Home > Risk > What could go wrong with strategy and its execution?

What could go wrong with strategy and its execution?

In its latest CFO Insights, Deloitte has a piece on Strategy execution: What could possibly go wrong?

The article is worth reading and discusses three ways in which organizations fail – three root causes.

But, are they the most common?

How about these?

  • It’s the wrong strategy! For example, insufficient attention is placed on the actions of competitors and regulators, changes in the market, and so on. In particular, the strategy-setting process does not include all the critical players (such as compliance, risk, and leaders of business units or geographies) and insufficient attention is placed on what might happen, both good and bad.
  • The strategy is not shared across the organization, with incentives tied carefully and closely to the actions necessary to achieve enterprise (and not just personal or team) objectives.
  • Insufficient attention is paid to changing internal and external conditions (which lead to changes in risk, both adverse and positive). As a result, changes to strategies are not made and it’s full steam ahead into the iceberg.
  • Failures in leadership. I was with one company where the majority of employees had lost faith in both the organization’s leadership and their vision.
  • While the overall intent and direction are fine, goals are set that are either beyond what can be achieved (so people give up) or are too easily achieved (so people stop when they are reached and focus on personal objectives).

I am sure there are more.

I welcome your comments.


  1. October 6, 2016 at 5:37 PM

    I think about the third bullet on your list often regarding the changing environment. Michael Porter wrote: “The essence of formulating competitive strategy is relating a company to its environment.”

    When the assumptions about the market, customers, and competitors get outdated, the company can get into trouble. Drucker called these assumptions the “Theory of the Business” in an article of the same name. Companies are often slow to notice their theories no longer fit the marketplace. As that fit worsens, so does profitability. Drucker encouraged them to make these assumptions explicit and test them periodically. For example, the assumption that “housing prices only go up” resulted in a fateful decision by the SEC to deregulate the risk taking of investment banks, precipitating the crisis as they raised their leverage from 2004-2006 on subprime mortgage purchases.

    I think another is a proper diagnosis of what is actually going on in the market, much like a doctor identifying ailment from the symptoms so a proper course of treatment can be determined. The leader has to effectively argue to his people about what they see in the marketplace.

    For example, Mr. Trump is saying the economy is a mess due to bad free trade deals. However, we’ve doubled net worth from $44 to $89 trillion since 2000, so it’s really an allocation problem. So his diagnosis (it’s trade) is probably misplaced (it’s allocation). You handle the former with better trade deals, and the latter with aggressive redistribution downward rather than upward.

  2. Glenn Daly
    October 7, 2016 at 2:24 AM

    Strategies going “right” or being exceeded in the medium term can contribute to longer term strategies going “wrong”. eg certain types of companies whose 5 year plans are easily achieved during times when commodity prices are high, potentially breeds a “bullet proof” mentality at board / management level resulting in the company over stretching themselves.

  3. October 7, 2016 at 6:07 AM

    Deloitte’s view point was interesting and hits on some key points which are certainly not getting enough attention. That said, in my eyes it has one significant underlying flaw that several of your points make clear. Deloitte’s view point seems to start with a somewhat static view of strategy where you analyze the space, set a strategy and then revise it annually. With the current pace of change most companies need to take a more adaptive approach to strategy.

    A strategy is really a set of hypotheses that need constant testing. We need to have measurements and metrics that we can monitor for changes that would cause us to course correct. Critically, we need to not only include obvious business drivers like market share and market size but also risk metrics. It is in thinking about what can go wrong that we usually catch emerging threats and issues. The typical metrics are usually lagging and send up warnings after it is too late.

    None of this takes away from the suggestions Deloitte is making. Those items are critical to execution. There just needs to be another screen to ensure that the strategy is changing as the facts change.

  4. Imran Samad
    October 7, 2016 at 9:31 PM

    Below two could be added to your points:

    1. Company’s strategic objectives are not property cascaded to the functional heads. As a consequent, functional KPIs / departmental objectives are not properly aligned with overall objectives of the Company. For instance, if the strategic objective is to achieve certain revenue target or enter into any market, the KPI to the marketing head and sales head should be consistent with overall objectives.
    2. Internal procedures & inefficiencies of the company may cause failure. Lack of well-defined business processes, SLAs and OLAs could cause further damage to the achievement of company’s objectives.

  5. Richard Fowler
    October 12, 2016 at 11:58 AM

    You bring up 5 very pertinent points for why a strategy may fail. I would suggest, though, that they ate not root causes. Each of them, with possibly the exception of bullet 4, can be further researched into why it occurred. And your third bullet is not too different from Deloitte’s second point.

    I have tried to look at each of your 5 points and Deloitte’s 3 points to see how I would audit them. How could we help assure the right strategy is in place and working effectively? Can we identify the disconnects between the strategy and the implementation? I don’t think I can do anything if the wrong strategy is selected. I can, however, take a hard look at communications and implementation and follow-up. That might be where Internal Audit can add the most value in a strategy review.

    • Norman Marks
      October 12, 2016 at 2:50 PM

      Richard, can you not audit the strategy-setting process? Ask questions like who is involved, what information is used, how do they get reliable insight into competitors and what they might do, and so on?

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: