When it comes to executing your business strategy, what drags your organization to a strategic slow crawl or even a full stop?
Conventional management practices point to initiatives as the vehicle to drive strategic change. However, studies show that over 75% of strategic initiatives fail within most corporations. It’s not surprising that so many CEOs say that their organizations are great at planning and not very good at executing.
Are strategic initiatives friend or foe? The answer to this question depends on if executives make any of the following four big mistakes that stop strategy execution.
Mistake #1: Thinking Big and Complex Equals Innovation
A big mistake often made by executives is thinking that big and complex initiatives are better. The following story illustrates how big and complex initiatives can derail a strategy.
A leading global corporation’s strategy targeted an under-tapped market segment. Consultants recommended an innovative bespoke end-to-end system to support the target market’s business. The executive committee determined to turn this recommendation into a complex process redesign and system building initiative. They formed a cross-sectional initiative team and provided a big budget with substantial resources. Meanwhile, their competitors used off the shelf support systems focused on the target customers and growing rapidly in the market. Fast forward 18 months beyond the target implementation date and $10M over budget, they did not have a system, and it still appeared to be at least two- years away.
Solutions: A big complicated initiative may look innovative and promising. However, smart strategic innovation is simple. The most successful initiatives are focused with all levels of the organization easily explaining the expected changes.
Mistake #2: Picking Misaligned Initiatives
Too many times, initiatives focus on what appears tangible to the executive committee. Senior leaders often focus on concrete actions of structure, governance, and process as the go-to ways to execute their strategy. They avoid addressing the mindsets and attitudes of their people – the human cost. Focusing initially on the tangible ignores the culture and usually creates immediate fatal resistance.
Solutions: A way to counteract the tyranny of the tangible includes utilizing the most critical assets of your organization – the people. Take a pulse of the culture by using front-line managers’ input. They will provide a well-rounded perspective on where expectations, attitudes, and human cost misalign. Your human capital will deliver dividends when their expertise and insights are a part of creating and selecting strategic initiatives.
Mistake #3: Creating Initiative Overload – Too Many & Bad Timing
Executive committees too frequently look at initiatives on an individual basis rather than the holistic view of their business. They miss the cumulative and often paralyzing effects of multiple changes occurring in their operations. On a stand-alone basis, an initiative might look good. However, when combined with other initiatives, it’s clear that what seemed good now becomes ugly.
For example, an executive committee of a global financial services firm approved three initiatives intended to improve customer service, increase focus on a particular market segment, and support ethical compliance. What they failed to see was that the combined impact of the initiative roll-outs. The cumulation of these initiatives created a field shut-down for the client-facing teams the two weeks before the close of their biggest quarter of the year: the results – angry clients, poor financial results, and disgruntled employees.
Solutions: How do executives counteract initiative overload? Decision-makers must compare the cumulative effects of the initiatives they are considering, including operational impact, resource requirements, and roll-out timing.
Apply the Pareto principle, meaning 20% of what you do will have 80% of the impact, so choose only the best few initiatives that will deliver the most impact. Rate potential initiatives as good, better, or best. Those rated as best are in the 20% that will create focus and results.
Mistake #4: Quiet Death of an Initiative
If 75% of corporate initiatives fail to deliver anticipated results, a big mistake is to not learn from those misfires. Create a simple process to evaluate initiatives that deliver vs. those that fall short. Focus on the assumptions, methods, what went well, and what did not. The intent is to learn not to blame. Share the lessons learned with all leaders in the organization. Taking these steps reinforces a culture of learning and communications.
Solutions: Apply the lessons learned to all future initiatives. When we learn from our missteps, and we share those lessons with the organization, we are less likely to repeat the same actions that took us off track. Executives can reverse the high rate of initiative death by learning from their mistakes.
Corporations do not need initiatives to make every relevant strategic change. Rather than reflexively turning to initiatives, leaders must first make their own critical behavior changes that move the status quo. From there, the most significant cultural and systemic differences become apparent. When we listen to our colleagues, choose wisely, and learn from errors, our rate of successful strategic execution will surprise the most seasoned executives.