Why strategies fail
No-one could have predicted the events of the past year. Companies have been affected to varying degrees. Some have prospered; others, through no fault of their own, have had to pull down the shutters. The majority are somewhere in the middle.
Many took advantage of the government-backed loan schemes and furlough provisions, but few seized the opportunity to fundamentally reappraise their business model and strategy. If we have learned one lesson from this traumatic period, it’s the need to be agile and willing to adjust quickly to changing circumstances. Witness the companies that saw a gap and pivoted their product or service to meet it.
Entrepreneurs are adept at spotting and exploiting such opportunities, and small companies are often able to react more quickly that than their larger counterparts. These companies are also the ones most likely to grow, but the key to future success rests on their ability to maintain the same level of agility. Sadly, as structures and procedures are put in place and responsibilities are devolved to a wider management team, flexibility gives way to rigidity, and the attributes that brought success become obscured.
Many management teams decide on a new strategy without fully understanding what it means. Most ‘strategies’ are no more than aspirations. Targeting percentage growth, penetrating a new market or improving operational efficiency may be worthy goals, but they do not constitute a strategy. None address the question of ‘how’. Merely wanting things to be different is not enough. The answer lies in the formulation of a strategic action plan, which sets out the step-by-step actions and resources needed to turn strategy into reality. It focuses effort and measures outcomes.
Several factors are critical to success
- Strong and effective leadership
- Clear goals and priorities
- Active engagement with staff to garner commitment and support
- Good ongoing communication
- Necessary resourcing and capability
- Clear responsibilities and accountability
- Visible and transparent measurement
- Cultural and organisational alignment
The strategy has to build on a company’s strengths and capabilities, and make the best use of its resources and assets. It also needs to be evaluated against the market potential. Too many companies embark on a direction based on assumptions or perceived knowledge, without adequately researching important data such as market size, growth potential, and competitive landscape.
A successful strategy will engage everyone involved in the implementation process and mandate different behaviour. Senior management has a responsibility to set clear expectations and to define success, otherwise existing objectives will undermine delivery.
Clearly, the barriers to successful strategy implementation can be daunting. There seems to be no shortage of advice available, but precious little practical help on offer. We are a team of experienced independent directors, not consultants or theorists, who work hands-on. If you would like some support in formulating, reviewing or executing your strategy, please get in touch.