Strategy or Tragedy?

Why the strategy is not implemented and even 90 of the % strategies fail? 

Why even 90 % and the peer-reviewed Candidos and Santos published in the Journal of Management & Organizations in 2015 research according to an average of 50 % strategies fail? One reason is unclear communication. So let's define the terms strategy and tragedy in the title. Strategy = plan about doing, which achieves a long-term or final goal. Tragedy = a tragedy in which people meet a tragic fate. Based on the statistics, in the strategy work or in the strategy created as a result of it, it would seem that the two sides of the coin meet, the probability of which is 50-50. If you want to be among the winners of the strategy lottery, continue reading. 

Root causes of strategy failure 

The reasons for strategy failure can generally be divided into four different root cause categories: 1) Communication, 2) Ambiguity of goals and results, 3) Action or lack of action, 4) Management problems. 

1. Communication 

The problems related to communication start from the fact that communication is unclear and one-sided - top-down orders. In terms of success, the key is to get into genuine interaction and get the entire organization to participate already at the beginning of the strategy formulation. If it is a real tragedy in working life, there is no communication at all, which in turn leads to a lack of commitment. 

What does a lack of communication look like in everyday life? Some years ago, I had a conversation with a CEO who graduated from Otaniemi - with whose permission I was able to share this story. He was in pain "when the strategy doesn't work". I asked how the strategy was prepared and communicated. He said: "Six months ago, according to the government's instructions, a weekend of strategy work was done with the financial director, and on Monday the films were immediately distributed by email. It's been half a year now, and nothing has happened. At some point, the government will also start asking questions." Although the previous example may bring a small wry smile to the lips of an enlightened reader like you, numerous organizations, both small and large, have exactly the same situation, or at least almost. How has your strategy been prepared and communicated? Do you remember your strategy? What about your people? So… go ahead!  

2. Ambiguity of goals and results 

One of the key reasons for strategy failure is that there is actually no strategy and the goals are either unclear, contradictory or non-existent. When the goals are unclear or non-existent, monitoring the results is also almost impossible. The great strategy and management writer Peter Drucker already knew that. Sometimes the goals are clear, but they are not prioritized. This leads to nothing moving forward, budget being exceeded and no results being produced. In larger groups with several business units, too often they get lost in competing with each other and partially optimize their own goals and results at the expense of others. At worst, this internal competition prevents the implementation of the strategy and the competitors are quickly passed by. 

Ambiguity of goals and results can be caused by many reasons in everyday life. Based on empirical findings, the ambiguity of goals can even be triggered by the owners' different states of will for the company. In this case, it is very difficult for the effective management to operate or take operations in any direction when there is a lack of a clear mandate from the owners and/or the board. Many times the (managing) director notices that when he bows to the father, he gives a shit to the son.  

Another equally common challenge in the lack of clarity of goals and results - especially in large organizations - is that even though the money from customers as a result of value production ends up in the same bank account of OP or Nordea, the managers of the profit units spend several days a month to ensure "fair" profit distribution and correctly realized transfer pricing in internal reports. This in itself is completely understandable, because often the bread and potatoes of people in their own business area (bonuses) are dependent on these internal Excels. However, as a man or woman of the exact euro, the reader of this text will certainly understand that endless sub-optimization eventually leads to a breadless table, when the customer is forgotten and the ability to generate value erodes in a constant internal struggle. The surest medicine to achieve better results is to play as one team, for one goal. Not me and my goals, but us and our goals! 

If you want to set better goals, google “SMART model”. If you just don't want or can't learntake care of it yourself, call us and we'll help you set better goals in just 5 minutes. Sure!  

3. Doing and lack of doing 

One of the main root causes of strategy failure is not identifying the key actions that lead to the achievement of strategic goals. Many things can be done in an organization, but they are wrong or only serve a certain organizational "silo". Another challenge is doing nothing. This complete passivity may arise from the fact that there are not enough resources or know-how at the level of doing to ensure the implementation of the strategy.  

Arki has at least shown me as a manager that wisdom does not reside in us (managers) or in the comb veneers of the corner apartment. Often, the best solutions for doing things right and prioritizing things are found where the slippers meet the factory floor or the fingertips meet the laptop keyboard. So involve your people and everyday miracles will start to happen. If things don't progress because there isn't enough time, it's too busy, or people just have too much to do in relation to their own coping skills, it's worth stopping. Often less is much more. For more tips on prioritization, check out the Eisenhower matrix. If everyday life is too stressful without even studying, we will open for you in 5 minutes a way to identify and prioritize the most importantto do.  

4. Management and management problems 

According to the old joke, the reason is always in the lead. One key management shortcoming is that the strategy is not updated often enough to reflect major changes in the operating environment, such as a pandemic, war or energy crisis. This "this is how we've always done it before" thinking is a sure way from (corona) corruption, through harsh conflict, to bankruptcy in an ever-faster changing world. When I was CEO at the start of the corona crisis, one key customer segment lost about 90 % of its own business, and the already agreed investments had no basis anymore. In this case, the focus of marketing and sales had to be turned almost 180 degrees around and the B2B strategy had to be changed to a B2C-driven operating model. Sure, the B2B strategy was left in place, but to wait for the market and investments to return to normal. People and the most important work were focused on where the money flows were moving even after the pandemic started. In terms of the implementation of the strategy, management undoubtedly plays a very central role, although no one can fight alone or even together against windmills. It was already shown by Don Quixote. Sometimes the circumstances are such that as a leader or an organization, your own endurance, know-how or available chips are not enough to implement the strategy. It's not a question of being a bad leader or predecessor, but that the situation is not one that suits you in the best way. Often in these situations direct value conflicts are also encountered. A growth leader rarely becomes a good reorganizer, and a reorganizer hardly ever becomes a growth leader.  

On the other hand, it could also be that situational information does not flow from middle management to top management due to casting defects built into the company culture. A good Finnish example of this influence of culture on strategy failure can be read, for example, in Risto Siilasmaan's book Paranoidi Optimisti.      

If you want your strategy to succeed and tragedy to be avoided, let us help. Let's make it together and understandable!