The Complexity of Strategic Execution and Its Common Pitfalls
Strategy is the description of approach, based on calculated decisions taken by the leadership team to maximize value proposition of the business to its internal and external stakeholders, that directs set of actions to be taken by the organizations within the business to achieve the stated strategic goals and objectives (and ultimately, its vision) in the most effective and efficient manner.
The strategic plan is the description of sequence of steps and actions to be taken by the organizations to accomplish the goals and objectives. Most people conflate strategy and strategic plan, they are not the same thing.
Strategic planning cycle entails creation of strategy and strategic plan and execution of the strategic plan to realize the stated strategic goals and objectives.
All stages of strategic planning are complex. Many people are involved, and they must all collaborate to deliver the expected results. Like a complex machinery there are many moving parts and failure in any one can get the whole machine to come to a grinding halt. It is impossible to predict all uncertainties and be prepared for them. As per the Murphy’s law ‘Anything that can go wrong does indeed go wrong’.
The strategy itself can be wrong, which can be devastating to the business and failure to create the right strategy can certainly ensure demise of the business. And hence it is very important that the business has the right visionary leadership team at the helm to steer the business successfully.
Assuming the business strategy is right then certainly it is possible that the strategic plan and its execution is not conducted properly resulting in the failure of strategy itself. This is a more prevalent reason for the strategy failure.
According to a Harvard business review studies conducted, over 67% of the well-formed business strategies failed due to poor execution.? A full 61% of executives were not prepared for the strategic challenges they faced upon being appointed to senior leadership roles and 50%–60% of executives failed within the first 18 months of being promoted or hired.
There are many reasons why strategies (executions) fail. Here are a few notable ones.
Lack of understanding of strategy by all stakeholders
The root causes of lack of understanding and general acceptance of the strategy stems from ineffective and inadequate communication at all levels of business, starting at the top.
It is important for business leaders to first clearly communicate the rationale behind why certain goals and objectives were chosen to begin with, especially to the group responsible for formulation of the strategy. It is the ‘north star’ that guides the subsequent steps of strategic planning cycle. Every outcome of the internal and external assessment must be reviewed and debated by the planners based on their collective understanding to justify the selection of the goals and objectives. Any misunderstanding and misinterpretations of the goals and objectives can lead to deviations from the intended outcomes.
It is hard to believe but the research in the Harvard business review also showed that a staggering 95 percent of employees do not understand or are unaware of their corporate and business strategy and employees of about 71 percent of businesses with such poor communications believed strategic decisions are second-guessed!
Another major hurdle to open communication is the fact that strategy related information, by its very nature, is generally treated as confidential information and very few people except at the top are privy to this information. Ideally business must have the right controls in place, so the right level of strategy related information is disseminated to the right people based on their ‘need to know’, especially to the people who are responsible for developing strategic plan and implementing it. If the business does not have proper controls in place this information does not get shared and percolated down in the chain with the right people at the right time and in some cases, not shared at all. This can certainly lead to incomplete or even wrong strategy planning and implementation since the key SMEs do not have all the needed information at their disposal and so they are left guessing mostly to their detriment.
Other issue with communicating the output deliverables from various stages of the strategic planning cycle with the stakeholders is that the information is not rendered at the right level of details. It is either at a very high-level with little details or with too many unnecessary details; in either case the information does not serve the intended purpose.
Successful strategy execution depends on clear understanding not only of the goals and objectives by every person involved, but how their individual goals contribute to achieving the larger business goals. This is the only way to rally the troops behind the strategy and garner support from all levels of the organization.
To improve the odds of success and boost business performance employees at the right level of need to know must be empowered. They must be able to guide and communicate effectively within their own organizations in formal and informal settings.
Failing To Fill the Right Roles
This may be the second major reason for strategy execution failure. Failing to first identify the right skills necessary for creation and execution of the strategy and plan and then failing to assign the right roles to the right people can certainly be a recipe for disaster.
In most organizations people get hired because there was a ‘vacancy’ or excess ‘headcount’ to be filled which is arbitrarily determined based on yearly fixed budgets and so managers rush to fill up these positions before anyone else grabs them. In most cases all this happens without good understanding of the demand and where these new hires might be working. This is just a bad planning. It is not only bad for the business, but also worse for the new hires. These folks get hired based on some generic job descriptions. After joining they end up being hugely disappointed by the actual assigned work and as a result predictably most of these folks do not hang around for too long.?
Strategic plan must drive the design of target operating model, which in turn should help identify the resource requirements (skills and roles) for the planned initiatives. If there are already people available from within the organization who have free capacity, are able, and willing to fill the identified roles then its a great news, else hiring teams must draft accurate job descriptions for the needed positions to attract the right candidates. Once hired, the hiring manager must make sure these people understand their roes and responsibilities, expected deliverables, and the timelines so they can focus on delivering the outcomes and perform their jobs right from the very beginning.
Low Maturity Level of Essential Capabilities
Successful businesses have higher level of maturity in the essential capabilities necessary for successfully conducting the strategic planning.
