Why Do Many Strategies Fail? Because They’re Not Actually Strategies
Not nearly enough emphasis is given to Strategy Deployment and Strategy Operationalization.
I spent five years at Danaher (DHR), arguably the best practitioner of strategy development, strategy deployment, and business growth in the world. I did not know it then, but I now realize how fortunate I was to have led three strategic planning cycles for one of their operating companies. Moreover, observing, learning, and having access to the best of the best. Danaher employees are humble and generous in helping their colleagues and live continuous improvement and learning every day. Think of Danaher as the business equivalent of the SAS or Navy Seals of strategy and deployment. Grueling, intense, full-on, but supremely effective. It was a galvanizing experience and showed me what "good looks like" when it comes to strategy development, implementation, and business growth. Don't just take my word but check DHR stock performance over the past 5-10 years. A testament and proof that this philosophy and ethos works.
Underpinning this success is something called Danaher Business Systems (DBS). DBS was once said that it is common sense vigorously applied. DBS is unique because no matter where anyone is in the company, whether a manager, individual contributor, functional leader, or President of an operating company, they must learn DBS. Or at least the basics or foundation of DBS. From strategy development to strategy deployment to daily management, cascading through an organization promotes alignment and clear communications.
It is unique to Danaher because I have seen in other companies' people have lots of KPIs, indicators, goals, OKRs, and matrices. But they are not particularly closely related to each other and thus develop strategy divergence, and the further you go in an organization, the more significant the variation.
Companies often outsource strategy. This is unheard of at Danaher, and the Chief Strategy Officer is the President or head of the operating business. Strategy is far too important to outsource or delegate. Instead, they build experience through doing. Presidents spend months before joining their own operating company at other operating companies learning DBS, Strategy Deployment shadowing other operating companies. Contrast this with a standard process where strategy consultants?come in, do their work, and document the new strategy in a dense PowerPoint presentation. Townhall meetings are organized, employees are told to change their behavior, balanced scorecards are formulated, and budgets are set aside to support initiatives that fit the new strategy. And then nothing happens.
Why do many strategies fail to get implemented?
Because they do not represent a set of clear choices. A good strategy should define a differentiated and defensible position the company has in the market. The strategy should be able to answer two key questions:
1.??????Where do we play?
2.??????How do we win?
Try it yourself; how aligned is your company? Conduct a test at your next leadership meeting, next staff meeting, or even your next Zoom call. Ask these two questions, and it will prove or disprove that your employees are aligned and can articulate your strategy.
Now ask why one company can do this while others swing and miss? As a large strategy consulting firm says, 70% of all strategies fail to deliver results? One primary reason is?that "new strategies" are often not strategies at all. An actual strategy involves a clear set of choices that define what the firm will do and what it's?not?doing. Many strategies fail to get implemented because they do not represent a set of clear choices. Why is this? Firstly many companies make strategy too convoluted and too complex with far too many objectives and initiatives that employees can neither understand, articulate or align to.
The Missing Link
Many companies fail because of missing a step called policy or strategy deployment, sometimes known as 'Hoshin Kanri,' which is intended to improve the execution of the strategic plan and is used to translate the business's strategy into a few specific improvements priorities. This closed-loop process includes action plans & monthly metrics to track progress & identify problems so that they can be resolved. It also builds new capabilities (process muscle) and a Growth Mindset. It focuses on shared, cross-functional, and quantified goals. It Involves all leaders in action planning to achieve the goal. Lastly, but most importantly, it holds participants accountable for achieving their part of the plan.
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The Strategy Deployment process turns strategy into reality (execution of strategy) with a set of breakthrough objectives and priority initiatives.
The key to strategy execution success comes in the monthly policy/strategy deployment meetings, where target gaps are identified and root causes and countermeasures are defined. Employees become used to living what is called in the red, which is nonpunitive but places emphasis on continuous improvement—focusing only on the KPIs where you have missed or are below plan. This becomes organizational learning, not just a strategy office or leadership effort. The key is for the organization to discover (not hide or mask) but find problems and then solve them. Doing good is more important than looking good. Let me say that again, doing good is more important than looking good.
DBS is Danaher-specific, part of its culture, and is not for everyone. I have tried to apply this learning across three companies with varying degrees of success and failure. But I took lessons learned and applied them to every function I have run, be it as a Chief Marketing Officer or when I ran business operations or GM for a region. It works, but only if you prioritize, train your teams and execute but are always willing to review and adjust. If you favor doing good to looking good, you want to remove waste, constantly improve, and have the customer and market drive your business. A lightweight titanium version of DBS or a form of lean is something you should consider.
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1 个月Martyn, thanks for sharing! How are you?
For a second I thought I'd re-stumbled on this HBR article: https://hbr.org/2017/11/many-strategies-fail-because-theyre-not-actually-strategies
What got you here won′t get you there. Don′t transform. Reinvent!
2 年If your strategy is seeking to change/improve (ehich most claim), nothing has happened until your customer notices. Martyn Etherington, DAMON BAKER, I would like to hear your perspectives on “outside-in”. That drove my biggest change in behaviour. You always work backwards from the customer into the organization. How many times have we seen productivity improvements for ONE centrally to cause extrawork for MANY closer to the customer. Instinctively, employees defend the customer experience, absorb the extra work, burn out. Worst of all: they only defended the status quo for the customer. The perception has not changed.
Vice President, Channel Development & Distribution at Intermedia
2 年Great stuff as always, Martyn. Learned some great pearls and also agree about fewer focused initiatives for the period with maniacal operational execution, measurement, and continuous improvement! Thanks for sharing this.
Associate Dean and Professor at Sa?d Business School, University of Oxford | Researcher | Advisor | Teacher | Speaker
2 年Thanks for the kind mention Martyn Etherington - and great article. Two points I like especially. First, many 'strategies' are not actually strategies in the sense that they don't answer the fundamental questions needed to provide direction. Such as: what do we offer (products and services) consistent with our purpose? To whom do we offer them (customer segments)? Where (which markets)? And how do we differentiate from competitors, whether the usual suspects or new entrants. And, finally, how do we align our people behind it as just aspect of organising for implementation.