Part 1 – The Factors Causing Failure
Two-thirds of strategic plans fail to deliver the promised outcomes
If you search on Google for “percentage of strategic plans that fail” the result that is returned is 67% and a significant number of articles on strategic plan failure are presented:
Other searches return results as high at 90% and this is the number that I have encountered over the years. The exact number is less important than the tragedy that many strategic plans end up on the shelf gathering dust.
For much of my career I have assisted clients to design and implement strategic projects. Over those decades I have witnessed successful projects and disastrous projects. I investigated dozens of failed and failing projects, and prescribed the “medicine” to turn them around. I call this intervention a “Pulse Measurement”.
From these Pulse Measurements, I have catalogued the factors that cause failure, and the factors that deliver success. Part 1 (this article) describes the factors causing failure, and Part 2 will look at the factors for success.
I start with failure because, as an engineer, I learned to achieve success by engineering against failure!
The Critical Factors that give rise to Failure
I set out below the seven critical factors that give rise to strategic plan failure. The percentages denote each factor’s contribution to failure, based on my experience:
1. Mythology, Hype and Tradition – 30%
Misinformed notions about organizational improvement are commonplace. When viewed as a silver bullet, technology has led to many a failed strategic plan. I have seen competent ERP and CRM systems replaced because the project failed, when the actual cause was a flawed implementation. Watch out for buzzwords like 4IR that drive hype and mythology. Be sober about what technology can do and what it cannot do.
There is also a misguided tendency to use hype as a motivator of people.
Established traditions that impede change also contribute to failure. Don’t be afraid to start with a blank sheet of paper.
2. Ineffective Executive Custody, Governance and Policy – 19%
The chief executive officer (CEO) is the custodian of the organization’s strategy. By extension, the CEO is the custodian of strategic change, and of the strategic plan. While the CEO can delegate plan execution, he or she cannot delegate ownership. Accountability for successful execution must rest with the CEO. This is executive custody.
Abdication of executive custody is a major reason why strategic plans fail. And abdication is common in technology projects. Often CEO’s are unwilling to gasp the technology and instead delegate to someone who lacks a strategic view of the business.
It is also vital to recognize that the practical, time efficient execution of a strategic plan does require input of either the CEO or the entire top team. These are decisions that rightfully rest with the C-Suite, and they cannot be delegated. In all strategic projects the availability of the leadership team will be a critical constraint.
Our StratGap© analysis tool explicitly provides for resource planning of the leadership team. Typically, on the first pass through the resource allocation, the executive time allocation is a multiple of what is available. Such a plan is doomed to failure and it is necessary to iterate back and do one of two things:
- Spread out the activities so the demand on executive time is spread out more with a lower requirement.
- Equip executives to delegate more. Frequently executives rise through the ranks and hold onto the activities that they are most familiar with (and most comfortable with). Consequently, their time management is heavily penalized. Executives may need to learn “dynamic delegation” to let go of these operational legacies.
Inadequate strategic governance is a natural outworking of the above issues and, if not addressed effectively, will compromise the execution of the strategic plan.
Corporate policies that are aligned with the old way of doing things can get in the way of strategic plans that seek to bring about culture change and otherwise confront the status quo.
All these issues need to be addressed as part of the implementation of a strategic plan. To this end it is vital that there is a high level of executive engagement with the planning process, and a high level of acceptance of the plan.
3. Lack of Effective Strategic Architecture and Alignment – 16%
Strategic Architecture is the organizational design that aligns with the strategic essence of the organization. Any plan will fail if it is not aligned with the strategic essence of the organization.
By way of example, I once took a Pulse Measurement of a stalled strategic IT project. I interviewed the directors and learned that the strategic essence was a service promise:
“We will ensure that your shipment clears on time every time, and if we fail to clear your shipment on time, we will make good your losses”.
On interviewing the owner of the software company, I discovered that his target market was the other 90% of the industry where time was not of the essence. He simply did not understand the pain he was causing my client. Clearly these two organizations would never work together effectively.
When I pointed this out to my client his response was “Of course! The lights have just gone on!”. He cancelled the contract the same day and we started looking for another software supplier. A few days later we met a supplier who said “we understand that time is of the essence for you and if our software causes you to miss a deadline, we will make good your loss” – clearly a marriage made in heaven. The client signed with that supplier without delay and the result was a highly successful outcome.
This exemplifies the importance of strategic alignment.
4. Lack of Substance, Data, Information and Documentation – 14%
Most so-called strategic plans contain statements of the strategic objectives — probably devised at an executive breakaway. But these plans are short on the substance of how to execute them.
Success then relies on the ability of managers to interpret the plan. They must figure out how to get from where they are today to where they plan to be in five years’ time. Most managers lack the skills to do this, and most plans fail to provide an actionable roadmap. This is a major reason why plans end up gathering dust: no one can figure out how to implement them.
Our methods enable executives to analyse every gap that must be closed. Our method surfaces all the projects, actions and tasks needed to close the gaps. You document these; you allocate resources and set timelines. Your plan is practical. You internalise it, you understand it, you own it.
5. Failure to Address Soft Issues, Business Engagement and Change Impacts – 12%
A range of soft issues can impede successful delivery of a strategic plan. Read about these HERE in my eBook, “The Critical Human Foundation of Strategy Design and Execution”.
It is vital to have a member of the project team who handles soft issues, business engagement and the management of change impacts. This is an important role on the team.
Although this factor attracts only 12% of total weight, it remains important — the first four factors are just more important and more problematic.
6. Lack of a Precision Engineered Approach, Lack of a Proper Planning Tool and Method – 6%
By “Engineering Approach” I mean a rigorous, systematic, precise approach that considers everything that can go wrong and designs it out of the program. Put in other terms “Engineers do not design bridges to stand up; they design bridges not to fall down”.
There is a tendency to believe that strategy is soft and fluffy and not capable of measurement. Our methods debunk this myth with a measurable and precise planning approach.
7. Technology Issues – 3%
Most elements of a strategic plan do NOT rely on technology.
When the plan does rely on a piece of technology, the technology itself is rarely the root cause of failure. Almost always, in my experience, it is one of the first six factors that is to blame. These may be decisions relating to specification, procurement and customization which manifest as technology failure. This is particularly the case with enterprise business software such as ERP and CRM.
The above factors can be summarized by the Donut Chart below:
Our strategic planning advisory services take account of all the above factors. Consequently, we are geared to assisting clients to achieve high value outcomes.
You may have a strategic initiative that is failing. You may need help to design a strategic plan that is practical and actionable. We have the solution.
Let’s meet up on Zoom to discuss your needs. Please click HERE and give me two 30 minute time slots that work for you.
In Part 2 of this article I will present the Critical Factors for Strategic Plan Implementation Success.
Dr James A Robertson
James A Robertson and Associates