The 10 Reasons why 70% of Strategies Fail
by Tom Wright, on Jul 20, 2018 7:58:10 AM
You must have heard the statistic before. Some people argue that only 60% of strategies fail - others say it's closer to 90%. Either way, the consensus seems clear: most strategies fail. These are the top 10 reasons most strategies fail:
- Starting too early
- Including the wrong people
- Not including the right people
- A lack of specificity
- A lack of honesty
- Not taking advantage of core competencies
- Resistance to change
- Lack of rigor
- Unrealistic goals
- Lack of accountability
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Hundreds of people have emailed us to say how familiar that scenario is to them. So one of the first questions I ask new clients using Cascade, is 'what went wrong with your last strategy?'. In this article, I'm going to summarize the most common reasons why so many strategies fail.
#1: Starting too early
This is going to sound a little controversial, but here goes: You don't always need a strategic plan.
When we started Cascade Strategy back in 2013, we didn't have a strategy. We had an idea. We had a dream. Maybe at a push, we even had a vision. But not much else. And it's not like we didn't try either. We sat down several times and tried to create a cohesive 5-year strategy for our startup. The problem was, that every few weeks, we learnt something new and completely changed our minds.
To be honest, I don't think brand new startups can really have strategic plans. If anything, having a plan could cause you to be too rigid in your decision making, and too dogmatic about your product. Of all the strategic plans that we've created for our company, the first one that has actually been useful was written just 6 months ago. Because before then, we just weren't armed with the information we needed to be truly focused and strategic.
I've seen this same scenario play out with quite a few of our clients too. Not so much because they were startups, but because they decided to try to implement a strategy right at the start of a transformation journey.
There are a few things you can do to test whether you're trying to create your strategy too early.
Once you've created the first version of your plan, ask yourself the following questions:
- Was creating your strategy hard? Creating a strategy shouldn't be hard as you should know exactly what you need to do, and in which order.
- Did it make sense when you sat down and explained your strategy to someone else? Talking through your strategy out loud with someone the organization is a great litmus test for getting a feel for whether your strategy will succeed or fail.
- After a couple of weeks, does it still feel like 100% the right thing to do? Or do you still feel just as directionless as before you started?
If you answered no to any of the above questions, there's a good chance that you're trying to create your strategy too early. These strategies fail more often than they succeed, and worse still they can hurt your belief in strategic planning. A belief you're going to need as you progress through your journey.
#2: Including the wrong people
Strategic planning is often viewed as an activity carried out by senior management or an elite band of ‘strategists’. Once the strategy has been developed by a relatively small assembly of people, it’s released to the rest of the organization. Those who actually carry out the goals and objectives of the strategy are given no input and expected to blindly follow the instructions of those above them. This outlook on strategic planning is a big contributor to why strategies fail.
Senior management is well positioned to steer the strategic direction of the organization and create high-level strategies. Often though, senior management have knowledge gaps when it comes to the detail required to build the strategy for particular departments and teams. Without including functional level managers, important questions might not be asked, such as 'Is this the best strategy to achieve our objective' or 'Has this been scoped out and can it be done in the way we think'.
The task of strategic planning is generally quicker when only a few are involved, however, the extra time spent opening up the conversation to a wider audience will surely pay the benefits. The people who actually execute the strategy have first-hand knowledge and generally the best understanding of how to achieve the objectives in their area. Including these people in the planning phase will bring important insight and different viewpoints. This leads me to my next point, not including the right people.
#3: Not including the right people
When the right people aren’t included in strategy creation it can be detrimental to the success of the strategy for a few reasons. As mentioned above, when the strategic planning circle is too small and managers from different levels in the organization aren’t included in the formulation, key pieces of knowledge and ideas are forgone.
A small strategic planning circle also hinders buy-in from the rest of the organization. Too often a strategic plan is foisted upon employees, with the expectation of them jumping right in and executing on it, without any understanding of the reasoning and arguments that went into creating the strategy. If employees aren't given the opportunity to be involved in the creation stage, it's going to be a lot harder to gain their buy-in, in the implementation stage.
Opening up the strategic planning phase and extending the conversation to the rest of the organization will not only give you great suggestions and feedback but once the strategy is released, buy-in will be easier to achieve.
#4: A lack of specificity
First of all - am I the only one who struggles to say the word 'specificity'?
Second of all - strategies fail when they lack focus and detail. I've seen so many examples of grandiose strategies that fail to nail down any concrete actions, goals or projects. For each focus area within your strategy, you need at least one KPI and several concrete projects that will actually deliver against that part of the strategy.
When you're creating your strategy, try to stick to the SMART goal principles - ensuring that your goals are:
Try using our free strategic plan template to help keep you focused and specific - and if you need some inspiration then check out our blog post with examples of good strategic objectives.
#5: A lack of honesty
One of our 3 core values here at Cascade Strategy is integrity. Not the kind of integrity where you don't steal someone else's chocolate bar from the fridge (that happens). Rather, the kind of integrity where we try our utmost to:
- Be upfront about our limitations
- Only say that we agree with something if we actually agree with it
- Speak our minds about things we're not happy about
One of the most common reasons given by our clients about why their strategies fail is 'Not everyone was on board'.
Executing a strategy is hard. It's usually over and above business-as-usual, and requires people to invest their time, energy and emotions into something with no guarantee of success. Getting your team on the same page is therefore critical to giving your strategy the best possible chance of success. That's not to say that everyone needs to agree on everything. But they need to be willing to share their concerns (and you willing to hear them) rather than just pay lip-service to the direction of the plan.
