Understanding and Preventing Strategy Failure

Strategy can fail either through lack of a fundamental element, a problem with its execution, or a combination of factors.

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Business strategy often involves a set of four integrated elements that, together, can position a company to win in the marketplace and generate superior returns for its key stakeholders.

These are:

·????? Setting an overall winning mission — aligning the organisation behind a clear direction;

·?????? Identifying where to play e.g, un(der)fulfilled or unidentified customer needs;

·?????? Deciphering how to win & keep winning – evolve appropriate business models & metrics;

·?????? Building appropriate people capabilities and management systems.

These elements are influenced by the CEO’s and leadership team’s beliefs about:

§? The external landscape (trends in markets, customer needs, geopolitics, demographics, competition, and technology).

§? The business (strengths and weaknesses, strategic assets, and investment capacity); &

§? The interdependencies between them.

To be successful, the business strategy must dynamically evaluate these elements and make careful choices not only to create and capture value but also to keep realising it over time. However, various studies show that between 60%–90% of strategies don’t achieve the intended outcomes.

How do you prevent your strategies from failing? Can we build in elements for success into the strategy process itself? This article aims to address these questions, as creating an effective and executable strategy is a systematic art that can be learnt.

Let’s first understand the chief reasons why business strategies fail.

Why do business strategies fail?

Strategies typically fail because:

§? The strategy lacks something fundamental; or

§? There are problems with the execution; or

§? A combination of these along with other factors.

See the Table below for some specific examples.

Causes of strategy failure

Strategy lacks something fundamental

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Unclear goals

There is a lack of clear and measurable goals; the strategy has unrealistic objectives or timelines.

No focus

The strategy is trying to accomplish too many things or trying to please everyone rather than focusing on key objectives.

Missing data/evidence

The strategy ignores market realities and does not back decisions with data and evidence.

Incorrect diagnosis / framing of the problem

The strategy is built on the incorrect diagnosis of the problems the business faces. Inability to unearth different framings of familiar and persistent problems

Lack of buy-in

There is not enough stakeholder involvement in strategic planning.

Problems with execution

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Unable to adapt

The strategy is too rigid and fails to adjust to changes in market conditions or the regulatory landscape.

Not enough resources

Adequate resources are not allocated to effectively execute the plan; employees are too busy with operations to contribute to future-based activities.

Ineffective communication

The strategy is not communicated and explained clearly, so stakeholders understanding the reasoning behind the strategy or their role in implementing it.

Poor talent management

The strategy is not aligned with effective talent management; there may be an overconfidence in the ability to execute the strategy, or ineffective leadership.

Lack of accountability

No “culture of accountability” is established; objectives don’t cascade down to teams and individuals; disjointed monitoring is based on LAG rather than LEAD indicators.

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Ten Steps to enhance the odds for success of a business strategy

Strategy formulation and execution work in tandem. Incongruence in strategy formulation can occur when the four strategic elements set out at the beginning of the article are not integrated and do not reinforce each other. When it comes to strategy execution, the odds of success are greatly improved with a combination of rigorous analysis, proper communication, enhancing capabilities of people, disciplined execution and, lastly, adaptation and continuous improvement.

With both formulation and execution in mind, the following ten steps can help prevent strategy failure:

1. Clearly define the business strategy and identify action items

Sometimes the cloak of strategy hides a long list of incoherent goals and initiatives bundled together. On the other hand, a well-defined strategy sets the stage for success by guiding the organisation’s direction and decisions. Strategic planners should ensure that the strategy:

·?????? Encompasses all the essential elements, including the target markets, customer value proposition, competitive advantage, and key performance indicators;

·?????? Outlines specific objectives, and a roadmap for achieving them; and

·?????? Translates the high-level strategic narrative into tangible bite-sized initiatives, which also lets you involve more people in the process.

This is how Starbucks turned its fortunes around after a disastrous 2007–2008. Using its detailed understanding of “what customers cared about and what drives customer value,” Starbucks’ leadership introduced a strategy of “reinforcing consumer willingness to pay a premium price for a cup of Starbucks coffee”, breaking that down into specific initiatives such as a loyalty program, healthier food options, and in-store facilities including its most popular, free Wi-Fi.

