Why Organizations Fail at Strategy Execution

2020.12.14 01:33 PM By Joshua Taddeo, Principal Consultant
discussing a strategy plan

Scientific studies on businesses show that an average of 50% of them fail at strategy execution and strategy development. Ironic as it may seem that in this day and age of information, the success factors of every other new business strategy is almost nonexistent. Although information about why other businesses have failed is readily available online, this still does not seem to be of much help.

The execution of individual strategies has a myriad of problems that hinder translating business strategy to tangible success. For businesses to solve this problem at their respective levels, they must first understand why they failed in the first place. Once the problem is identified, understood, and solved, the executives can forge a way forward for the rest of the company to follow. Generally, the problem lies in two spheres: the strategy development or the strategy execution plan of the business strategy.

Throughout the years, researchers have studied and documented failed strategy executions at an individual and corporate level. A baseline of common recurring reasons for failure has been agreed upon to offer more guidance to people. In this article, we are going to delve in-depth into some of the reasons found globally. In the end, it’ll become clear what you’ll need to do and what to avoid to steer your organization in the right direction.

Common Reasons Why Strategies Fail

Doing the same thing yet expecting different results is a slow but a sure recipe for disaster. Believe it or not, many people fail to understand what strategy is all about. Combined with executives’ unpreparedness, this lack of clarity explains why some business strategies fail before takeoff. That said, it is essential to get your team on the same page before you start strategizing. Below are some of the common reasons why most business strategy plans fail.

Lack of proper or adequate communication

Communication between the top, medium, and low-level management is crucial in disseminating information to the company. Many times the top-level management staff are the only ones involved in the development of business strategies. The ailment to this approach lies with the infamous broken telephone error. Most managers fail to pass down accurate information to the junior staff, leading to wrongful execution.

Proper and adequate communication across the company empowers the business strategy executors, aka junior employees, to express the strategy’s challenges. These problems may have otherwise remained unknown to the management as they are not actively involved in the execution process. Adequate communication within a company also helps tap into innovative younger staff members’ minds in lower management levels. The fine-tuning of old and outdated strategies often requires young minds since they are abreast of new technology. Doing so could end up increasing sales revenue within the company.

coworkers planning a strategy

Another critical aspect that can boost an organization’s strategy execution is holding frequent meetings. Having regular staff meetings helps eliminate the problem of inadequate communication and ensures business operations’ smooth running.

Lack of clearly defined strategies

There’s a reason why organizations strive to create visions and missions. That said, having well-defined strategies effectively communicated to all staff members is essential to create a common goal for the whole company. Ensuring that the plans are motivational and inspiring to your employees is even better as they personalize the strategy.

You can break down how each department can individually buy into the shared execution strategy to better implement it. When everybody is aware that any little effort goes a long way into achieving the overall plan, they feel seen and important. Going as far as having weekly or even daily strategies with a set goal will better serve companies. This is because employees won’t afford to idle as they have timelines to meet. 

The famous saying that having too much of anything is poisonous has never been more true. Setting too many strategies can end up affecting your business negatively. Having your staff focusing on too many things can end up proving distractive. It is recommended to have a maximum of five main strategies then break them down into smaller actionable targets. Remember to keep your plans and targets realistic and attainable.

Scientific studies show that people who often receive compliments strive to perform better than those who don’t. In the same breath, the lack of rewards for accomplished milestones or business strategies creates low success rates. Employees become demoralized and unmotivated to accomplish the next goal because there is no incentive for them. With dispirited staff and ambiguous business strategies, the company can quickly head towards a downward spiral. Your employees will end up doing the bare minimum for the sake of salaries, or worse still, nothing at all.

Lack of accountability

It is not unheard of to find top management staff who fail at leading and are often unaccountable. Often, such people may have been in good standing with the previous management. Others may have excelled at strategy execution to land the top-management positions. When companies end up with such leaders, they need a third party to step in and ensure transparency and accountability within the company. The consulted party serves to help people achieve maximum efficiency.

A chief strategy officer may be employed to ensure everybody is held accountable - from top to low-level posts. In this case, accountability applies to all business aspects, from financial resources to time spent on tasks, work accomplished, etc. When everybody, including management staff, is accountable for their actions, a company can avoid the blame game that co-workers hide behind when things go wrong.

Consistent accountability in strategy execution helps maintain a steady increase in revenue, which is the company’s ultimate goal. Adopting this useful habit gives rise to healthy competition between co-workers. It ensures they achieve positive results instead of an indifferent attitude since people are unaccountable for their actions.

business strategy development

Lack of willingness for the company to change

No matter what we try, change remains inevitable. Employees are more attentive than most employers think. They can notice when an organization is struggling to adapt to the changing times. Change is almost always good for a company, especially if it means better results for the company. The top management must first embrace this change and be willing to adjust their routines before asking the same from their employees. Managers who are not receptive to change may never fully inspire employees to change their ways. This action can prove fatal when trouble arises along the way.

