February 04, 2018
20 Reasons Why Strategy Execution Fails
Share This Post
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.
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:
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.
Copyright notice: an earlier version of this article was published by the author as post on www.newstrategygroup.com
Share This Post