Why companies fail to implement strategies

Activating their strategies and moving from strategy to results is perceived by many business leaders as one of their greatest challenges. Probably rightly so, studies show that a large proportion of companies fail to execute.  

The topic is discussed in a study presented in the Harvard Business Review. It is based on interviews with some 8,000 executives in more than 250 companies. The article is a few years old but remains relevant. What is the difficulty in implementing strategies, why do so many fail? According to the Harvard Business Review, it is explained by five myths, or pitfalls, which, in a nutshell, mean:  

Myth 1. "...but we have effective processes for implementation."

Most companies work with effective processes to translate strategies into sub-goals and to cascade them down the organisation. This is good, but what is lacking are processes for horizontal implementation, across units and departments. Many (80%) have systems for collaboration across silos, but only 20% feel they are working well.  

Myth 2: "...your own creative solutions undermine the strategy..."  

...but it can be just the opposite. Of course there should be a strategic plan and it is necessary to stick to it. But no plan in the world can foresee every possible event that may occur. When people find creative solutions to unexpected problems, implementation is not undermined - it is a sign that the implementation of the strategic plan is working at its best.  

Myth 3. "... it's communicated so now everyone knows."

A common misconception is that communication is counted in the number of power-point presentations and emails, the more the merrier. But that's not how you build understanding. When the middle managers in the study were given five attempts to explain their company's strategic goals, almost half failed. It's not just about input, it's about creating insight and being able to translate that into your own frame of reference.  

Myth 4. "...results-based culture drives change."

Many see results-based culture as a way to implement strategies, and measurement can indeed drive behaviours on a daily basis, but the question is whether it will be the "right" behaviours. When the focus is on numbers and measured results, there is a risk of hedging, i.e. betting on safe cards and behaviours that have been known to pay off. This is at the expense of innovation and new developments. To create real change, other values need to be recognised and rewarded, such as flexibility, cooperation and ambition.  

Myth 5 "...change should be driven from the top."

A dominant leader at the top, steering the organisation and pointing with the whole hand, can be effective in driving change in an organisation - in the short term. But the risks are many - what happens when the strong leader disappears? The study does not underestimate the importance of strong leadership but points out that effective strategy implementation in large complex organisations relies on countless decisions and initiatives taken at all levels with the help of middle managers. It is they who have the challenge of translating the overall strategy and making it clear and meaningful to their teams and units. A lot can go wrong in this communication, and according to the study, this is exactly what happens. Failure is the rule rather than the exception.  

So what do these results reported in the Harvard Business Review study mean - that it's impossible to implement your strategies? Not at all, but it's important to be alert to the pitfalls. It is also important to have effective and powerful tools for communication and understanding, vertically and horizontally and for all levels.  

Involve has the knowledge, and the tools.  

Contact us and we will tell you more.

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The article "Why Strategy Execution Unravels-and What to Do About It" by Donald Sull , Rebecca Homkes and Charles Sull, was published in the Harvard Business Review in March 2015.

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