2. Set measurable goals and metrics

For each initiative, clearly articulate the objectives, owners, activities, timelines, resources, investments, measures of success, and anticipated risks and challenges. Develop goals that are specific, measurable, achievable, relevant, and time-bound (SMART). Having SMART goals is indispensable for monitoring progress and ensuring that the strategy remains on track. Have a mix of leading (for early detection if a strategy is not working) and lagging indicators.

Align individual and departmental objectives with the overall strategy to ensure cohesive efforts towards common goals. For employees to work towards the organisational goals, they must understand where their tasks fit, and how their individual daily decisions can help or hinder both the department and the organisation in achieving their objectives.

In addition, assign an owner to each element or component of your strategic plan, to build in accountability.

3. Analyse the strategy’s alignment with market realities, especially customers and competitors

Many strategies have failed based on their flawed assumptions about customers, competitors, or internal capabilities.

Ensure a solid footing for your strategy by putting processes in place to collect competitive intelligence, conduct a market analysis, monitor external factors, and assess your core competencies. Don’t forget to stress-test conventional corporate wisdom and challenge strategic assumptions. A SWOT (strengths, weaknesses, opportunities, and threats) analysis is an effective way to view your situation holistically and adjust your strategy accordingly.

For its successful global expansion, Netflix had to contend with regional and local media giants in many of the more than 190 countries it operates in. A key success factor for the business has been utilising country-specific consumer insights and adapting its content strategy by (a) procuring some local content while (b) themselves creating original material for both local and global audiences.

Important to remember that strategy alignment is not a one-time thing. You should analyse the situation and adjust the alignment on an ongoing basis.

4. Assess resource allocation and capability gaps

Many organisations fail to allocate sufficient resources ( financial, human and others) necessary for implementing new growth strategies. Sometimes organisations simply allocate capital like peanut butter, spreading it evenly across the enterprise rather than differentially after setting clear priorities and resolving trade-offs based on criteria aligned to the strategy.

Here are some examples of how proper resource allocation is vital for the success of a strategy:

·?????? If you’re launching a completely new product line, consider training your employees first, or hiring suitable people, to ensure you have the capability to execute your new product strategy. Another way to think of this is considering shifting resources from legacy products to emerging opportunities

·?????? Match spending to strategic priorities for not just the current budget cycle, but also for future ones until the strategy bears successful outcomes. The Walt Disney Company is a firm believer in this — as finance director for the South East Asia region, I factored in an enhanced multi-fiscal year promotional spend - which ensured that our launch of Playhouse Disney (was later christened as Disney Junior) in 2004–05 was successful across the region.

·?????? Leadership is important to achieve strategic plans. Pair capable people with the appropriate initiatives, and spend time one-on-one to get their buy-in. Then put mechanisms in place to incentivise desired behaviours and monitor progress. Ask, is there a plan to help teams request more resources based on performance?

6. Establish open communication and collaboration

Lack of buy-in, poor coordination, or ineffective communication can sabotage even the most well-designed strategies. If employees don’t know about or don’t understand the strategy, they may feel disengaged and lack motivation to act. Sprinkling powerpoint slides on the organisation won’t do — foster two-way communication about the strategy to ensure organisational buy-in.

Ideally, you should press home the strategy message several times and in a number of ways, through meetings, emails, online forums, and more. This should continue even after implementation is underway, so that it remains top-of-mind and also brings new joiners on board.

Strategy rollout invariably brings change. Be proactive about managing the impact of the change on your people, processes, and resources. Transparency about what you’re trying to achieve generates buy-in to change. Not every decision can be democratic, but taking the time to explain the rationale behind the strategy shows respect for your employees and motivates them to do their best. Equally, recognizing achievements and celebrating milestones sustains team morale through the implementation.

7. Monitor performance to check if the strategic plan is working

Monitor the execution of each initiative and revisit whether the efforts carried out across the company are aligned and producing the expected results. Leadership teams should meet regularly (monthly or quarterly) to look at the latest data and discuss adjustments or course corrections if necessary.

