Why Strategic Plans Fail

Strategic plans do not always work. Five common failure modes are noted below. Recognizing these in advance can help avert a failed strategy, and importantly, all but one (the last on the list) are factors largely within management control.

1. An Unrealistic Objective

In the quest for differential performance, leaders will often declare a stretch objective, and that can be motivating in many organizations. But a stretch objective is also usually a low probability objective – failure to be honest about the difference can lead to problems when building the strategic plan. Remember that changing the objective is always an option when building a plan.

2. Mismatch of Resources or Capabilities

The generic goal of almost any strategic plan is growth, and the most obvious choice in pursuit of growth is to compete where there is growth in the market. But often market growth pockets require expanded resource commitments or new capabilities to pursue. Make sure you are fit to compete where you choose to pursue growth.

3. Lack of Commitment or Executional Discipline

A brilliant strategy will produce nothing if it is not reduced to practice through a clear set of priorities, plans and initiatives that are tracked and measured on a regular cadence.  This is simply an act of follow-through and adjustment as the planning assumptions unfold in the real-world environment.

4. Misaligned Incentives and Rewards

If the strategy calls for aggressive innovation, but the organization is rewarded for maximizing current product sales, the outcome may disappoint.  Especially if the strategy requires a departure from past organizational priorities, the reward and recognition systems should be reviewed for strategic compatibility. Organizations always respond to what is praised, measured and rewarded, not necessarily what is declared and communicated.

5. Unforeseen Market or Competitive Changes

Every plan unfolds in an environment of uncertainty because there are so many actors beyond a company’s control – customers, competitors, the government, lenders and many others.  A significant environmental disruption is the only failure mode beyond management control – but even in such circumstances, as many youth sports coaches will attest, the organization still controls its attitude, effort and response to the adversity.

Are you looking for help with your strategy?  Call us, we’d love to help.