Defining Good Strategy Is Hard
It is important for senior executives to understand why strategies fail and how to spot flaws that can have significant impact on strategic outcomes. By being critical of strategic plan definitions, asking better questions of design teams, and critically assessing plan components, executives can significantly improve the quality of their strategic plans.
Being able to identify flawed strategies, organizations have a much better chance of creating good ones. A good strategy does more than urge us toward a goal or vision, it honestly acknowledges the challenges we face and provides an approach to overcoming those challenges while achieving the vision.
Statistics Show How Difficult Strategy Can Be
90 % of Executives in a recent study revealed they had failed to implement some part of their strategy successfully. … every 20 seconds one million dollars is wasted due to poor organizational performance. That equates to 2 trillion dollars every year. [Source: Brightline Initiative, published in Strategy@Work From Design To Delivery.]
And it’s not getting better. Presented in a keynote speech at the 2018 Association for Strategic Planning’s annual conference, Ricardo Vargas of the Brightline Institute compared two studies conducted by the EIU. In the 2013 study, 61% of organizations struggled to implement their strategies. In the 2017 study, 59% of organizations struggled, showing very little improvement.
A majority of strategic initiatives fail to deliver expected results. Only 45% of organizations believe they do a good job of strategy execution. Industry organizations like the Project Management Institute and Association for Strategic Planning have identified a performance gap between plan design and delivery. Failures to effectively transition from design to implementation, has been identified as a primary reason for lack of success. Additionally, 95% of employees do not understand their organizations strategic plan, much less how their daily routines contribute to its success.
The root of the problem is much deeper than just managing the transition between design and implementation. Key issues impacting the success of most organizations strategic outcomes can be summarized to a few high-level issues.
- Strategic plans are treated like artifacts and not an evolving, tractable plans
- Strategies are vision-oriented and too abstract to be directly implementable
- Plans jump from visionary declarations to implementation projects missing the definition of strategies
- Performance indicators do not focus implementation nor act as early indication of risk
- There is not consistent transition between the phases of strategy
- There is not an integrated management process that maintains the dependencies between strategy elements
- Decisions are influenced by organizational bias, culture, and special interest of its leaders
- Off-cycle events and requests, create chaos, and circumventing the strategic planning process
- The lack of traceability between the various elements of the strategic plan minimize accountability.
Strategy management can help organizations that struggle to meet their goals and objectives by formalizing the strategic planning processes and providing structure that helps leadership ask the right questions. Strategic management improves processes to overcome the major issues that inhibit success.
Because strategy management does not dictate a given strategic planning paradigm it can be adapted to support the organizations specific approach. What tt does provide is a rigor that is required to manage across the entire plan, and automated services that reduce the added burden of management. Strategy management supports organizational decision making using detailed analysis of large sets of information augmenting human experience.
Common Planning Mistakes
Too many organizational leaders say they have a strategy when they do not. Instead, they make a number of typical planning mistakes. The following sections describe a few of the more common issues:
Goals and Objectives are Not Strategies
It is important to realize that goals and objectives are not strategies. Goals are end points and objectives are measures of performance along the way. Strategies are pathways defining how an organization intends to change from its current state to its long-term desired state. Strategies define not what constitutes success, but how success will be achieved. “Increase market share to 70 percent” is not a Strategy. It defines an end point. “Establish primary care physicians in key growth areas where the market is underserved” is a Strategy. It provides the how.
Generalized Strategies that Lack Focus
Strategies that lack in focus, trying instead to accommodate a multitude of conflicting demands and special interests. Leaders that lack focus in their strategies are similar to a team’s coach whose only advice to the players is “let’s score!”. Or closer to home, “Our strategy is to become the market leader in…”. Strategies that lack focus covers up its failure to guide by embracing broad goals. Ambition, vision, and values, by themselves, are not substitutes for producing a detailed strategy.
Equating Strategy with Leadership, Vision, or Ambition
Strategy is not “visionary messaging.” Strategies do not describe what the organization intends to become. Aims, aspirations, and strategic themes are not strategy. Each is a more specific version of the vision statement. Each can be an important aspect of the strategic planning process, by creating enthusiasm and momentum for the organization. But, visionary messaging lacks the specificity of how to implement the changes required to achieve the vision. Strategies that are visionary in nature do not provide organizational direction and leave employees uncertain as to how their role impacts the organizations strategy.
