The Worst Kept Secret of Business Strategy: Why Most Companies Fail

Strategy consultants come in, do their work, and document the new strategy in a PowerPoint and a weighty report. Town hall meetings are organised, employees are told to change their behaviour, balanced scorecards are reformulated, and budgets are allocated. And then nothing happens. If you've ever worked in an organisation, you know this scene too well—a company launches its strategy with fanfare and verve and then, slowly but surely, the momentum disappears. Even the most inspiring strategies fade into irrelevance and then oblivion.

So Why Does Strategy Fail?

Most strategy consultants will never tell you the worst secret of business strategy: most companies fail. The reason is simple – they don't execute their strategy. Even if a company has the best strategy in the world, it's worthless if they don't execute it. And execution is hard. It requires coordination and alignment across an entire organisation, from the c-suite to the front line. It requires buy-in from employees and buy-in from customers. For all this to happen, there needs to be strong leadership, clear accountability, transparency around goals and metrics, visibility into the results of day-to-day operations, and long-term targets for the company as a whole.?The bottom line is that the organisation needs to start by focusing on culture for the strategy to work. If you have a sub-par culture (e.g., too much bureaucracy or cynicism), then whatever strategy you implement won't succeed. So when consultants pitch their strategic frameworks, they need to recognise and understand the challenges posed by culture and its impact on execution – and if they don't, it makes sense that CEOs aren't taking their advice. The result is that executives who want to focus on the things that matter for execution choose to ignore the strategy experts altogether or outsource their counsel entirely.

Who's on board?

When it comes to business strategy, the worst-kept secret is that most companies fail. That's because companies often rely on strategy consultants to come in, do their work, and document the new strategy in a PowerPoint and a weighty report. But once the consultants leave, town hall meetings are organised, employees are told to change their behaviour, balanced scorecards are reformulated, and budgets are allocated. And then nothing happens. The problem is not the quality of the strategy. The problem is that there's no process for making sure the strategy gets implemented--no plan for how you get people to buy into what they're supposed to be doing differently, no system for figuring out how well they're doing so you can make adjustments if necessary, no feedback loop to check whether they're achieving the desired results. All this leads to the same outcome: Employees forget the new company objectives, or they try but never get traction. The company forgets about the strategic plan within months or even weeks. Balanced scorecards are, therefore, the vital missing link in any successful business strategy implementation project. They provide the communication bridge between strategy and execution, linking short-term tactical performance with long-term strategic objectives.?

What should happen?: A good balance scorecard will answer three questions:?

1) What are we trying to achieve? 2) How well are we doing? 3) What do we need to do better? 4) Who needs to do it? 5) When does the task need to be completed? 6) What resources are needed? 7) Who's responsible for the task? 8) Is the person currently able to complete the task successfully? 9) If not, why not (e.g., skills, knowledge)? 10) Where does the person need help from others? 11) Do the other people know about the task? 12) Does the person know whom they need help from? 13) Do these other people know what the employee needs them to do? 14) Has each of these other people committed to helping them?

What is your company culture?

Is your company culture really what you think it is? The Worst Kept Secret of Business Strategy is that most companies fail because they don't truly understand their culture. A company's culture is the set of values, beliefs, and behaviours that define how employees interact with each other and with customers. It's the way things are done around here. And it's not something that can be changed overnight. It's often an accumulation of behaviour over many years, slowly creating patterns of thinking and interacting in your organisation. Three main questions should be asked to reveal the type of organisational culture you have: What do people believe about work? What motivates them at work? How do people deal with conflict or disagreement at work? What are the rewards for good performance? These three questions will tell you if your company has a healthy, supportive culture; one where everyone feels safe enough to bring up difficult issues; one where every member of staff feels valued and respected; one where there is healthy communication between managers and staff members; one where employees are encouraged to improve themselves by learning new skills. If you answer yes to all these questions, then congratulations! You have a thriving culture! But if not, it may be time for some changes.

Is your business unit ready?

When it comes to business strategy, most companies fail because they're not ready. They don't have the right team in place, are not aligned with the company's goals, and are not prepared to execute. If you want your business unit to be successful, you need to make sure you have the right people in place, are aligned with the company's goals, and are prepared to execute. Otherwise, you'll just be another statistic. Don't let that happen! You can build a strong team, achieve alignment on goals, and prepare for an execution by getting support from an experienced strategy consultant who will help you answer questions like these:?

What is the vision for our business? What are our competitive advantages? What are our priorities? How do we get there? What resources do we need? How do we get them funded? How do we know if we're making progress? Whom should we talk to about any changes in direction? And what should we talk about at town hall meetings, so employees understand how their actions relate to the new plan? How do we best change behaviours now that there is a new strategy? What should managers measure directly instead of old KPIs? How can teams work together more effectively when they no longer have the same incentives or rewards as before? With answers to these questions, you won't be left feeling lost when strategy consultants come in, deliver their PowerPoint presentation and weighty report, and then go without consulting you again. You'll be able to guide your implementation process and ensure success for your organisation.

Are you doing it right?

There's no question that strategy is important for businesses. After all, without a plan, how can you know where you're going or how to get there? But many companies fail to realise that simply having a strategy is not enough. To be successful, you need to ensure that your strategy is well-executed. Here are a few tips on executing your strategy.?

(A) Start with the fundamentals. Ensure your execution team understands the strategy’s key objectives and intended outcomes and what should be considered at each step in the process. It's also essential to have individuals representing different levels of the company involved in this planning process. As a result, you'll have greater buy-in and be able to measure progress more accurately. Remember that strategy implementation is an ongoing process - it never ends! Achieving success requires persistence and patience. If something isn't working, try something else. Once you've done everything you can think of, look outside the box for inspiration. And don't forget about obstacles along the way - often, they provide opportunities to find new solutions that otherwise would have been missed.

(B) Get everyone on board from day one. Ensure that employees understand the steps needed to achieve strategic goals, and help them take ownership of their roles in achieving those goals. Clearly define responsibilities so that people know exactly what is expected of them. Provide feedback throughout the process, so people feel supported and encouraged to keep moving forward. Remember that change may not always be easy, but if you stick with it, things will improve over time. So put some effort into thinking about how to execute your strategy and don't settle for mediocrity effectively! Keep in mind that balancing short-term needs with long-term goals is vital. Let go of any unrealistic expectations and adjust accordingly. Continually monitor performance, iterate when necessary, and persist until the goal has been achieved. The strategy doesn't end once it's implemented. Implementation is just the beginning. These two posts address implementing strategies in two very different contexts, but both start with looking at why most companies fail before implementing a strategy. The first post discussed why balanced scorecards become ineffective when management doesn't follow through by acting upon recommendations; the second post looked at ways to make effective strategy implementation happen within your organisation. Implementing a strategy might sound like the easiest part, but unfortunately, it is usually the point where many organisations begin to lose momentum. Keeping track of successes, failures, and adjustments during the process can help maintain that momentum. This is an excellent time to check in with yourself and your coworkers to determine what went well, what didn't work, and how you can use these insights to do better next time. Planning for the future is equally important as following through with your current strategy. Think ahead and ask yourselves questions such as What changes could happen that might affect our strategy? What changes could we make to our strategy to account for these possible changes?

Have you trained your people enough?

Most businesses don't fail because they lack the right strategy. They fail because they don't execute that strategy properly. And a big part of execution is training your people. If you want your employees to change their behaviour, you need to give them the tools and knowledge they need to do so. Otherwise, it's just lip service. In many companies, when the consultants come in with their PowerPoint presentations and weighty reports, there are three typical responses from management:

1. Shrug off everything as an outdated fad.
2. Implement some half-hearted pilot projects.
3. Believe that this time things will be different.

None of these reactions will get you very far. No matter how high the quality of your strategy is, if you can't execute it effectively, then all you have is a nice-looking document on your shelf. And even if you're executing perfectly on all fronts, at some point, someone will shake up the industry and throw everything into chaos again. The only way to survive change is by being constantly ready for it – always flexible enough to adapt quickly. This means having a company culture built around agility and experimentation, encouraging failure as the foundation of innovation, and not trying to avoid it. This means taking more risks, knowing that some will pay off and others won't. So instead of telling everyone to play it safe, embrace the fact that failure is inevitable and encourage your team members to make mistakes. It may sound counterintuitive, but success usually comes from breaking existing rules rather than following them.

One last thing... 7) Are you thinking like a startup?

To succeed, businesses must constantly innovate and adapt to the ever-changing landscape. That's why it's important to think like a startup, always look for new opportunities, and be willing to take risks. Unfortunately, most companies are bogged down by bureaucracy and red tape, which stifles innovation and creativity. As a result, they cannot keep up with the competition and eventually fail. Yet the solution is surprisingly simple - if you want your company to grow, you must change your mindset from doing things to doing things that matter.?In other words, organisations need to ensure that every decision or action taken aligns with the organisation's vision and strategy.?

A key part of this process is creating alignment between employees' goals and values and those of their organisation. Employees will only give their best effort when they feel that what they do makes a difference in achieving the organisation's strategic objectives. They also need to know how what they do fits into the bigger picture, which means understanding how their job contributes and how it interacts with other functions and departments. It takes leadership from top management to create an environment where everyone feels valued, heard, and empowered enough to act on ideas rather than sitting back passively and waiting for someone else to tell them what needs to be done. If you can find ways to motivate people at all levels of the organisation, then more people will be thinking about innovative ways to meet customer needs and bring in revenue. And that's when success becomes inevitable.

Key Takeaways

1. To be successful, businesses need to have a clear and concise strategy that everyone can understand and buy into.

2. Unfortunately, many companies fail to do this, and their strategies are nothing more than a document collecting dust on a shelf.

3. The main reason is that companies don't take the time to implement their strategy. They may allocate budgets and resources but don't change their day-to-day operations to align with the new strategy. There are two possible reasons for this: (A) managers simply don't know how to make the changes required, or (B) the need for change doesn't convince them. Either way, inactivity will ultimately lead to underperformance - because it doesn't matter how well you execute your strategy if you're not doing what needs to be done. Allocating budgets is all very well, but the only thing that matters is whether people are taking action based on the strategy.?

So if your company's strategy isn't making an impact, then ask yourself these questions:?

(1) Is there some major part of our operations which we've overlooked??

(2) Have we communicated our strategy enough??

(3) Do we want to return to the drawing board and start again? That may seem easy but bear in mind that if you haven't implemented your strategy fully yet, it would be difficult to rework things from scratch without starting from square one. Alternatively,?

(4) if the answer to both of those questions is no and you're still struggling with how best to move forward given the constraints of your current situation, then talk to someone who has successfully implemented a strategy before.