When the poet Robert Burns wrote his now proverbial line ‘the best laid schemes of mice and men, often go awry’, he put forth a perfect description of how even with our best intentions, we sometimes fail to achieve what we set out to do, and cause all kinds of unforeseen consequences in the process.
Companies, like people, also strive for success, or at least what they believe success to look like. And true to Burn’s line, they also frequently miss the mark. In fact, if the data published from organizations like the Project Management Institute (PMI) are any indication, many organizations are missing the mark too frequently. According to PMI’s 2018 Pulse of the Profession Report: Success in Disruptive Times, fewer than 1 in 10 organizations report having very high maturity with their value delivery capabilities.
Any venture, whether business or personal, is subject to risk. We do not live in a risk free world, and this means that whether you call it fate, serendipity or just plain old bad luck, we must accept that sometimes we will miss our target. But this does not mean that we are powerless to improve our chances of success. We have the ability to plan, to manage risk, and to move with agility to correct our missteps before they close the door on a successful outcome. Many organizations fail, not because of risk, but because of their own actions (or inaction).
Here are five top reasons that companies fail to achieve their goals:
1) No Goals, No Strategy
To get to your desired destination, you need a clear strategy of how to get there. It is a rudimentary concept to be sure, but believe it or not, there are companies operating right now without a clear vision of where they want (and need) to be in the future. There can be numerous reasons for this, but I believe that chief among them is what I’ll call ‘strategic drift’. If a company has been profitable in the past, it stands to reason that at some point there was a clear business strategy that led them to a measure of success in the marketplace. Over time, this strategy must be reviewed with regularity and adapted to the emerging competitive landscape; new competitors emerge, technology changes and customer’s needs shift. But what if this landscape is very slow to change? Existing customers stay customers, order volumes stay relatively constant from year to year and ‘good’ remains good enough. If strategic direction is not actively reviewed by an organization, then it simply defaults to sticking with the same thing. A malaise sets in; a gradual slide into complacency and comfortable routine. Like a driver nodding off at the wheel, nobody is watching the road ahead and this leaves the company incredibly vulnerable. The optimal competitive strategy for the company, like the centerline of the road, drifts away, slowly at first and then gradually accelerates Perhaps the warning alarm sounds with the first major account loss, then the sales numbers continue to slide downwards. Immediate action needs to be taken! New sales need to be found! At this point, that much ground can be hard to make up, and to make matters worse, a competitor may have found that optimal strategy that had drifted away, and is now in a position to dominate in the years ahead.
2) Bad Strategy
When devising a strategy to guide a company forward, there will always be a measure of uncertainty. Despite our best analysis, educated predictions and planning for where the market will be in the future, there are just some events which can never be foreseen. Indeed, in hindsight, a company may look back on its carefully considered strategic plan and say “that was a bad strategy. We wanted to be here, but instead we ended up there, where we did not want to be”. So when I refer to ‘bad strategy’ in this section, I’m not talking about it in this sense. What I’m talking about, is ‘strategy’ that is not really ‘strategy’, but fake strategy. This is the nonsense you sometimes see on company websites and annual reports; mission statements and goals like “we plan to be the market leader in synergistically designed discrete systems while engineering an environment of corporate openness”. There may be a laundry list of goals like this. Putting aside the frustrating language for a minute, what is the plan to achieve these goals? Frequently, there are none. But unlike the unknowns of strategic drift (in point 1 above), if we were to press this company on their strategy, we would most likely receive these fuzzy goals in hand as proof that they are indeed on top of their strategy. The problem is that they have prepared an empty strategy sandwich...there is something resembling bread seen from the outside, but on closer inspection there is no meat to be found on the inside. There is only a summary list of vague strategic goals. To reference the excellent (and highly recommended) book Good Strategy Bad Strategy by Richard Rumelt, all good strategy must possess 3 critical components which he calls ‘the kernel’. The first component is a diagnosis, or clear identification of the challenge needing to be overcome to achieve a desired outcome, or destination. The second component is a guiding policy, a clear approach chosen to deal with the obstacles revealed in the diagnosis. The third and final vital component is a set of coherent actions, aligned with the guiding policy and designed to bring about the desired strategic goal. For example, if our company’s goal was to generate positive sales growth of 10% year over year, but we were actually seeing a decline in sales, a strategic intervention would be required. If the poor sales were seen in a particular product line, we might perform analysis and diagnose the primary reason to be a competitor who has released a substitute product at a lower price point in the market. To determine a guiding policy, there are many different ways we may choose to act, such as competing on price, improving the existing product in a meaningful way to offer added benefits to the customer, or even a path as extreme as abandoning this product line in favor of investing in something else that favours better future growth consistent with our goal of 10% year over year. Once we have established our policy, we then devise our list of specific strategic actions which are designed to achieve this competitive strategy when executed. We may launch a project initiative or program on the basis of these strategic actions. Ultimately, the guiding strategic policy may turn out to have been the best course of action, or it may have been ultimately ineffective. The point is, the strategic goal was real, and actions were designed to achieve this goal for the company. In contrast, having an obscure goal on paper for the purpose of communicating that you have a strategy but having no real action planned to back it up is just bad strategy, and many companies are failing to achieve their goals because of it.
