The Strategist

Three prejudices about business strategy

08/13/2021 - 09:31

Companies spend a great deal of time meticulously developing strategic plans. But most executives estimate their success rate of 25% to 35% at best, while less optimistic experts cite a very low 10%. Why is it so difficult? Let's take a look at the major myths about business strategies.

Prejudice 1. Implementation means following a plan

Strategic plans don't always survive a clash with reality. Creating a portfolio of strategic initiatives to ensure strategy success is part of the typical strategic planning process for most companies. These initiatives entail a commitment of human and financial resources, and once adopted, companies are often unwilling to change anything about them.

However, strategy implementation requires flexibility-that is, the ability to grasp and respond to change, making both small and significant changes to their strategy. Companies must also be flexible in reallocating human and financial resources to seize opportunities. People with a fixed mindset, who treat plans as if they were carved in stone and are unwilling to adjust them, will pay dearly to implement what does not fit the new realities.

Prejudice 2. Implementation is about consistency

An almost irrefutable business truth is that consistency, or more simply, "getting everyone rowing in the same direction," is essential. Consistency is undoubtedly a worthy goal, but the problem often lies in the realization of that goal.

Many companies, despite good intentions, quickly turn the process into a top-down directive, where top management proposes a series of seemingly important tasks and imposes them on the organization, with no regard for how staff will perform those tasks. In this situation, execution suffers: local offices create goals that align with management's goals, but do not take into account interests of other groups and teams. Forced cascading creates "functional wells" (acting solely in their own interests), and this makes cross-functional communication difficult.

Prejudice 3. Communication is understanding

Given the availability of simple and relatively inexpensive ways to communicate digitally, even small companies can dramatically increase their ability to communicate with their employees. Unfortunately, the information rarely reaches the consciousness of the listeners.

A survey of managers of 250 companies around the world showed that only half of them could even name the key objective of their company. This is a very low indicator, but other studies have demonstrated an even poorer understanding of the company's priorities. The survey revealed that only one in seven people - that is 15% - was able to articulate their company's main purpose.

There are different explanations for this phenomenon, but it is quite common to see the tendency for organizations to burden employees with incomprehensible terms (jargon). It often happens that a company has core values, strategic priorities, mission, vision, code of ethics, key competencies and the like - but all of these are nothing more than buzzwords. Not surprisingly, employees are confused: they don't know what these words mean or what to focus on, so they don't pay much attention to any of them.

Based on “Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs” by Paul R. Niven and Ben Lamorte