Why Strategy Fails
The Top 5 Strategy Pitfalls and How To Avoid Them
Failed strategies are a common issue that can significantly hinder a company’s progress and success. Even more common are strategies that can’t be said to have failed because they were never executed to begin with. Despite the best intentions and meticulous planning, leaders are often asking themselves why their strategies continue to fail. CEOs must recognize that the formulation of a strategy is just the beginning. Ensuring its execution requires an understanding of what prevents most companies from seeing the desired progress.
Let’s discuss the top 5 reasons why business strategies fail, and how to avoid these common pitfalls.
Reason 1: The Strategy isn’t Clear
A strategy should have clarity around three critical decisions:
- Who to target as customers and who not to target
- What to offer these customers and what not to offer
- How to go to market against the competition
In many organizations, senior leaders either choose too many initiatives, confuse priorities, or make no choices at all, leaving the organization rudderless. This “shotgun approach” to strategy, where efforts are spread too thin across various markets, products, or organizational changes, results in employees lacking focus and an unfocused brand in the market.
Leaders must decide on initiatives that will have the most impact on revenue, market penetration, or competitive differentiation, aligning with overarching goals.
Reason 2: The Strategy isn’t Well Articulated
‘Our 2023 numbers were lousy. We need to get out from behind the eight ball if we don’t want this ship to sink. Now that we’ve figured out our strategic game plan, we can get the ball rolling and start rebuilding this company from the ground up. Once we get all our ducks in a row with opening the new office and hire 12 more employees to cover our bases in sales, the sky’s the limit. These new hires need to learn the ropes ASAP if we’re going to stay ahead of the pack. In a nutshell, we have our work cut out for us.’
This is, of course, a dramatic example of a muddled roll out of a strategy but isn’t as far off as you might think. No strategy can be implemented if your employees don’t understand it. Your strategy should be shared with the entire organization in clear and specific terms.
When alignment occurs between the C-suite and those who are executing the strategy, you increase the likelihood that the right tactics will be chosen to achieve the ultimate goal. Everyone in the organization should understand the key initiatives and expected outcomes.
Reason 3: No ’Why’
To gain enrollment from the organization, sharing the Why of the strategy is critical. Communicate the choice and the alternatives considered and rejected in favor of the choice. It is the positioning of the choice relative to the alternatives considered that makes the choice clear to people. This means that what you need to say is not “We have decided to target customer X” but “We have decided to target customer X rather than customer Y or customer Z.” This communication cements into the minds of your organization not just the vision but also the rationale behind it.
When employees understand the Why of the strategic choices, you empower them to leverage that same logic when making tactical decisions.
Reason 4: Tactics Aren’t Tied to Strategy
When vetting tactics, the questions should always be asked, “will this get us closer to our goal?” and “Is this the right next step to get us closer to our goal?” This is a simple formula for enabling employees to work through the decision-making process of developing tactics.
As with strategy, companies decide on too many tactics with no clear direction on what their value is or if they will enable progress toward the desired KPIs. Tactics should always have a clear line to what strategic initiative they are supporting.
Reason 5: Lack of Autonomy
Three elements create employee engagement:
- An understanding of the vision
- An understanding of their role in the success of that vision
- Some autonomy in how they contribute to the vision.
How you achieve this:
- Ensure that employees understand the difference between strategy and tactics. To ensure your success, strategic decisions should only be made by top management. Helping your team to understand the difference between strategy and tactics will enable them to see the areas where they can contribute.
- Set boundaries so that employees know when they have autonomy and when they should refer decisions to top management. This structure not only contributes to strategy success, but it also improves employee engagement by creating a sense of ownership in the outcome.
- Tie your strategy to corporate values. When an employee is armed with a clear vision for success, an understanding of their autonomy in making decisions, and a clear process for vetting those decisions and clarity around how those decisions match the organizations values, you can be confident that they’ll be making the kinds of decisions that will create success for the organization.
A well-thought-out strategy is the single most important tool for any organization. It is also the area that is the most poorly executed.
To create the best chance of success, ensure that the strategy is clearly articulated to the entire organization and every team member understands the strategic initiatives and the expected outcomes. Avoid the ‘shotgun approach’ by prioritizing initiatives that will have the most impact on your overarching goals – this focus will help in directing resources and efforts where they are most needed and will prevent confusion and lack of direction.
Communicate the rationale behind strategic choices to the organization. – when employees understand the reasoning behind the strategy, they are more empowered to make tactical decisions that align with the strategic goals. Ensure that all tactics are vetted against the strategy – ask if each tactic will bring the company closer to its goals and if it’s the right next step. Set clear expectations for those tasked with executing the strategy and assign accountability for key actions. Align jobs and roles with the strategy to ensure that everyone is working towards the same objectives.
By following this approach, you will see a dramatic improvement in the success of your strategic vision, and foster a culture of learning and scalability, sustaining growth and adapting to changes.
FAQs
What are the common reasons why business strategies fail?
Business strategies often fail due to unclear goals, poor communication, lack of alignment between tactics and strategy, and insufficient autonomy for employees.
How can unclear strategies affect business success?
When strategies lack clarity, employees may be confused about priorities, leading to misaligned efforts and poor execution.
Why is communication important in strategy execution?
Clear communication ensures that everyone understands the strategy, their role in it, and the desired outcomes, leading to better execution.
What role do tactics play in the success of a strategy?
Tactics must align with the overall strategy to drive the company toward its goals; otherwise, they can hinder progress.
How does employee autonomy contribute to strategy success?
Giving employees some decision-making autonomy fosters engagement and ownership, improving strategic outcomes.
