ENews & Tech 3 reasons good strategies fail

Business strategies often hit the skids because of three avoidable strategic tensions. Understanding their root causes can help keep a plan on track.

Developing a well-crafted strategy takes time, effort, money, intellectual commitment, and political capital. Anyone who has ever led or participated in a strategic planning process knows the drill. But what happens when a strategy doesn’t work as intended and falls short of delivering expected impact?

The question, “Why isn’t my strategy working?” is asked more often than many executives would like to admit. Yet, there is very little in the strategy literature that can help companies troubleshoot their strategy execution, isolate the causes of friction, and deploy mitigating and corrective actions.

Strategy 101

Strategy can be best articulated as a set of five integrated choices that, together, can position a company to win and generate superior returns for its shareholders. They are: winning ambition, where to play, how to win, capabilities, and management systems. But these choices do not exist in a vacuum; rather, they are informed and influenced by the management team’s beliefs about the world around them (e.g., market trends, competitive dynamics, customer needs) and about their own business (e.g., strengths and weaknesses, strategic assets, investment capacity).

This contextual definition is critical for allowing companies to understand, identify, and protect themselves against three common points of strategic tension: incoherence, incongruence, and inconsistency.

Incoherence

An incoherent strategy can result when the management team’s underlying beliefs don’t align with external or internal realities, leading to myopic perceptions, wrong conclusions, and misguided choices. Incoherence is often rooted in misinformation, including knowledge gaps, reliance on opinions over facts, and internal biases leading to group think. Creating a shared, accurate view of the world can help guard against incoherence.

Rapid change can also create incoherence. Shifts in the marketplace – a defining characteristic of the times we live in – can simply outpace strategy development and execution. Business leaders can address this challenge by adopting a more dynamic strategic planning process. Scenario planning can be a great technique for building greater flexibility into the planning process. As some advanced adopters of AI have found, a combination of natural language processing, machine learning, and human intervention also can help companies achieve significantly better “real time” monitoring of strategically relevant developments in their ecosystems.

Incongruence

Incongruence occurs when the five strategic choices are not integrated and do not reinforce each other; for example, when the where-to-play choices don’t support the winning ambition, or when the capabilities don’t enable the how to win. This commonly results when organisations take a fragmented approach to strategy development – for example, when the five strategic choices are considered sequentially and individually or when stakeholders divide and conquer so each choice evolves independently.

To protect against incongruence, business leaders must consider strategic choices in combination, not in isolation. Ideally, a company should at minimum consider different permutations of its goals and aspirations, where to play, and how to win choices. Each permutation is a distinct strategic option to consider. If strategic choices need to be addressed in sequence, leaders should adopt lookback mechanisms to consider the full set of choices as each new decision is made. And while it’s tempting to dedicate more executive time and energy to defining the winning ambition, where to play, and how to win while pushing discussions on capabilities and management systems down the organisational hierarchy, all five choices warrant equal attention and commitment from leadership.

Finally, strategy development is a messy process. In-person dialogue and debate among C-suite executives – led by a strong strategy architect such as the chief strategy officer or CEO – are crucial safeguards against incongruence.

Inconsistency

Inconsistency occurs when what an organisation says it will do (its strategy on paper) doesn’t match what it actually does. Organisations execute strategies inconsistently for a variety of reasons. These include: too little specificity in the strategy, leaving too much room for interpretation in execution; insufficient resources, bandwidth, or capabilities to execute the strategy as intended; poor understanding of the strategy, including intent, priorities, and actions required; and misalignment among key stakeholders, including disagreement with strategic direction and individuals consciously acting upon personal beliefs or advancing a competing agenda.

To avoid inconsistency, translate the highlevel strategic narrative into tangible initiatives with a road map that accounts for time, resource, and money constraints. Each initiative should have clearly articulated objectives, owners, activities, timelines, resources, investments, measures of success, and anticipated risks and challenges. Use these initiatives to mobilise resources and guide coordinated action. It is also important to monitor the execution of each initiative and revisit whether the portfolio of efforts carried out across the company remains aligned and is producing the expected results.

A structured, carefully considered change management plan can also help minimise inconsistency, addressing insecurities and removing confusion by clearly communicating timelines, expectations, and success metrics. Bear in mind that a good success metric system contains leading and lagging indicators that help monitor for early indications that a strategy is working or failing to drive impact.

Finally, be explicit about securing buy-in from key stakeholders. Spend the time to meet one on one, understand personal concerns, and evaluate trade-offs. Then put mechanisms in place to encourage desired behaviours and monitor progress along the way.

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Strategy is not an exact science. Its intent is to increase an organisation’s likelihood of winning by aligning objectives, priorities, plans, and resources to generate superior value. Avoiding common pitfalls – incoherence, incongruence, and inconsistency – will help business leaders ensure they have a sound strategy that is set on the right context, grounded on self-reinforcing choices, and executed in a manner that matches its original intent. This can make the difference between a strategy that falls short and one that meets – or maybe even exceeds – expectations.

For more information, please visit www.deloitte.com/mt/consulting