Strategies are Not Extensions of Current Operational Effort
Strategy is not what you are already doing operationally. Most companies, when writing up their strategy, look for some formulation that fits in all the things they were doing anyway. Strategies define how to bring change to the organization, to meet its vision. True strategy leads to significant change bringing competitive advantage. It is not a simple refinement of performance. An organization can operate perfectly and still fail. A strategy to maintain coarse, can have serious consequences, in that they may not notice the bridge ahead is out, eventually driving their perfect operation right off a cliff.
Strategies are Not Initiatives or Projects
Strategies are not projects with a plan and budget, wrapped in grandiose explanatory language. Good strategy defines an approach and tells you which initiatives actually make sense and are likely to produce the result you actually want. Strategy is not the initiative. Strategy describes the approach taken that allows for the identification, prioritization, and selection of initiatives to be implemented.
Failure to Face Challenges
If a strategy is a definition of a path to an envisioned future, failure to define the challenge that will be faced in achieving the vision, makes it impossible to assess the quality of that strategy. And, if you cannot assess the quality, you cannot reject a bad strategy or improve a good one.
Additionally, those charged with implementing a specific strategy or initiative, might not be aware of a given challenge and fail to address the challenge in their planning.
Poorly Defined Objectives
A sign of bad strategy is fuzzy objectives. An objective is defined as a performance indicator. They must be specific, measurable, and achievable within a specific timeframe. Objectives that fail to meet these criteria fail to measure performance and can cause implementation teams to focus on the wrong things.
A second type of weak objective is one that is “blue sky”—typically a simple restatement of the desired state of a desired state. It skips over the fact that no one knows how to measure progress toward the state, or how to measure success.
A third type of weak objective is one that is a “vanity” metric. One that is easy to achieve, makes the organization feel good about having achieved the objective, and yet does not measure real progress toward achieving the company’s goals or vision.
When defining objectives, it is important to realize that the purpose of the objective is to measure progress. If we only define objectives that measure outcomes, then by the time we realize a strategy has failed, it is too late to mitigate its impact. When defining good objectives we must measure early indicators, even if they are less reliable or speculative, as well as outcome measures, that lag the implementation. Leading indicators provide an indication of pending trouble, before the trouble is realized. This gives the organization time to mitigate risk, and minimize impact. And when necessary, leading indicators give leadership time to re-plan without missing its strategic goals and objectives. In today’s chaotic healthcare market, it is important to learn to fail fast. This saves wasted investment and provides the ability to avoid lost opportunity costs.
Beyond early indicators, intermediate and lagging indicators are just as important. To successfully manage the strategy lifecycle, we want the ability to continuously monitor performance. And once a strategy is delivered, we want to assess our planning performance to ensure planners are realistic in their planning estimates.
A critical issue in many organizations strategic plan definition is fluff. Hours are spent crafting especially articulate language that means nothing. Fluff, masks the absence of thoughtful strategy. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise that it is not directly actionable. Or worse, fluff confuses the intent of well planned strategies. Strategies should focus on defining an actionable approach. Strategy, should focus on clarity and simplicity, to insure understanding. Strategy should not be overly abstract or fluffy descriptions.
Bridging the Gap Between Design & Implementation
The industry has identified bridging the gap between strategic plan design and implementation is critical to improving strategic outcomes. Most companies feel they do a good job of strategic planning, but a majority of organizations feel they are not successfully implementing their strategies. Key mistakes in strategy implementation include:
- Not designing strategies with with delivery in mind
- Designers are not held accountable for strategy delivery and outcome projections
- Implementing strategic initiatives in isolation, with no thought to dependencies
- Failure to maintain consistent stakeholder engagement across the phases strategy lifecycle
- Not adapting plans dynamically to emerging events
- Failure to carefully prioritize implementation effort based upon strategy alignment
- Loose dependencies between strategic objectives and implementation requirements
- Failure to provide management oversight and coordination
- Do not maintain health and status of strategy implementations
- Fail to manage implementation risk across the plan
Strategy Management Tools Can Help Overcome These Issues
If your organization struggles to achieve successful strategic outcomes, you probably need some sort of formal strategic management solution. In addition to improving strategic outcomes, strategic management can help you determine the best opportunities in which to invest. By developing high quality strategy designs and focusing on strategy implementation, organizations can maximize the value of their strategic investment.
Implementation of a strategic management tool doesn’t need to be difficult. OntoReason has created a tool that provides the features that you need and can be implemented in a hosted environment. Contact email@example.com more information as to how you can start providing strategic management in your organization.