How Does Corporate Strategy Fail?

I have met organizations that, not believing in their own strategy, do not implement it. Similarly I have met organizations who, from careful planning, know what they need to do and do not follow through because of lack of confidence, vested interests or because "we do not do things like that".

Unfortunately, some organizations treat strategic planning as an annual chore that is completed by extrapolating past performance figures forward and then massaging the numbers until something likely to be approved is produced. This is often compounded by perceiving this annual task to be part of a negotiation process where the skill is to offer the minimum acceptable performance.

Some strategic plans are based on "more of the same" where an organization continues to do what it has always done. This leaves it at the mercy of new technologies, new fashions and the entry of new competitors into the market.

Some organizations become very complacent particularly if they have a significant market share or if their trade name is synonymous with the market. They will even tell you that they dictate the direction of the market as they have done in previous generations.

Technology led organizations can be particularly vulnerable to changes in a market. There are numerous examples of organizations developing a product with superior technology only to see the market change direction because of better product promotion by a competitor. At present, there is considerable maneuvering taking place to agree standards for telecommunication products including high definition television, mobile telephones and business software.

Sometimes organizations set out to do a professional job of strategic planning and collect all the data they can. They then sift out anomalous data as errors. In the process, they may have sifted out a new opportunity or a signal that the market is changing. Analyzing outliers in data can be very interesting and can challenge accepted wisdom. Remember, at one time it was known that if you sailed west from Europe you would either fall off the end of the world or land in India. The large land mass of the Americas must have changed a lot of corporate plans at the time

In the same way as leaders can have defective eyesight they can also have a defective vision for the organization. I do not know of any airline that would allow their chief executive to fly a passenger aeroplane if he had bad eyesight. So why do some appear to allow them to steer the airline even when they demonstrate they have bad vision.

Corporate strategy is easy, it is easy to get it right and it is easy to get it wrong. It can be difficult to deconstruct the strategy in retrospect in order to learn something useful for the future. Perfectly good strategies appear to fail due to a combination of unfortunate events and bad strategies can produce astoundingly good results due to a combination of fortunate events.

Effective corporate strategy is live, responsive and flexible. No one can really forecast the future sufficiently accurately to enable a rigid corporate strategy to succeed. Techniques such as scenario planning can help you prepare for a large variety of circumstances but may struggle with systemic shock. The present decimation of manufacturing industry in western countries and the increasing influence of China and India require a flexible corporate strategy.

I can still remember the shock I created when, in 1995, I recommended a company close its factories in Western Europe and move production to the Far East. This would have allowed the company to concentrate on its key added value activities that were design and development and get rid of its factories that it ran inefficiently. I take no pleasure in noting the company no longer exists as it ploughed resources into its factories and starved its research and development facilities. The main reason it followed this strategy appeared to be the company founder designed the factories in the 1930's.

A corporate strategy can fail because:-

It was never implemented

It was the wrong strategy

It was the right strategy but at the wrong time

It was overtaken by technology

Customers, suppliers, shareholders lost faith in the organization and its leaders

It breached acceptable practice / the law

It was superseded by a better strategy

Refer :
Michael Daly, founder of Executive Coaching and Mentoring provides more than 40 years international business experience for the benefit of his clients. Concentrating of strategy and tactics Michael uses advanced coaching techniques to help the modern business executive deliver improved performance in all areas of a business.

Have a look at http://www.corporateexecutivecoach.com

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