Keys To Combating Strategic Failures

For directors leading the strategic development process for an organization, understanding what can go wrong can be just as important as understanding the process itself.

strategicDid you know that developing a new strategic direction is one of the riskiest ventures any leadership team can take on?  Failure rates are astronomical and research indicates that only 20% of strategic plans ever succeed.  However, at some point, every organization either desires or is forced to set a new strategic direction. But since the stakes are so high, it pays to not just understand the process but also what can go wrong.

Here are three strategic development traps that can cause your strategy (no matter how well intended) to fail:

Incomplete Strategy Development. In other words, it is just an idea, not a full strategy. This often happens when planning efforts produce big goals or ambitious vision statements but no story of how the organization will progress towards these goals or its vision. For all intents and purposes, this is a magical leap, not a strategy.

A vision and goals are part of a strategic plan, but not the complete plan.  I like to think of them as the beautiful cake that a person jumps out of to surprise and delight the honoree at an event.  Very exciting and entertaining, but not enough to you sustain past the event.

Strategy development is an iterative and lengthy process. Excitement is generated when the possibility and passion for the future is fresh, but this is still early in the strategy development process. The next steps require dedicated teams to carve out key initiatives and build strategies and plans to move the organization from today to the future.  When compiled and integrated, these strategies create a full story of the journey you hope to make to achieve your goals and realize your vision.  Now you have a complete strategy.

“Building a plan to achieve the wrong objectives often happens when the planning process is too focused on solving today’s problems and not tomorrow’s.”

Neglect. Neglect is 100% the fault of senior management. It is result of a lack of understanding and willingness on their part to guide the strategy implementation phase of planning.  All too often senior leadership believes their role is limited to creating the strategic direction. They believe that once they create and communicate the new strategies, they should step back and let their staff take hold of it and make it happen. This sounds like empowering the next level of management to fulfill their role unencumbered by senior management, but it is really neglect of a vital role in their success.

This neglect is not intentional. It often happens because of an overabundance of confidence in the organization’s ability to succeed. Specifically, it happens because there is a high degree of confidence in the brilliance of strategies themselves or in the ability of the staff to understand and implement them. However, without the careful guidance of the architects of the new strategies, they can either be interpreted incorrectly or rejected by those in favor of maintaining the status quo.

Executives can avoid the neglect trap by including strategy integration as a part of the strategic planning process. In other words, they can bake it in. Additionally, they need to provide ongoing sponsorship of the strategy development process to ensure that the new thinking is embraced broadly in their organization. This sponsorship can be as light as authorizing and announcing departmental or cross-functional planning meetings to continue the development of implementation plans, or as heavy as attending the meetings and working elbow to elbow with staff to develop the new plans. Either way, the process needs senior team monitoring to translate the strategic thinking to ensure that the organization is heading in the desired direction.

You Got Beat.  Strategies can fail because they were beaten – beaten by competitors, beaten my changing market conditions, or beaten because they focused on the wrong objectives.

Competition is everywhere. So, if your strategy fails because you were outgunned by companies with bigger budgets or outmaneuvered by competitors who were faster or more agile, you can learn from this setback. You cannot feel too bad about this failure; after all it is a competition. Adjust your strategy and get back into the game. However, if you were beaten because you failed to incorporate changing market conditions, or you were focused on the wrong objectives, you need to take a hard look at your strategic planning process because it failed you.

Building a plan to achieve the wrong objectives often happens when the planning process is too focused on solving today’s problems and not tomorrow’s.  This is especially prevalent in cultures that focus on responding to customers’ demands or competitive pressures. Strategic planning is about crafting the plan to achieve your long-range vision.  Your customers and competitors may be totally different in the future state defined by your vision than they are today.  So, your strategy needs to focus on achieving the goals you believe will move you towards that vision. For this reason, avoid the trap of letting the voices of your current customers dominate the discussions in the creation phase of the strategic planning process.  Instead, remember that addressing a reasonable and appropriate customer demand or making a maneuver to stay competitive are operational priorities. While they should be part of the strategic assessment phase of your strategic planning effort, it would be short-sighted to think of focusing on them as your strategy for the future.

So, if charting a new strategic direction is so fraught with the possibility of failure, should you even try?

Yes, absolutely because not choosing to do so could eventually lead to the demise of your organization. My company has been assisting clients in the strategic planning process for more than 20 years so we have been through a lot, including two significant economic disruptions – the dotcom boom and bust in the late 1990s and the great recession that started in 2008. During both significant changes in market conditions, we saw our clients take a pause in their progress, but not fail. In fact, we were in a session finalizing a strategic plan in 2008, the day the stock markets were taking their biggest dip, and I thought, “This plan is toast.” To my great delight, we returned for a plan review the following year to find they had deferred two goals until the market recovered but surpassed all other strategic objectives. The depth of strategic thinking and the engagement and commitment unleashed during the process gave the leadership and management structure the tools they needed to quickly adjust their plans and keep moving ahead while others around them were still picking up the pieces from the change in their markets.

Strategies can take time to bear fruit. Even in today’s shortening lifecycles, it takes time to bring a new idea to market. If you focus on responding to today’s customer or competitor demands when you start your planning, it is highly probable that those demands will have shifted by the time you bring your solution to market and your strategies will fail. If you are part of, or in the position to lead the strategic development process for your organization, understanding what can go wrong can be just as important as understanding the process itself.


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