3) Strategy is Not Communicated
Ok, so we know good strategy from bad strategy. We know where we want to go, the obstacles in our way, have a guiding policy to get there and have devised some actions we need to take. Does strategy stop there? NO! We need to communicate this strategy to our organization. Optimally, this strategy has been planned not only with the senior leadership, but also the critical players on the ground, the ones who are responsible for executing the strategic plan and ensuring that work tasks are aligned with the strategic guiding policy. In addition, for large, multi-national corporations, this strategic plan needs to be communicated across all the business units to properly leverage resources into achieving the strategic goals. I cannot tell you how many times I have spoken with managers at large corporations that have no clue what their parent organizations are trying to achieve. How can they operate their business units to align with the corporate strategy? What role can they best play to ensure that the unit is achieving positive results for the larger organization? Some organizations are addicted to growth through serial acquisition other companies, but then seemingly fail to fully integrate these new business units into the whole. Corporate focus remains on a core product, or core market (usually the first, largest, or most concerning) and the other business units that aren’t seen as directly relevant are left blowing in the wind.
4) Strategic Plans are Not Executed in a Systematic Way
In today’s ultra competitive business environment, it does not make any sense to invest in great strategic planning and then fail to implement those plans in a controlled, systematic way. In order to achieve our strategic goals, we must ensure that the actions we have identified to bring about the change required are executed in a timely manner, with minimal resource cost and with enough agility to change coarse should market conditions require. Let’s use a simple example from everyday life. Imagine you are relaxing on your living room sofa and are suddenly hit with an uncomfortable feeling of thirst. You are quite aware of the thirst quenching drinks you placed in your kitchen refrigerator last night. In an instant, your brain creates a strategic plan to reach your desired goal, which is an ice cold, refreshing drink in hand. You need to stand up, walk to the kitchen while successfully navigating around the various furniture and obstacles in your way, open the refrigerator and take the drink you want. You now have a solid strategic plan. But like all strategic plans, you now need to translate those good intentions which live in your brain, into actions which need to happen in the physical world to manifest your desired goal. You flex your leg muscles and core to stand, put one foot in front of the other and use your physical senses to navigate around obstacles that could cause you to trip and fall. We do these basic physical tasks every day without thinking twice about them; but when you break the whole sequence down into its smallest elements, there are thousands of operations which have to happen in a precise way for you to achieve even this simple goal of getting a drink. Likewise, in a company, there are numerous work tasks which need to happen in sequence to transform a strategic plan into real results. This work should not be left to chance and simply lumped in with all the other day to day operational work. In such a scenario, there is no way to prioritize this strategic work, nor effectively monitor the effectiveness of our guiding policy. The inevitable result is frequent failure to realize planned strategic goals. To greatly increase our chances of success, we need to execute our strategic plan in a systematic way that allows us to monitor our progress, manage risk and resources, communicate our intentions and sequence events in the precise order they need to optimally happen. An established system for this is Enterprise Project Management (EPM). This system is designed specifically for connecting strategy to action. The actions defined in the various organizational strategic plans are launched as strategic initiatives which are organized into various projects and programs (groups of related projects). All the initiatives are then managed as a project portfolio by a designated manager or senior leader. Program Managers in the organization are then assigned specific initiatives from the portfolio and act as the direct liaisons between the relevant strategic plans and the actual work being performed by the organization. They are responsible for understanding the business purpose of their assigned strategic initiatives, and ensuring that program related project work is continuously aligned with this strategy. They provide the critical oversight necessary to co-ordinate the efforts of project managers assigned to manage the individual program components. Another powerful way of maximizing the success of reaching strategic goals is to understand and implement the