Low maturity level in the core strategic planning capabilities can lead to ineffective strategy execution.?
The maturity level of a capability depends on many factors, it is higher if –
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?Each core capability is a unique contributor to the strategic planning cycle and business must not have low maturity level for any one of these capabilities.
Disconnect Between Strategic plan and Execution
This is a result of a classic siloed organization, where the “business” is responsible for the strategy formulation and then after its completion it may toss it over, in some shape usually in the form of high-level executive presentation deck, to the operational units (and IT) to execute it. The strategy and the plan are rarely written down properly. It usually is in the “business language” for businesspeople to follow and it is seldom delivered in the form in which the operational units, especially IT, can understand.? This another form of bad communication.
Another side-effect of the above disconnect manifests during strategy implementation stages because the strategy and plan are not understood by the operating units, they get interpreted in many unique ways based on individual unit’s understanding. The individual organizational units do not get opportunity to validate their understanding as the business is done creating the strategy and does not engage later during the execution stages. And therefore, subsequent steps of strategy implementations are planned based on skewed understanding that are not neatly aligned with the original goals and objectives. Projects are formed in haste and forced to meet the deadlines without the necessary governance and oversight to ensure strategic alignment. This is very akin to running fast but not at all in the intended direction. This is precisely the opposite of doing the ‘right’ thing ‘right’. This is probably the third largest reason for strategy failure.
The extreme case of the above is that the business just does not produce a formal documented strategy at all. Or if it has one, it completely fails to communicate it with the right people responsible for its execution due to various political (or other similar) hurdles. Well, in such cases all bets are off. This is the ‘wild-wild-west’ scenario. Anything goes. This also unfortunately becomes convenient for the operational unit heads who oversee strategic decisions for their respective units to have a free hand in getting their wishes fulfilled based on their priorities. The louder leader is the higher are the chances for them to get what they ask for. They propose the initiatives that only meet their own agenda and unfortunately there is no higher governance oversight to ensure if the investments are in support of the original business’s goals and objectives.
People in the trenches are busy and work hard, however they may be running in the wrong direction. There is no accountability as there is no formal strategy in place to align to, so no apparent harm done (until of course, there is a big shock later but usually it is too late).
Failing to Measure and Monitor Business Performance
Peter Drucker famously said, “what you cannot measure, cannot be managed”. Strategy execution relies on continually assessing and monitoring progress and outcomes of the implemented initiatives. And therefore, planners must first define key performance indicators (KPIs) and appropriate metrics/targets during the Plan stage so that they can be continually monitored and measured. Failing to do so is not necessarily a failure of the strategy execution itself however it might as well be since the extent of success (or failure) cannot be known without monitoring and measuring the KPIs.
Failing to Balance Innovation and Control
This one does not contribute directly to the strategy failure however it is worth mentioning. Too many controls during the strategic planning stages in form of policies, directives, and standards during investigation of solution alternatives can stifle innovation. Encouraging employees to brainstorm, experiment, and take calculated risks with strategic goals in mind is good for innovation which in turn helps explore the ‘art of the possible’.
That said, while innovation is an essential driving force for growth, too many unsupervised activities and experimentation can eat up precious resources and has a potential to derail the well intended plans and eventual execution of the strategy due to higher opportunity costs.
To maintain the right balance, business must appoint right governance structure (such as enterprise architecture governance) that appropriately leverages innovation while maintaining right controls over implementation activities. The governance body should develop processes and policies to evaluate the barriers and opportunities that arise and make decisions about how to mitigate them and whether the given opportunity is worth pursuing keeping the end goal in mind.
Coordination of Technology initiatives
Another potential contributor to the strategy failure is technology initiatives are not prioritized and coordinated with other strategic initiatives. The root cause of this is usually unclear or non-existent foundational technology strategies and as a result, missing or incomplete IT strategy and operational plans. This clearly points to a weak or nonexistent enterprise architecture practice.
Executing on the business strategy requires a single roadmap consisting of all strategic initiatives including foundational technology initiatives. The initiatives within the roadmap must all be prioritized and coordinated together. If no such roadmap exists, CIOs cannot identify dependencies within strategic plans, cannot avoid duplication, prevent uncoordinated initiatives, and stop unnecessary initiatives being planned elsewhere in the business.
Conclusions
A strategy outlines the approach and decisions to maximize value, while a strategic plan details the steps to achieve these goals. Successful execution is often hindered by poor communication, misaligned roles, low maturity in essential capabilities, and a disconnect between strategic planning and execution. Research from Harvard Business Review reveals that over 67% of strategies fail due to poor execution, and common reasons include a lack of stakeholder understanding, improper role assignments, and inadequate performance monitoring. Effective strategy implementation requires clear communication, proper role allocation, mature capabilities, and continuous performance assessment to ensure alignment with strategic goals.
Author: Sunil Rananavare, IT Strategy Planning and Architecture (CIO Advisory)
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