Home > Risk > Why do well-formulated strategies fail so often?

Why do well-formulated strategies fail so often?

One of the presentations I make relatively frequently is on the “strategy to execution” gap. Why is it that (according to Fortune magazine) “less than 10% of strategies effectively formulated are effectively executed?”

These are the primary issues as I see them:

  • 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 would you add to this list?

  1. October 4, 2010 at 4:09 PM

    I would suggest The Strategy Paradox by Michael Raynor. The future can not be predicted and CEO’s hold hold to their strategies too long.

  2. October 10, 2010 at 1:53 PM

    The “snake oil” I kept talking about was in fact not snake oil at all. It was actually koolaid all along

  1. October 4, 2010 at 1:24 PM
  2. November 10, 2010 at 7:20 AM
  3. November 22, 2010 at 11:56 AM
  4. March 17, 2014 at 11:06 AM

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