Why do well-formulated strategies fail so often?
Why is it that less than 10% of strategies effectively formulated are effectively executed?
Norman Marks, a GRC guru and SAP evangelist, knows:
- Decisions may be made based on unreliable or untimely information. This is an issue that affects the setting of strategy as well as planning, execution, and monitoring of performance
- Employees don’t understand how the strategy affects them, and how their decisions impact others. The strategy is very high-level and not translated into actions each manager has to take to deliver on the strategy – which are then clearly communicated to those managers. In fact, they continue to work on their own projects, and their own priorities, which may not be linked to the enterprise strategies, goals, and objectives
- It’s unclear who is accountable for ensuring execution of initiatives, projects, and tasks
- There’s no link between strategy and risks. Risks are not addressed and managed, during strategy definition, planning, execution, or monitoring
- There’s no link between budgeting and strategy. I have seen situations where the company falls short of its performance targets, generating less cash than expected, but doesn’t have the linkage to drive adapting the strategy, major project plans, etc.
- Incentive systems aren’t linked to the achievement of the organization’s strategy, and individual goals are not aligned with the company’s
What are the reasons in your organization?
6 Responses to “Six Reasons Your Big Plans Will Fail”
Frank Swiatek
After 30 years and 3400 engagements, my experience is that big plans fail because of the basics – lack of trust, lack of accountabiltiy, and lack of commitment.
Matt Lauth
Here is why strategies fail in my opinion:
1. Organizations (especially smaller orgs) have not defined process for planning and implementing strategic plans.
2. Senior Mgmt is not aligned – they may feel they are aligned but after probing farther you’ll find there is subtle misalignment at the most senior level in the organization on exactly what the strategy is.
3. Due to alignment issues, communication breaks down. People believe they are communicating but in reality they aren’t.
4. Which causes low accountability – goals aren’t clear or are misunderstood. A lot of activity takes place but goals are missed.
The solution I’ve found (which is what I do for a living) is straight forward:
1. get a process
2. follow the process
3. hold yourself and the organization accountable.
4. learn and improve (strategic/annual planning is a time-based yearly project, you can move the needle in performance from a 2 out of 10 to a 5 out of ten to a 9 out of 10).
If you’d like to discuss, email me at mlauth@sixdisciplines.com.
Best regards,
Matt
Salman Hameed
This can be all true but the half truth. In implementing big strategies, I have seen that some times we fail due to unknown and outside factors rather than internal lack of capacity as mentioned by Norman. People tend to think that developing strategy in board room is adequately fit all the needs of the Company while employees are not aligned to that.
Cary Mitchell
Mr. Beeber is dead on in his criticism of this bit of fluff. This is cheap and glib pitch. I’m not suprised that the author describes himself as an “evangelist” and a “guru”.
Nick Pawliwec
This true — most of it is due to bad project mgmt & not properly aligning goals to execution.
Ronald W. Beeber
Total poppycock. “Effectively formulated strategies” take these obvious potential people centered pitfalls into consideration. 90% of strategies fail to achieve the results expected due to the ignorance of the formulator of the market place. SAP, as an example, has excelled not because it is good software but because the market it sells into are top level executives that don’t know good software from bad.