8. Conduct regular strategy reviews and adapt to new data or changes in the environment

Business environments are dynamic, and strategies must be adaptable to changing circumstances. Monitor and analyse market feedback continuously to gauge the strategy’s impact and make necessary adjustments. Stay responsive to customer needs, industry trends, and emerging technologies.

In today's rapidly changing world, assuming a single, predictable future is a recipe for strategy failure. By helping you prepare for various potential outcomes, Scenario Planning helps to make your strategy more robust and adaptable. Scenario planning involves:

·????? Identifying key uncertainties in your operating environment

·????? Developing plausible future scenarios based on these uncertainties

·????? Creating flexible strategies that can succeed across multiple scenarios

For example, during the COVID-19 pandemic, health care facilities including hospitals, used scenario planning to anticipate different trajectories of the virus spread and ensured that they had adequate resources including beds, ventilators, and staff to handle different scenarios. Remember - Scenario planning does not seek to predict the future but helps us to understand and prepare for a range of potential futures.? Lastly on this, Implement a feedback loop to capture insights from customers, employees, and stakeholders, enabling you to refine your strategy iteratively.

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9. Leverage technology for better execution

Use?dashboards ?and real-time monitoring:?For timely course correction, use performance management systems to track progress, hold employees accountable for key goals, and make informed decisions promptly.

Leverage data and analytics:?Data ?and?analytics ?will help ensure that decisions are based on solid evidence.

• Facilitate collaboration through technology:?Technology breaks down silos and fosters an integrated approach to strategy execution. To further explain this, it is highly conceivable that different business functions may need to use different systems (e.g. retail point of sale, warehousing, procurement etc…), as finding a single platform that can fulfill every business need is sometimes not possible. But that doesn’t mean data needs to stay in its silo within a specific system. The various business systems must be able to talk to one another, and data needs to flow freely across them to increase transparency and visibility. This allows different teams to access the same information, reducing duplication of effort and ensuring everyone has access to the latest data. Similarly, Digital tools like project management software, and communication apps (e.g., Slack, Microsoft Teams) facilitate real-time collaboration among employees, regardless of their physical location or department.

·???? Use technology tools:?Strategy execution software, like Cascade or ClearPoint Strategy, offers valuable tools for planning, monitoring, and adjusting strategies.

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10. Lay a wider foundation

Lastly, in many mid-sized companies, strategic planning is primarily part of the financial function, handled by the CEO, CFO, and their limited circle. Except for budgeting and financial planning, there is little opportunity for the rest of the leadership team to be part of strategy discussions.

For a robust strategy, take care to involve the business heads and functional heads from Marketing, Technology, R&D, and other key areas in the strategy formulation stage.

Pixar Animation Studios (part of the Walt Disney Company since 2006) has a three-decade history (since releasing The Toy Story in 1995) of creating award-winning animated films - the latest being Inside Out 2. One of their secrets for consistently excellent output is “The Braintrust” — a diverse group not directly involved in the film’s production, but with a vested interest in its success due to their various roles at the company. This is a great concept to adapt and get organisational stakeholders to stress-test the strategy before it is finalised and approved.

In conclusion

Strategy, however well-conceived, cannot be implemented successfully unless the people in critical roles know what they need to do differently, understand why and how they should do it, and have the necessary resources. A successful strategy is not static — it adapts in the face of changing market conditions, competitive pressures, and internal challenges. The flexibility to pivot or adjust strategic actions, while still maintaining focus on overarching goals, is a strong indicator of success. Consider your own organisation’s strategic planning process - Are you giving enough attention to these key elements? If not, consider incorporating these practices starting now.

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Raju Venkataraman, PCC, FCMA, CGMA, is a leadership and career coach with more than 30 years of experience in finance, strategy, media distribution, and leadership development across various industries – most notably 16 years with the Walt Disney Company. He is based in Singapore and coaches corporate executives worldwide. He also conducts training for corporate executives on a variety of leadership topics.