February 04, 2018

20 Reasons Why Strategy Execution Fails

Jeroen Kraaijenbrink

Jeroen Kraaijenbrink
Co-Founder New Strategy Group/Author The Strategy Handbook

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Number One CEO Challenge? Executing Strategy

As found in a recent survey amongst 400 global CEOs, out of 84 challenges, executing strategy was their number one challenge (see the 2015 HBR article ‘Why Strategy Execution Unravels’ by Donald Sull, Rebecca Homkes, and Charles Sull).

At first sight, this seems quite a surprising outcome given that geopolitical instability, innovation, and growth were also on the list. We would perhaps expect that the CEOs would struggle more with those challenges. However, it is less surprising when we realize that, over the past three decades or so, strategy execution has shown to be a troublesome area with many problems, few successes, and little progress.

The success rate of strategy execution is incredibly low. The fail percentages found in scientific studies range from as low as 7% to as high as 90%, with an average of about 50% or more (these percentages come from a 2015 review article by Candido and Santos in the Journal of Management & Organization, which is one of the most optimistic articles on this topic...). Even though a slight improvement can be seen over the years, such percentages of failure are not particularly satisfying. After all, it means that at least every second strategy initiative fails to be executed properly.

Why is this? Why, after hundreds of academic studies and tens of thousands of failed strategy projects, we still don’t do better than this? The simple answer would be that successfully executing a good strategy is just damn hard. But that is hardly a gratifying answer. There are many other things that are damn hard, but where we succeed nevertheless. As argued in earlier articles, an important reason is the lack of proper strategy approaches.

While there are numerous strategy models and tools, they have not yet added up to effective practical approaches that work in today’s turbulent world. This applies particularly to strategy execution, where the number of approaches is only a fraction of those for generating strategy.

For developing an effective approach to strategy execution and thereby increasing its success rate, we need to have a good understanding of the problems that organizations face when executing their strategy. When we know these problems, we understand the underlying reasons why strategy execution fails. This helps us find the solutions. As part of the research done for part 2 of The Strategy Handbook (which is about strategy execution), I have made an inventory of the most important problems that organizations experience when executing their strategy. As it turns out, this list of problems is surprisingly stable over time. Over the past thirty years or so, they boil down to the following list of 20 key problems in strategy execution:

20 Key Strategy Execution Challenges

  1. Unclear communication
  2. No or insufficient communication
  3. Lack of commitment
  4. Insufficient or inadequate resources
  5. Isolated and fragmented actions
  6. Ambiguous or conflicting goals
  7. No or unclear strategy
  8. No clear priorities
  9. Ambiguous responsibilities
  10. Lack of performance information
  11. Silo behavior and sub-optimization
  12. Wrong or ineffective culture
  13. Resistance to change
  14. Over-complexity
  15. Insufficient management capabilities
  16. Delay, plans are not met
  17. Budget is exceeded
  18. Lack of middle management support
  19. Strategy is not adapted to changes
  20. Poor leadership

This list of problems shows what goes wrong in strategy execution and what keeps going wrong over and over again. If you want to improve our success rate in strategy execution, it means these are the problems to tackle. In my next article I will discuss how to realize this.

Comments? You can contact me directly via my AdvisoryCloud profile.

Copyright notice: an earlier version of this article was published by the author as post on www.newstrategygroup.com

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