN

This covers the strategy design, formulation and decision process

STEP 2

COMMUNICATION

Whilst often grouped in

implementation, many author distinguish

communication as a n important & separate stage

STEP 3

IMPLEMENTATION / EXECUTION

Two camps as discussed on

whether strategy is implemented or

executed

STEP 4

EVAULATION

The formal or informal review & measurement of progress against

targets

Based on the research this was the strategic process adopted for the study

The reason that so many companies fail to have a successful strategy is that managers are reluctant to make strategic choices and incorrectly see the biggest threats to their

strategy coming from outside the firm when the greater threat often comes from inside the firm (Porter 1996)

Just 53% of executives characterise their companies’ strategies as emphasising a relative advantage over competitors (McKinsey Global Survey 2011)

Communication

On average, 95% of employees are unaware of or do not understand the organisation’s strategy (Kaplan & Norton 2005)

Implementation / Execution

Strategies frequently fail not because of inadequate strategy formulation, but because of insufficient implementation (Li et al 2008)

A key cause for missing strategy goals is that leaders do not invest the same amount of time, energy, and resources in managing the implementation of the strategy as

they do in setting the strategy (Getz & Lee 2011)

Measurement

92% of organisations do not track the relevant KPI’s against their strategy to assess their performance (DeLisi 2004).

Evaluation

Less than 15% of companies make it a regular practice to go back and compare the business results with the performance forecast for each unit in it’s prior year’s strategic plans(Mankins & Steele 2005).

Leadership

Mistakes in strategy can be boiled down to two things: a wrong idea and bad stewardship of that idea (Finklestein & Borg 2004)

Flawed preferences of key leaders derailed their competitive strategies (Finklestein & Borg 2004)

“Even if a firm seems to have a superb strategy, it its culture isn't aligned with and doesn’t promote that strategy, this ‘great’ strategy

with either stall or fail” (Schneider 2007)

“When strategy and culture are at odds, culture always wins” (Beaudan 2001)

So, can you make improvements to your strategy process?