Getting it Done: Overcoming the Three Key Reasons Behind Strategy Execution Failures

A few years ago, keen observers began to notice a gradual yet compelling shift in the business world. The traditional paradigm of command-and-control managers was giving way to authentic leaders. True leaders inspire others to follow them willingly, rather than relying on obedience and silence. They promote collaboration and sharing among employees, who are viewed as empowered and trusted professional rather than children in need of supervision. It was the dawn of what was dubbed the “participation age,” bound to radically transform the workplace and make companies more successful than their old-style management practices-anchored counterparts.

The sharing, participation, and involvement of empowered professionals turn out to be crucial when it comes to strategy formulation and execution. In essence, there are three reasons why strategy fails, and they are all related in some form to firms being resistant to adopting a participatory approach. The first reason behind a strategy execution failure is, simply put, that people do not understand the strategy. This often happens when the strategy is crafted solely by the CEO and a select group of senior managers, who subsequently instruct the rest of the organization to go and implement it. Due to their exclusion from the formulation process, individuals may struggle to understand both the strategy’s rationale and how to go about it. When people lack a clear understanding of the strategy, successful execution becomes impossible. Failure is automatic.

The second reason for potential strategy execution failure is that, although individuals comprehend the strategy, some may believe it is not the right thing for the company or that it conflicts with their interests. In both instances, resistance to change arises. In this scenario, the challenge is not a communication debacle; the strategy is clear. The underlying issue is a lack of commitment from those tasked with its execution.

The third reason for the failure of strategy execution is resource related. In this scenario, individuals understand the strategy and are committed to its execution, but they face a shortfall in necessary resources. This could involve not having the right personnel, lacking essential training or competencies, or experiencing a shortage of required financial resources.

Strategic Execution Excellence: A Compelling Case Study of Success

Overcoming the three main reasons of strategy execution failure is possible, as showcased by the example of a multinational company supplying machinery and plant engineering services for a variety of industries, headquartered in Italy and with a headcount of almost 5,000 employees.

The company developed its five-year strategy in a participatory fashion, involving individuals from all seven of its business units, totaling one hundred people. They were tasked with collaborating on five key questions: What is the winning ambition? Where do we (or should we) compete? Where do we stand compared to our competitors? How do we win? What do we need to get there and what will be the impact?

Despite the swift and radical changes the world has recently witnessed, the company was able to achieve its five-year strategic goals in only three years, moving from a revenue of €1 billion to almost €2 billion. How was the company able to accomplish such a remarkable feat?

First, by engaging numerous individuals in the strategy formulation process, the risk of miscommunication or a lack of common understanding was significantly reduced. Collaborating side-by-side for several months, they delineated the company’s desired position in five years and outlined the path to achieve that ambition. When questioned about the background or rationale of the final strategy, each of them could articulate a clear explanation. Undoubtedly, having one hundred people well-versed in the company’s strategy surpasses the insight of just five among a pool of 5,000.

Second, in collaboratively crafting the company’s strategy, individuals had ample opportunities to share their ideas, discuss concerns, and engage in debates about alternative ways to win and potential outcomes. By the time the strategy was finalized, all potential barriers to adoption had been addressed, significantly enhancing the likelihood of successful execution.

Third, in the strategy formulation process, individuals conducted various analyses, including the pre-mortem technique, to pinpoint potential reasons for the strategy’s future failure and devise mitigating actions. Through this process, they refined the strategy until the final version ensured that all necessary resources were in place, including, deciding to let go of some opportunities and postponing others. In conclusion, achieving success in crafting and executing a strategy is indeed possible. Embracing a participatory approach is the crucial step.

References

Davide Sola and Jér?me Couturier, How to Think Strategically: Your Roadmap to Innovation and Results (Harlow, United Kingdom: Pearson Education Limited, 2014).

Graham Kenny, “Leaders Need to Get Comfortable Collaborating on Strategy,” Harvard Business Review, March 27, 2023, https://hbr.org/2023/03/leaders-need-to-get-comfortable-collaborating-on-strategy , accessed November 2023.

Chuck Blakeman, “Embracing the Participation Age,” Inc.com , July 15, 2014, https://www.inc.com/chuck-blakeman/participation-age-companies-8211-the-new-norm.html , accessed November 2023. Peter Bregman, “Execution Is a People Problem, Not a Strategy Problem,” Harvard Business Review, January 4, 2017, https://hbr.org/2017/01/execution-is-a-people-problem-not-a-strategy-problem , accessed November 2023.

Donald Sull, Rebecca Homkes, and Charles Sull, “Why Strategy Execution Unravels—and What to Do About It,” Harvard Business Review, March 2015, https://hbr.org/2015/03/why-strategy-execution-unravelsand-what-to-do-about-it , accessed November 2023.

Michael Wade, Amit Joshi, and Elizabeth A. Teracino, “6 Principles to Build Your Company’s Strategic Agility,” Harvard Business Review, September 2, 2021, https://hbr.org/2021/09/6-principles-to-build-your-companys-strategic-agility , accessed November 2023.

Roger Martin and Alan G Lafley, Playing To Win (Harvard Business Review Press, 2013)