What’s Wrong with Strategy Planning?
There is theory and then there is practice. In theory, the strategy is supposed to help identify the next course of actions for the business so it can swiftly act on it to stay on the course for achieving the stated strategic goals and ultimately, its vision.
All stages of strategic planning are complex. Many people are involved, and they must collaborate in unity 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. To add to the misery, it is virtually impossible to predict all uncertainties and be prepared for them. As per the Murphy’s law ‘Anything that can go wrong does go wrong’.
According to a Harvard business review studies conducted in 2016, 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 fail. Here are a few notable ones.
Lack of understanding and acceptance 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 are chosen, especially to the group responsible for formulation of the strategy. It is the ‘north star’ that guides the subsequent steps of strategy formulation. 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 original intended outcomes.
It is hard to believe but the research in the Harvard business review 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 confidential information and very few people 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 and implementing the strategy.
If the business does not have proper controls in place this information does not get shared and percolated down in the chain to the right people at the right time and in some cases, it is not shared at all with the people who must know. This can certainly lead to incomplete or even wrong strategy formulation and implementation since the key SMEs are left guessing.
Other issue with communicating the output deliverables from various stages of the strategic planning cycle with the stakeholders is that the information in those deliverables is not rendered at the right levels of details. It is either at a very high-level with too little details or at a very detailed level with too many unnecessary details; in either case the information does not serve the intended purpose.
Successful strategy development execution depends on clear understanding of its goals and objectives by every person involved, so it is crucial that everyone understands not only the broader strategic goals and objectives, but how their individual goals will 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 all employees must be empowered. Managers at all levels must be trained to guide and communicate effectively in all formal and informal settings.
Failing To Fill the Right Roles
This may be the second major reason for strategy failure after the lack of communication. Failing to first identify the right skills necessary for creation and execution of the strategy 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’ which is arbitrarily determined based on yearly fixed budget and managers rush to fill out these positions before anyone grabs them. In most cases all this happens without good understanding about 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.?
Strategy must drive the design of target operating model and creation of strategic plan, 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 and perform their jobs right from the very beginning. (See Problem with Architect roles).
Low Maturity Level of Essential Capabilities
Successful businesses have higher level of maturity in the essential capabilities for strategic planning cycles. (See Essential Capabilities for Strategy Planning).
Low maturity level in these core capabilities can lead to ineffective strategy execution.?The maturity level of a capability depends on many factors, it is higher if –
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.
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Disconnect Between Strategy 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 over the strategy document (if it is documented) in some shape usually in the form of high-level executive presentation deck, to the operational units and IT to execute it. The strategy is 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 and IT can understand.?This is another form of bad communication.
Another side-effect of the above disconnect manifests during strategy implementation stages because the strategy is not understood by the operating units, it gets interpreted in many unique ways based on individual unit’s understanding and the individual units do not get opportunity to validate their understanding with the business as the business leaders are not accessible and do not engage later during the execution stages. And therefore, subsequent steps of strategy implementations are planned based on skewed understanding of the requirements that are not neatly aligned with the original goals and objectives. Projects are formed in a haste and forced to meet the deadlines without the required enterprise architecture oversight to ensure strategic alignment. This is precisely opposite of doing the ‘right’ thing ‘right’. This is probably the third largest reason for strategy failure.
In the extreme case, the business just does not produce a documented strategy at all. Well, in this case all bets are off, this is the ‘wild-wild-west’ scenario. Anything goes. This makes it very convenient for the operational unit heads, who oversee strategic decisions for their respective units, to have a free hand in prioritizing their initiatives. They get their wishes fulfilled. The louder the leader is, the higher are their chances to get what they ask for (or as the saying goes, ‘the squeaky wheel gets the grease’). They push the initiatives that only meet their own agenda and unfortunately there is no higher governance oversight to ensure if the investments are going into supporting the original business’s interests.
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 strategy to align to, so no harm done (until of course, there is a big disaster later).
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 the progress and outcomes of the implemented initiatives. And therefore, the planners must first define key performance indicators (KPIs) and appropriate metrics 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 the mention. Too many controls during the strategic planning stages in the form of policies, directives, and standards during investigation of solution alternatives can stifle the 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.
To maintain the right balance, the business must appoint the right governance structure such as architecture governance that appropriately leverage innovation while maintaining the right controls over implementation activities. The governance body should develop appropriate processes and policies to evaluate the barriers and opportunities that arise and provide guidance for make decisions about whether the given opportunity is worth pursuing.
Technology initiatives are not coordinated with other strategic initiatives
Another potential contributor to the strategy failure is pure 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-source 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 (i.e., prevent the 'shadow IT').
Author: Sunil Rananavare, IT Strategy Planning and Architecture (CIO Advisory)
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The views in the article are author’s own and not necessarily of his employer.?