practice of Benefits Realization Management (BRM). In BRM, benefits are those identified components of value that are accrued to an organization through successfully achieving its planned strategic initiatives. A benefit can be something tangible, like a financial gain, or it can be intangible like enhanced reputation in the market. When crafting a strategic plan, the guiding policy and the designed strategic actions should be tied to specific, desired benefits that are expected to be achieved through the successful execution of the strategy. When a program or project is launched for the purpose of executing a strategic plan, the planned benefits should be logged and tracked by a manager as work progresses. If successful project outcomes are failing to produce the realized benefits as planned, then the guiding strategic policy can be revised to correct course. This greatly increases the ‘strategic agility’ of an organization, ensuring its ability to react quickly to sudden changes in the competitive landscape.
5) Available Strategic Range is Too Narrow
In music and audio electronics, there is a measure called dynamic range, which is the ratio between the loudest volumes to the lowest found in a particular piece of audio. This is an important measure to those who record music, and also those who enjoy listening to recorded music. If the audio equipment used for either purpose was designed and built with low dynamic range sensitivity, it does not have the capability to reproduce music in the original way it was performed by the musicians. Information is lost, either in the receiving process, or the transmitting process. Similarly with business strategy, if our organization has not been designed and built to optimally formulate broad strategic plans and then execute those plans, we will fail to successfully complete the actions required to achieve our goals. For the purpose of our discussion, I will call this the strategic range; that is the difference between the most risky, ambitious of strategic actions (like entering an entirely new market), and the smallest (like a process improvement initiative to save cost). Organizations with a wide strategic range have broad power to react to competitive threats and opportunities with ambitious plans to disrupt, pivot and outmaneuver. Like a top athlete with excellent physical conditioning and muscle memory, an organization first needs to commit to a deliberate regimen to grow and reach the required operational capacity to compete and win amongst market peers. The athlete may strongly desire the gold medal, but will most certainly fail in the attempt if they have not yet built up the required skills to compete against the best in the sport. So how can we increase our strategic range? Luckily, this parameter can be improved both at the strategic planning stage, and the execution stage. To start, we need to have an idea of our current organizational capability; all of our strengths and weaknesses. We need to enhance our strengths to quickly gain additional competitive edge, and improve or mitigate any weaknesses that keep our strategic range narrowed. One excellent way to improve our strategic execution is to ensure that our organizational strategy is known and well connected throughout all of our strategic management positions. In this way, we can use strategic leverage to ensure that all of the resources in our organization are managed in alignment with our strategic goals. We then have the power to quickly concentrate our forces where they are most needed at any given time. We also need to view the organization holistically, using system level thinking to see each functional component in relation to the whole. You will find there is a great deal of overlap between all strategically oriented functions (Senior Leadership, Sales, Program Management, Research and Development, etc.) in a way that requires managers to work together cross-functionally in pertinent shared areas of responsibility. To continue to widen our strategic range we also need to invest in research and knowledge growth, along with the necessary development efforts to discover valuable new applications of our knowledge. This can result in new or enhanced products and services, further widening the range of available strategic options that can be executed with a high degree of confidence. To stay completive and profitable, all companies must commit to continuously improving their organizations ability to plan and execute strategy with ever increasing levels of maturity.
In summary, I hope this brief look at some of the top reasons why companies fail to achieve their strategic goals has given readers an idea of where to start improving their own performance, whether business or personal. We all have goals we want to achieve in life. It’s time to clearly identify those goals, formulate a good strategy to get there, let people around us know how to help, monitor progress, stay on track and continuously practice growing our capabilities to achieve greater and greater levels of success.