In fact, candidly, the empirical evidence is not kind here.
By some measures, over 70%
of corporate strategic initiatives are never successfully implemented.
So given that sort of dismal statistic, why focus on strategy at all?
One might ask, why bother?
Right? And look, it's a fair question, but
I think the answer lies in the fact that we don't aspire to be part of that 70%.
Rather, we aspire to be part of that 30% in which we did create and
execute an effective strategy, right?
And oftentimes, the key to ending up in that 30% is better strategy.
It's having a better sense of what our strategy should be and what it is.
In other words, when I say better strategy,
I mean better on all three dimensions of strategy execution.
We need to have a strong analysis that is thorough, and well-grounded, and
is sort of adaptable to the changing conditions of the marketplace.
We need to have a good process for formulating that effective strategy,
given the analysis we've done.
And we've gotta have a plan for implementing that strategy that, again,
is going to be effective.
All three of these sort of aspects or
elements of strategy execution are things that we're talking about.
But it may just turn out that better strategy is, in fact, the key to
performing better and ending up on the better side of the statistics, right?
And so therefore, it's really important to understand
what some of the common pitfalls are to good strategy execution.
And that's what I want to focus on just for a few moments now.
So what are the common mistakes to strategy execution?
Well, let's start at the top.
First of all, there can be a failure to understand your own organization.
Now, that seems sort of strange, right?
But in fact, that's true that oftentimes, organizational strategies fail
because the organizations don't really understand themselves that well, right?
So that's the thing I want to put to you.
I want you to think carefully about how well do I understand my organization?
Do I really understand my capabilities and strengths?
Do I really understand how the marketplace might be changing?
Have we done a really effective strategic analysis to really
understand who we are and what we're all about?
Because if we don't have a good,
accurate starting point, we may just head in the wrong direction altogether.
So that's a common mistake.
Another common mistake is the failure to really understand how you are performing,
right?
So assessing the performance, sort of understanding performance feedback for
the organization turns out to be a really tricky thing.
It's much more difficult than it appears.
In fact, often, sort of blunt measurements of performance,
if the stock price is up or down today, sort of basic accounting measures,
things that we might put on our tax filings, all of those metrics are useful.
But they can sort of highlight certain things, and
they can also obscure certain things, right?
So it's important to really understand and
dig deep within the organization to understand how you're performing.
What are the leading indicators of what your performance might be down the road?
I think that's a common failure, a common mistake, and it's a reason why,
a lot of times, strategy doesn't work out well for some organizations.
What's another common mistake?
Another one is the failure to really understand the sort of context,
the industry dynamics, the competitive market that you're operating in to
really understand which direction things are headed in.
What are the trends versus what are the uncertainties?
What are the things we're not sure about?
But to really focus on understanding that economic context,
the social context, to really have a grasp
on what's the environment that we're doing business in, what's it really like?
And do we really understand which direction things are headed in?
So that's a common failure, to not really thoroughly and effectively
understand the business context that the organization is operating in.
Another common mistake can be a hyperfocus on growth for growth's sake.
So by many accounts, growth is a good thing.
Certainly, investors are looking for growth in you as an organization,
for example.
But growing just for the sake of growing
can cause an organization to do a lot of foolish things, right?
And it's much better to understand how growth
might help you execute on your effective strategy.
And once you sort of put growth together with your understanding
of what your strategy is and what it ought to be, you might have a better handle on
where you should grow versus where you shouldn't grow, right?
But oftentimes in organizations, this sort of focus on growing at all costs
by any means necessary can be a recipe for disaster.
Michael LenoxSenior Associate Dean and Chief Strategy Officer
Jared HarrisSamuel L. Slover Research Chair in Business Administration
Scott SnellE. Thayer Bigelow Research Professor in Business Administration