Leaders who are not quick to lead by example end up with unmotivated workers. The lack of motivation is detrimental to the company since growth may increasingly become elusive. Change in strategy execution often leads to the redefinition of job titles and descriptions. This change has to be sanctioned and supported by senior management for it to work. The support may be in financial or human resources. Eventually, the adopted changes will benefit everybody as the company will realize a significant net profit increase.

Evaluating Preparedness and Capabilities

Simply put, strategy consulting refers to when high-level management seeks advice within or from outside. Doing so helps the company make critical decisions that understand their target market. Strategy consultants are unbiased and highly skilled in their field. Analyzing a company’s readiness for their strategy execution is part of their job description. They also help companies become more prepared to handle the ever-changing market while efficiently implementing their strategy.

Strategy execution entails understanding what the market needs, when, and how to execute these plans. All these questions and more are taken care of by the strategy consultant as they unburden the executives who are managing the business daily. The keen seasoned eye goes a long way in ensuring that the strategy is implemented as best as possible for maximum profits with the least risks involved. 

Tailoring the business strategy to a capabilities-driven plan is a highly profitable and wise route for a company that understands its employees and proficiencies. Taking advantage of the organization’s skills and talents helps narrow down to a specific niche that curves out a permanent and reliable market. This, in turn, allows the company room to invest in one area for specialization instead of diversifying funds everywhere without any field of specialty. Focusing on fewer targets enables the company to have precise business strategies that are easier to achieve than several ambiguous ones. When a company zones in on critical areas, it reduces its overall business risks since most factors are pre-determined. At Universal Creative Solutions, we provide strategic consulting to help organizations develop efficient long-term plans. 

Indicators of Failure

Signs that an organization’s business strategy is failing are seen when the reasons for the failure are left unmitigated. That said, here are the typical signs to watch out for.

Poor communication between all stakeholders

When co-workers do not adequately share crucial information due to jealousy, lack of proper channels, or any other reason, failure becomes imminent. Different departments often have to work in harmony to complete all projects, whether big or small. When communication is haphazard, delays can occur simply because one department was not aware of a pending job. The outcome could be disastrous. For instance, your company could lose a project in totality, which results in losses. The best business solutions lie in establishing regular cross-departmental meetings with all workers to remove the silo-mentality in individual departments.

Delayed or unmet deadlines

Consistent delay in meeting set deadlines is a clear sign of the onset of business failure. Timely execution of work is paramount for an organization’s credibility with clients. Without it, the company’s reputation becomes tarnished, and rebuilding trust takes more time and resources. An organization should strive to meet all set deadlines. As soon as projects start lagging, the management should establish clear guidelines for fast-tracking things. The solution is to have open and regular communication by team leaders with concerned stakeholders. Doing so will ensure that everyone is aware of upcoming deadlines, and nothing is left unsaid or unknown.

business strategy development

Unclear strategies and goals

Employees who are seemingly busy but cannot translate the time spent working into tangible results are not in line with the business strategy. Having spelled out plans and targets helps employees work with purpose. Without this, all their hard work surmounts to nothing. You can schedule monthly team meetings to check in with your staff and ensure they are still on track. Team building activities can also provide a fun way to hold these meetings and boost the staff’s morale.

Lack of accountability in workers

When employees are not responsible for company resources or the time spent on projects, they can quickly become complacent. This lack of direction and accountability gives room for inefficiency and results in endless blame games. The remedy lies in strategy consulting to maintain accountability throughout the whole organization. 

Resistance to change

When employees are resistant to changing their old routines to more efficient and practical ones, their efficiency comes into question. It’s a typical indicator that workers are feeling unappreciated or confused in their job. The best solution to this is to ensure slow but well-elaborated change within all levels. To achieve this, the employer should diligently train the employees. This will ensure that they are well-prepared and competent to execute the set business strategies. On the other hand, rushing to incorporate changes could lead to resistance and demotivation.

Strategy Alignment

Strategy alignment involves linking the company’s business strategy with the available resources and environment to guarantee profitability. The strategy execution should be in harmony with the business goals, vision, and mission. The vision and mission spell out the business’s very essence; thus, aligning its execution strategy ensures authenticity. 

An organization with good strategic alignment should have a business strategy that fulfills the purpose of the business. The alignment also effortlessly supports the achievement of your business strategy. Improved performance is assured by enhancing people’s contributions and the processes required to achieve the quantifiable objectives.

Strategic alignment, combined with a solid business plan, mission, and vision, can significantly mitigate problems and potentially increase net profits and employee satisfaction. When it comes to strategy execution at a corporate level, everybody from the top management to the support staff has to align their goals to become successful. At Universal Creative Solutions, we dedicate our time and resources to helping companies efficiently plan and execute their business strategies.