Why Business Strategies Fail
A quick introduction covering the background of corporate strategy and its purpose:
Corporate strategy refers to the overarching long-term plans and priorities that guide how a company positions itself to gain a competitive advantage, please stakeholders, and achieve sustainable growth in its chosen market. It articulates an integrated perspective on how the collective efforts of a company’s divisions and activities will drive the realisation of core objectives (for more on corporate strategy, check out Business Strategy Hub).
Corporate strategy provides direction on how an organisation will leverage its resources and operate across business units and functional areas to meet ambitious corporate aims. It helps align structures, capabilities, and operations towards a common purpose. An effective corporate strategy sets forth a cohesive game plan for how all facets of an enterprise can work synergistically to execute the organisation’s vision.
The key objectives served by corporate strategy include:
- Gaining marketplace competitive advantage and strong positioning versus rivals
- Targeting growth opportunities aligned with the organisation’s strengths
- Enhancing efficiency by eliminating redundant efforts and leveraging core competencies across units
- Promoting organisational coherence by establishing strategic frameworks all operations can align to
- Providing clarity on resourcing decisions such as capability investments or divestments
- Creating a focus for innovation strategy initiatives, partnerships, and external engagement
- Preparing proactively for identified threats and market uncertainties
- Delivering attractive returns for investors and shareholders
While corporate strategy sets the course, it can only be considered successful insofar as it is properly implemented across the breadth of the organisation. Without supporting processes, systems, and organisational capabilities activated through impeccable execution, the most beautifully crafted corporate strategy will fail to generate the intended results. Thus, a holistic view must tie strategy formulation to enactment frameworks and protocols.
The vast majority of corporate strategies fail to achieve the intended results. Studies show that while most organisations invest heavily in developing elegant and detailed strategic plans, roughly 60-80% of strategies are never successfully executed (McKinsey). One fundamental driver behind such failed execution is a lack of supporting systems and processes that enable organisational alignment and day-to-day operationalisation of strategic objectives.
Corporate leaders often take a narrow view, equating strategy solely with high-level vision setting, ambition articulation, and long-range planning. However, the realisation of strategy is fundamentally tied to what happens after planning – the capacity of an enterprise to effectively roll out and activate the behaviors and initiatives dictated by strategic intent. This capacity directly stems from the workflows, reporting structures, methodologies, technologies, and procedural frameworks used to translate strategic thinking into ground-level action across the breadth of an organisation.
Unfortunately, the majority of business leaders fail to dedicate sufficient focus to intentionally designing, assessing, and constructing the requisite systems and systematic processes needed to serve as the scaffolding for strategy execution. There is an underlying assumption that current infrastructure and operations are organically equipped to adopt the wide array of activities and responsibilities introduced by each new strategic shift. This disconnect is exacerbated by the reality that corporate strategists themselves rarely have accountability for downstream implications or requirements of the strategies they architect.
The net result is a predictable array of execution roadblocks, missed objectives, budget overruns, diminished returns on strategic investments, failure to capitalise on market opportunities, and an inability to achieve the benefits articulated so compellingly in the polished corporate strategy documents themselves. Effective strategy implementation requires a holistic approach where formulation goes hand-in-hand with capability-building – not just as an afterthought, but as an integral part of the strategic planning process.
The Problem of Overlooking Systems and Processes
While roughly 80% of executives rate their organisation’s strategy as good or excellent in annual surveys, historical analyses indicate that only 14% have succeeded in executing those strategies. This staggering gap highlights the pervasiveness of strategy execution failure in the corporate world (Harvard Business Review).
There are several key reasons why leaders fail to dedicate sufficient focus to building execution frameworks:
Assumption of innate alignment: There is an assumption that current operations and infrastructure are equipped to seamlessly adopt the behaviours and activities required by the new strategy. Leaders believe that staff will intuitively modify their day-to-day workflows to support unfamiliar strategic objectives without the need for procedural guidance.
Lack of accountability: Corporate strategists are typically measured on the innovative quality of strategy, not downstream implications. They design strategies in a vacuum without responsibility for building downstream execution roadmaps for the broader organisation. There is no single owner that retains accountability for end-to-end rollout.
Bias for high-level planning: Leaders enjoy envisioning the future state and articulating ambitions. However, concrete planning for the deep organisational change needed to activate strategy is far less glamorous, so it gets short shrift (Bain & Company).
Discomfort with execution details: Many strategic leaders are concept and vision-oriented thinkers who shy away from codifying detailed protocols for strategy activation. The organisational process design needed feels out of their wheelhouse.
Resource constraints: Building infrastructure to support a strategic pivot requires an upfront investment that leaders are unwilling or unable to make without a guaranteed ROI, so they shortcut capability-building.
