Even in good times, 61% of organizations struggle to implement strategies. But these are not good times. The bull market that has held for the better part of a decade is quickly dissolving, and the dark clouds of recession are on the horizon. The next great economic sifting is beginning, and only organizations with a clear, actionable strategy will endure.
A popular Harvard Business Review article concluded that the epidemic of failed strategies is a result of underprepared executives who don’t understand their competitive environment. Undoubtedly, there is truth to this conclusion, but it’s an incomplete picture. There are multiple reasons why your strategy is going to fail, and time is running out for you to proactively shore up your plan. Here are the top six most common reasons your strategy will fail and how to avoid them.
1. You have not made your strategy actionable.
Take a second to consider the issue with this hypothetical.
A fast-food chain lost its market-leading position. The company’s board brings in a team of consultants to execute the firm’s strategy: “Acquire the largest market share in our industry.”
See the problem? The firm’s “strategy” is not actually a strategy at all. It’s a goal.
London Business School Professor Freek Vermeulen considers a strategy to be a “clear set of choices that define what the firm is going to do and what it’s not going to do.” A lofty statement on what the firm hopes to achieve or become in the future is not a strategy, yet many organizations still fall victim to this common mistake.
In McChrystal Group’s work with hundreds of organizations, we have identified that only 53% of employees would agree their organization’s strategies are actionable; organizations not having an actionable roadmap to deliver strategies is an all-too-common occurrence.
Get one-on-one time with three junior-level contributors. Take five minutes to describe the strategy, and then ask them what they will and will not do to carry out the described strategy. If they can clearly and concisely answer, then the strategy is actionable. If they use vague language or cannot describe what they will not do, then you must recraft your strategy.
2. You have not prioritized your initiatives.
We are all juggling too many competing priorities. This is one of the major reasons strategies fail nowadays.
Leaders must ruthlessly prioritize. However, it’s incredibly challenging to do in practice. McChrystal Group data indicates only about half of employees agree that leadership communicates priorities when their team is executing multiple projects.
Your team may be able to sprint and swiftly juggle several competing priorities in the short term. But a lack of leadership prioritization over the long haul will catch up with teams and lead to persistent bottlenecks for the organization.
Our data also shows that leadership teams who are above average at articulating their organizational priorities are 45% less likely to experience bottlenecks than those who struggle with prioritization.
List out your team’s strategic initiatives and, in one sentence, capture how they contribute to the strategy. Rearrange tasks in order of importance and redistribute resources to the initiatives at the top. If the team is working on a project or task outside the list, immediately stop them.
3. You are tracking the wrong metrics.
Consider this: A state government is concerned about a recent rise in crime rates and asks its data team to identify the root cause. The team surprisingly concludes that ice cream sales and crime rates are positively correlated. Thus, the governor decides to heavily tax ice cream.
It seems unlikely that ice cream influences crime rates or vice versa. However, data does indeed indicate a positive relation between ice cream sales and home invasion rates. This story is a classic example of confounding variables, as the trend in ice cream sales and crime rates are both influenced by a third variable — warmer weather.
Although your organization might not be tracking ice cream and crime rate data, it may be directing resources toward measuring the wrong metrics.
Misleading numbers are most detrimental in rapidly changing business environments. When data has the potential to turn from dependable to misleading in a single quarter, leaders must quickly adapt their organizations’ strategies. However, McChrystal Group research indicates only half of employees agree that their company adapts its strategies to changes in the environment.
Measurement strategies are often based on what metric is convenient or historically utilized. Often these metrics will descriptively tell you how things are going but not why they are happening. If the metric does not answer the “why,” we can only form hypotheses. Consequently, important strategic decisions are based on hunches instead of data, another of the major reasons many strategies fail. For each of your team’s key performance indicators, categorize them into “how metrics” and “why metrics.” If you do not have sufficient “why metrics,” you must develop a new measurement strategy.
4. Your team is misaligned.
There is a common story, possibly based in reality, that shortly after his “We choose to go to the Moon” speech, President John F. Kennedy toured the NASA headquarters and came across a janitor with a broom in his hands. President Kennedy asks the man what his job is at NASA, to which the man replies, “Mr. President, I am helping put a man on the moon.”
