Why 70 percent of strategies fail

Why 70 percent of strategies fail – Two questions we get asked a lot at  Strategy Training are ‘why do strategies generally not deliver on their objectives? How can this be avoided’? The simple answers are that there are multiple reasons why this failure happens, and therefore many solutions.

Over the next few blogs we are going to explore the key reasons why business strategy fails and explain why a successful strategy has many facets that starts, but definitely does not end, at its initial development (that in some ways is the easy bit).

Before we talk about the failures within a strategy, lets firstly look at a key mistake some organisations make, that is they don’t bother with a strategy at all! this normally occurs in businesses that have started in or suddenly find themselves in a growth market, so they see successes happening in terms of sales and profit daily, and believe that they have the right recipe/formula, i.e. just keep doing what we’re doing!

There are two problems with this approach, the first being that lack of strategy normally means lack of business development, and in our experience ‘strategy free’ organisations that are growing organically do not maximise their potential and the potential of the market they are operating in.

An example I use for this, is a company which Strategy Training were consulting in a number of years ago, they were working with the oil and gas industry in Scotland during the North Sea gas boom. At that time the industry was growing at 25% per annum, but my client was growing at 8 – 10% per annum, which they seemed perfectly happy with.

Their key competitor on the other hand was growing at 20% per annum, which was closer to the growth rate of the sector.

So why the disparity?

The competitor had a strong strategy which included initiatives to grow their client spend, introduce more products and services and grow their influence in key accounts, ultimately their end game being to take a greater share of customer (from my client and others), and they had clear tactics to do so.

The main difference between them an our client was that they didn’t just keep ‘doing what they were doing’ they were looking for other ways to develop their business and maximise the industry growth, all set behind a clear strategy to do so.

The second problem with not having a strategy is the inability to react quickly to change; lack of strategy normally means lack of a plan ‘B’ ‘C’ and possibly ‘D’ i.e. the ‘What if’ scenarios are never considered.

When a business that has had a run of success, with no real measures of the what, where and how they are succeeding (just the sales figures), suddenly runs into choppy waters and their market crashes for whatever reasons, they find themselves completely floundering, as they can not adjust quickly enough to the threat, they make re-active panic decisions that may or may not be right.

An organisation with a measurable and regularly reviewed strategy would firstly have seen it coming much sooner, most likely would have prepared for just such an event and are therefore more able to quickly steer to another planned and organised route.

The moral of the story is that perceived success is not always as good as it sometimes seems!

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