This lack of emphasis on the construction of suitable systems and systematic processes to facilitate the hard work of transitioning from strategic plan to implementation results in severe breakdowns in execution across the organisation.
The disconnect related to strategy execution infrastructure leads to a range of organizational breakdowns including:
Poor Cross-Functional Coordination: Disjointed workflows, misaligned metrics, and conflicting priorities across business units impede collaboration critical for strategic initiatives.
Role & Responsibility Ambiguity: When execution protocols are unclear, employees waste efforts due to duplication or failure to fully own areas core to strategy success.
Inability to Track Progress: The absence of stage gates, milestones, and progress reporting allows strategic objectives to fail quietly without timely visibility (KPI Institute).
Unresolved Barrier Identification: Rapid surfacing and resolution of impediments stalling strategic progress rarely occurs without mechanisms to link on-the-ground inputs to decision-makers.
Insufficient Capability Development: Staff skills and organisational competencies fail to evolve at pace with the requirements of new strategic needs due to a lack of developmental infrastructure.
Cultural Inertia: Lack of top-down expectation-setting and performance incentives means legacy behaviours persist that are counterproductive to strategic agility and evolution.
Without the foundation of capable systems, well-designed processes, and sound infrastructure to enable execution, strategic aspirations turn into mirages in the desert. The prize is left unclaimed despite the view from a distance appearing so promising. Breaking this cycle requires putting systems and processes on equal footing with vision and ambition in the strategic hierarchy.
Here is an expanded discussion of the assumptions and accountability issues that lead to poor strategy execution:
The assumption that current operations can adopt a new strategy
One of the most common yet flawed assumptions leaders make is that an organisation’s existing operational infrastructure, systems, and processes will seamlessly adapt to the new behaviours and workstreams demanded by a shift in strategy.
However, the reality is that even incremental strategic changes require modifications to day-to-day rituals and coordinated workflows across departments in order to achieve alignment. New strategy often necessitates entirely different protocols, reporting relationships, capability requirements, and decision frameworks relative to the status quo.
Expecting that employees and managers will intuitively modify engrained ways of working to support unfamiliar strategic objectives, without clearly articulated procedures, is naive and a recipe for disjointed execution efforts. People require concrete guidance to break old habits and form new patterns of working shaped explicitly to enact strategic aims. The lack of deliberately designed infrastructure to enable new strategic behaviours leads predictably to the continuation of legacy activities misaligned with intended outcomes.
Lack of accountability for downstream implications
Another core issue is the lack of end-to-end ownership for strategy execution, stemming from corporate strategists and C-suite architects of strategy failing to retain accountability for downstream activities required to activate strategy across the enterprise.
Too often, senior leaders conceive strategy in a vacuum without sufficiently rigorous consideration of the operational implications of strategic plans on frontline teams, managers, and support functions. The architects of strategy then consider their work done once the target is articulated and ambitious penned to paper, leaving it fully to middle managers and their teams to translate statements of intent into on-the-ground execution without much guidance.
No single owner remains responsible for assessing and building the organisational capabilities needed to go from strategic vision to activated workflows and realigned resource allocation. This failure to view strategy enactment as an extension of the strategic planning process instead of a separate downstream concern is a huge barrier to effective implementation.
These problematic assumptions often stem from a superficial understanding of what strategy execution entails and a bias for high-level thinking over in-depth execution planning among corporate strategists.
Many business leaders enjoy the process of formulating strategy – assessing the competitive landscape, setting visionary goals for the future, and defining ambitious growth targets. They take pride in conceiving innovative strategies that differentiate from the past.
However, the hard work required to examine complex interdependent organisational systems and redesign underlying processes to align with a new strategic course is far less exciting. Nor does this capability-building stage cater to the egos of top executives the way speeches about bold new strategic directions do.
As a result, too few leaders dedicate themselves to understanding current organisational dynamics and limitations before declaring new strategies. They fail to ask hard questions about whether current staff have the required competencies or if control systems guide behaviours conducive to desired strategic outcomes.
They wrongly assume that employees can operationally interpret high-level verbal mandates rather than needing concrete roadmaps. This tendency manifests instrategies painfully disjointed from reality. Hence the glaring execution failure rates that persist despite extensive C-suite cycles devoted to strategy formulation.
The costs accrued from glossing over operational planning and capability-building are massive missed opportunities, wasted resources, diminished competitive position, and disillusioned workforces when grand strategic pronouncements fail to manifest.
Executives must take responsibility for strategy follow-through, not just conception. This starts by challenging assumptions about Innate organisational readiness. Strategists should visualise execution implications before finalising strategic plans to ensure they build requisite enablers in parallel with target-setting.
