The success rate of strategy execution is incredibly low. The fail percentages found in scientific studies range from as low as 7 % to as high as 90 %, with an average of about 50% (as reported in a 2015 review article by Candido and Santos in the Journal of Management & Organization). Even though a slight improvement can be seen over the years, such percentages of failure are not particularly satisfying. After all, it means that every second strategy initiative fails to be executed properly.
To do better, we need to understand why this is the case—why, after hundreds of academic studies and thousands of failed strategy projects, we still don’t do better than this. The simple answer would be that successfully executing a good strategy is just exceptionally hard. But that is hardly a gratifying answer. There are many other things that are exceptionally hard, but where we succeed nevertheless.
Therefore, to start with, we need to have a good understanding of the problems that organizations face when executing their strategy. When we know these problems, we understand the underlying reasons why strategy execution fails, which helps us find the solutions.
As part of the research done for Part 2 of The Strategy Handbook (which is about strategy execution), I have made an inventory of the most important problems that organizations experience when executing their strategy. As it turns out, this list of problems is surprisingly stable over time. Over the past thirty years or so, they boil down to the following list of 20 key problems in strategy execution:
- Unclear communication
- No or insufficient communication
- Lack of commitment
- Insufficient or inadequate resources
- Isolated and fragmented actions
- Ambiguous or conflicting goals
- No or unclear strategy
- No clear priorities
- Ambiguous responsibilities
- Lack of performance information
- Silo behavior and sub-optimization
- Wrong or ineffective culture
- Resistance to change
- Insufficient management capabilities
- Delay, plans are not met
- Budget is exceeded
- Lack of middle management support
- Strategy is not adapted to changes
- Poor leadership
This list of problems shows what goes wrong in strategy execution and what keeps going wrong over and over again. If we want to improve our success rate in strategy execution, it means these are the problems to tackle.
This post was published earlier here on my forbes.com page.
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