Organizational alignment, centered around a common purpose, empowers us to accomplish beyond what we consider possible. Employees within an aligned organization can confidently bridge their personal values with their organization’s. Alignment clearly articulates both the why and the how to achieve goals.
In contrast, organizations that are misaligned exacerbate the current epidemic of a disconnected workforce. According to Gallup, as much as 85% of surveyed employees are not engaged or are actively disengaged at work. When asked by McChrystal Group researchers to consider their company’s future, roughly 60% of employees reported feeling motivated to excel in their positions.
Strategy execution is driven by those closest to the operation. However, a disengaged workforce consequently inhibits organizations from successful strategy implementation.
Develop your strategy with collective input. Consensus doesn’t always come naturally, but there are ways you can foster collaboration. Make strategy development an iterative process. Include your team in early conversations, then take their input and craft the strategy. Then, ask them to pressure test the strategy and find weak points that can be shored up to ensure success. Including them at multiple points throughout the process will create ownership of the successful plan they co-created.
5. Leaders are not holding their teams accountable.
Within the past month, how many times have you provided a teammate with positive feedback? What about negative? In a cross-functional study of 60 leadership teams, researchers discovered that top performing teams give a 5:1 proportion of positive to negative feedback. The environment in which criticism is given is just as important as the amount.
Amy Edmondson describes organizational culture through the lens of psychological safety and accountability. The most effective feedback is delivered when accountability and psychological safety are simultaneously present. When teams lack accountability but maintain psychological safety, they enter the comfort zone, in which learning is absent and mistakes are not fixed. Alternatively, employees in the anxiety zone are afraid to make mistakes or speak up when accountability is high but psychological safety is low.
A lack of accountability within teams is a common issue, as illustrated by our research, which shows that when objectives are not met, only 38% of respondents agree that responsible parties are held accountable for their actions. In moving toward a learning organization, leaders must hold their teams accountable and foster a culture of high psychological safety.
Leaders can drive accountability through the following three-step process. First, break the strategy down into specific initiatives that have defined metrics of success. Second, assign a singular leader with public responsibility for executing each initiative. Third, establish a regular cadence to debrief senior leadership on the status of the initiatives. The combination of concrete objectives, ownership, and regular reviews will drive accountability and produce results.
6. Your team has essential capability gaps.
If you have ever ridden a bicycle, you may think that it’s a simple piece of machinery. When compared to a car or a boat, it is. But you probably know much less about a bike than you think you do.
Take, for instance, the gears of a bike. Could you describe in detail how a gear change affects the pedaling resistance? What about its speed? When we consider the mechanics of the common items we use in our lives, we discover we know much less than we previously thought. We call this phenomenon the illusion of explanatory depth.
Your strategy falls short of execution when your teams are constrained by the illusion of thinking we know more than we do. When given a strategy to execute, our initial instinct may not be to consider our inability to accomplish the task, yet McChrystal Group survey data shows that 62% of employees indicate they need more access to expertise to accomplish their business objectives.
Many leaders mistakenly create long-term strategies based on the teams they currently have, creating unnecessary constraints and narrowed visions. The idea is to build strategies that drive success both now and into the future. To accomplish this, conduct a capabilities audit to identify the gaps that exist, whether that includes skills, expertise, knowledge, or experience within your team. Conduct the audit at the strategic initiative or project level so you have a clear line of sight on what each initiative requires for successful execution. When you aggregate these needs, you will have a clear view of what specific capabilities are missing.
Fortune favors the bold. Your strategy may not be perfect, and the future is foggy at best. However, you can prepare for difficult times. If you take proactive steps now to avoid these reasons strategies fail, you will be in the right position to weather the storm and come out on top.
Written by David Livingston and Harley Zhu.
Harley Zhu is an Associate at McChrystal Group. He is currently partnering with a leading pharmaceutical company in assessing its organizational structure and implementing solutions to improve its product development lifecycle. He earned his bachelor’s in economics from Yale.