Negative consequences that can result from a lack of focus on building systems and processes to enable strategy execution:
Poor Organisational Alignment
- Uncoordinated workstreams across business units/departments
- Conflicting priorities that confuse staff and dilute focus
- Managers maintain misaligned legacy metrics/goals
- Lack of clarity around decision rights slows responses
Unclear Protocols & Wasted Efforts
- Staff duplicate efforts or fail to fully own key areas
- Trial-and-error in trying to execute without playbooks
- Reinvention of solutions that already exist elsewhere
Inability to Track Progress
- Missing milestones go undetected
- Success measurements not defined or monitored
- The risk of failure rises without progress visibility
Lack of Troubleshooting Mechanisms
- Underlying execution barriers persist unaddressed
- Learning from mistakes does not inform course correction
- Critical deficiencies reach crisis point before surfacing
Insufficient Staff Capabilities
- Skills gaps arise relative to strategy requirements
- Current talent bench lacks proficiency for new initiatives
- Need for training overlooked without capability audits
In aggregate, these breakdowns lead to crippled realisation of the intended strategy. The organisation remains mired in status quo activities misaligned with strategic goals. Opportunities are missed, resources drained, and competitive positioning relinquished all while executives continue harbouring the illusion of transformational progress against the strategy they defined. Avoiding this requires a concerted focus on constructing the apparatus to activate strategy through people and operating infrastructure.
Missed Financial Returns
- Desired growth, cost reduction, or profit goals fail to materialise
- Forecasted ROI on strategic investments not achieved
- Shareholder confidence and valuation erodes
- A company perceived as unable to achieve the goals it sets
- Brings strategy prowess into question after high-profile plans flop
- Best talent reticent to join organisations with failed executions
- The inability to deliver on a defined strategy damages executive credibility
- Causes blame game and internal turmoil at the top
- Short CEO/C-suite tenures disrupt continuity
Loss of Competitiveness
- Rivals outmaneuver the organisation in the market
- early mover advantage goes unclaimed due to delays
- Customers lost due to failure to improve value proposition
Waning Employee Morale
- Workforce grows jaded by leadership’s floating vision
- Change fatigue sets in after failed attempts
- Talent exodus ensues after confidence breaches
Taken together, these outputs result in severe premiums paid for glossing over the vital task of strategy operationalisation. Competency gaps unaddressed, unrealistic expectations unchecked, and poor coordination unresolved combine over time into a massively diminished enterprise. Avoiding the snare of strategy failure requires embracing capabilities, processes, and system-building with equal zeal to the vision and ambition set.
The critical role of systems and processes in enabling strategy execution:
The Critical Role of Systems and Processes
While formulating strategy is crucial for setting direction, the capacity to effectively execute on strategic plans is what ultimately determines success. Rather than treat strategic planning and implementation as disconnected stages, they must become interwoven facets of an integrated discipline.
The reason most strategies fail is because execution lives in the realm of systems, processes, and infrastructure – areas typically beneath the interest of corporate strategists. However, the sledgehammer of strategy will sit inert without these foundational enablers activated to fuel implementation.
Effective strategy execution requires a scaffolding of organisational systems, workflows, and processes to translate high-level strategic thinking into aligned ground-level action across the enterprise. Simply relaying strategic objectives to staff without an infrastructure to guide behaviours and track progress will not catalyse change.
Enablers that warrant examination and realignment in service of strategy include:
- Departmental workflows, coordination touchpoints, reporting protocols
- Structure of plans, budgets, operations calendars
- Data gathering approaches, analytics capabilities
- Internal communications and messaging platforms
- Stage gate processes, milestones, checklists, reporting templates
- Skills profiles, learning programs, competency models
- Individual/team performance metrics and incentives
Constructing execution infrastructure demands a detailed understanding of current dynamics within each area so new design elegantly builds on or modifies the status quo rather than disrupting it entirely. This is why responsibility cannot be delegated wholesale to external consultants. Sustainable strategic activation relies on leaders intimately addressing elements within their sphere of influence and oversight. No excuse exists for sidestepping the infrastructure challenge.
Key areas to analyse for capability gaps and examples of new systems to enable strategic priorities:
Key Areas to Analyse Capability Gaps
Organisational Structures & Coordination Flows
- Assess if current structures promote information sharing and collaboration needed for strategic initiatives and cross-functional delivery.
- Look for redundant hierarchies adding unnecessary complexity that hampers agility.
- Identify missing governance touchpoints across interdependent teams.
Staffing Models, Roles & Competencies
- Audit talent bench strength and skills profiles against fresh capabilities dictated by strategy pivot.
- Pinpoint role gaps or overlapping roles creating confusion around decision authorities.
- Anticipate learning curves and training demands from changing competency requirements.