The good news is, you probably already know who on your team isn't fully bought into your strategy. That's the easy part. The hard part is creating an environment where they feel comfortable sharing their concerns. There are a whole bunch of reasons why someone may not open up right away - they may:
- Lack confidence in themselves and their opinion.
- Feel marginalized and that their views will put them further into the minority.
- Not feel empowered or that their views will be listened to.
Don't forget, people respond to situations very differently from one another. Some will feel confident opening up about their views on the strategy in the team meeting - whilst others may need a 1:1 chat over coffee.
#6: The strategy doesn't take advantage of core competencies
The misalignment between a new strategy and the core competencies of a company often concludes with a failure of the strategy. Core competencies are what has taken your company this far, they’re the reason customers see value in a transaction with your company. Not taking advantage of these key organizational strengths when developing your strategy means you're relying heavily on competencies that your organization hasn't quite mastered yet. Therefore, in order for your new strategy to be successful, you're expecting your organization to develop new core competencies, which it might not have the resources, knowledge or skill to currently do.
Before creating your new strategic plan, you should have a think about what your organization's core competencies are. By having a clear idea of what they are, you can easily build upon what you’re already doing well. As you develop your strategy make your to ask yourself whether your mission is aligned with the core competencies of your company.
#7: Resistance to change
When we first started this company, we did the typical software startup thing of lugging our laptops and projectors from client to client, trying to impress them with the software we'd built. Some of them bought, but most of them didn't. We started to wonder if maybe our product didn't match up to the competition as well as we'd hoped, so we started asking our sales leads about this very topic. One response really stuck with me:
Your biggest competitor isn't another company. It's the status quo.
In other words - being the best isn't enough if people aren't actually willing to get up and make changes.
Strategies fail for exactly the same reason. You can have the best strategy in the world, but if the people around you are too set in their ways to change, then you've got a major problem.
Unfortunately, there's no magic formula to getting people excited about the change. It's a fact of life that some people will always be more comfortable with what's familiar to them. And here's the thing - sometimes, you should listen to them. Change isn't always a good thing, and sometimes the people resisting have valid points that need to be considered.
When you do encounter 'resistance for the sake of resistance', spend a bit of time trying to figure out what's actually behind it. You'll often find that people aren't resistant to the actual change itself, but rather the thought of that change is triggering an emotional, human response. The most common culprit is fear - of job security, of social changes in the work environment, or something similar. Address the root cause of the resistance, and there's a good chance you'll get the person on board with the change itself.
#8: Lack of rigor
Creating a strategic plan is really just the beginning. The riskiest point in the life-cycle of a strategy is in the first 6 months of its existence. This is where so many strategies fall by the wayside or lose momentum. If you can get through the first 6 months and still be actively tracking and delivering against your strategy, there's a good chance that it won't become one which fails. So how do you transition from creating your strategy to executing it? We actually wrote a complete post on this topic last month, so check that out - but probably the most important element is rigor.
At Cascade Strategy, we call this rigor your 'Strategy Rhythm'. Specifically, you need to:
- Book regular strategy meetings into your diary.
- Send out reminders to people a few days before those meetings that they need to update their goals.
- Agree upon a consistent report that you will use for each meeting.
- Provide concrete resolutions in those meetings to issues that may cause problems for your strategy.
Applying this type of rigor to your strategy execution not only helps keep you focused and on track, but it also helps to build the credibility of the strategy in the minds of your people. The fact that you as the leader are dedicating so much time and attention to the strategy is a great way of reminding people how important it is to the future of the organization.
#9: Unrealistic Goals
Unrealistic goals are a big problem in many strategies. When your goals are unrealistic, they will seem un-achievable and end up demoralizing your people. While your unrealistic goals may look good on paper, for those tasked with executing them, it can be quite undermining. If goals seem unattainable, employees will lose enthusiasm and may turn toward resentment instead.
Now, this is not to say your strategy shouldn’t be ambitious. Your strategy should still be aggressive enough to drive growth and generate excitement/enthusiasm amongst your people. Easily achieved goals do little for you and don’t generate the kind of buzz (that a more ambitious plan would), to get your people on board.
Formulating goals that are ambitious yet still realistic requires a solid understanding of:
- previous performance
- current resources
- organisational knowledge.
Knowing how you have previously performed will give you a good estimate of future performance. You should also use your organization's current resources and knowledge to help you forecast future performance.
#10: Lack of accountability
Lack of accountability is a common culprit as to why strategies fail. Organisations that don’t clearly articulate the employees that own goals and different parts of the strategy leave themselves susceptible to failure before they’ve even started executing the plan. When it isn’t clear who owns the different parts of the strategy, it’s very easy for goals and objectives to slip through the cracks and miss their deadlines. Accountability is not about having someone to blame; instead, it’s about having someone own and take the lead on certain objectives and goals. Having employees report to others on the progress of the goals they own places importance on the goal and ensures goal owners stay on track.
While creating your strategic plan, ensure every goal, objective and project has an employee owning it. You may also want to include co-owners to guarantee everyone who is expected to contribute on the goal is accountable.
Owners names should be written down next to the goal and communicated with the rest of the organization, this will ensure there is no confusion on who owns the goal, and other employees know who to direct their questions to.