Performance Tracking Protocols
- Determine KPIs and metrics needed to monitor progress on strategic goals and programs.
- Identify ineffective measures that incent the wrong behaviours or outcomes.
- Build infrastructure to collect and analyse data sources that feed strategic insights.
- Evaluate current budgeting models’ compatibility with newly prioritized projects and activities per strategy.
- Assess gaps between projected funding needs versus available budgets.
- Plan for resource trade-offs and procurement required for strategy.
Knowledge Management Platforms & Training
- Take inventory of existing learning infrastructure and paradigms.
- Make skills development roadmaps attuned to new capabilities required.
- Plan a structured curriculum for reskilling and mindset shift.
Communications & Change Management
- Audit reach and effectiveness of existing internal communications channels.
- Survey workforce perspectives on impending strategic changes.
- Establish ongoing touchpoints and messaging to shepherd adoption.
Data, Analytics & Business Intelligence
- Identify additional data sources, analytics tools, and BI infrastructure needed to glean insights that guide strategic progress and adaptation.
Continuous Improvement Protocols
- Implement mechanisms to capture lessons learned, employee feedback, and performance trends to refine execution approaches on an ongoing basis.
Examples of Enabling Systems for Strategic Priorities
Elevated customer centricity:
- Voice of Customer data collection system
- Customer advisory panel processes
- Persona and journey mapping protocols
Accelerated product development:
- Automated prototyping workflows
- Holistic launch team structure
- IT release management procedures
Entry into new markets:
- In-country partnership playbooks
- Remote sales tools and protocols
- Localised communications templates
Best practices for improving strategy implementation success:
Steps for Improving Implementation Success
Assign End-to-End Accountability
- Make a single senior executive (ideally lead strategist) responsible for the full strategy lifecycle – from formulation through execution, outcomes and adaptation.
- This forces a holistic upfront view of capabilities needed for activation and adds incentive to construct those deliberately.
- Creates a role that bridges strategy, structure and operations.
Conduct Capability Audits
- Undertake objective assessments of existing systems, processes, skills and cultural dynamics against requirements introduced by strategy shift.
- Identify gaps that could handicap execution like outdated legacy systems, missing agile processes, and underdeveloped competencies.
- Quantify the size of change and investment necessary to address gaps.
Define Implementation Roadmaps
- Map out detailed sequences of execution protocols, project plans, capability-building initiatives and funding needed quarter-by-quarter post-strategy approval.
- Outline timelines, milestones, metrics, and governance touchpoints across business units to create an integrated view.
- Provides a blueprint for leaders to coordinate action.
Embed Execution Infrastructure
- Construct and implement required systems, processes and skills development protocols DURING strategy planning.
- Too often these are tacked on after the fact, allowing gaps to cripple results from the outset.
- This includes changes to workflows, analytics, decision architecture, training programs, staffing models etc.
Continuously Monitor & Adapt
- Once activated, rigorously gather data on milestone progress, performance indicators, and adoption feedback.
- Open channels for surfacing employee and customer sentiments related to execution experience.
- Refine the approach in real-time based on outputs rather than waiting for annual reviews.
Following these steps will significantly improve the likelihood of strategy success by forcing leaders to view execution as an integrated component of planning rather than an afterthought. It also embeds formal mechanisms for connecting strategy to field realities post-deployment. Leaders must inspect the systems that will enable victory well before entering the battlefield.
Key Points To Remember
The harsh truth is that the vast majority of carefully constructed corporate strategies fail in their execution due to a lack of supporting infrastructure. Success requires elevating systems, processes, and organisational capabilities as integral elements woven into strategic plans from the outset.
Leaders must challenge assumptions about innate organisational readiness and view execution dynamics as extensions of the strategy dialogue rather than downstream implications. Strategists should retain accountability not just for formulating innovative strategy, but shepherding enterprise-wide capability building to activate it.
Steps like conducting capability audits, assigning end-to-end ownership, and embedding new operational systems parallel to planning can transform execution outcomes. But a philosophical shift is also warranted – one that puts strategy into action not just through targets but protocols, not just boardroom PowerPoints but cross-functional workflows.
The time has come for a new era of corporate strategy, one anchored in implementation excellence rather than lofty aspiration alone. Making this future reality requires commitment from executives willing to get into trenches of operational detail.
For leaders serious about increasing the odds their strategic plans generate expected returns, contact the author of this paper, Moe Nawaz, to engage his firm as a strategic advisor. With over 40 years of turning corporate strategies into realities, Moe brings a battle-tested perspective forged in the fires of real-world execution.
The cost of continuing with status quo failure is too great not to explore a better path forward.
Moe Nawaz Strategic Advisor to FTSE 100 Leaders
Duke Brothers Ltd
122 Leadenhall St,
London EC3V 4AB