The big strategic efforts that require internal change almost always fail to achieve the original objectives. Whether it’s an acquisition and subsequent integration, a needed change in the ability to innovate, implementation of a major ERP system or software platform, a new supply chain program or approach, or any number of other major initiatives, CEO’s are almost always going to be disappointed with the initial outcomes and be asked to double down on their original investment.
There are a tremendous number of studies that provide the evidence the boss is going to be upset. I’ve provided some of it here. The track record is an abysmal 60%-80% failure rate; which means something is seriously wrong with how business goes about strategic initiatives.
Here are the two obvious, probably indisputable, reasons for failure: strategy and execution. Too broad, I know. To get at the root cause of failure requires going much deeper to find the underlying causes in both strategy and execution. The results of the analysis can be grouped into seven categories: Strategy, Objectives, KPIs1, Capabilities, Operating Model, Simplification, and Deployment.
For example, one of the most common categories of failure is industry’s historically unsuccessful approach to deployment. People are interesting creatures of habit. As Charles Duhigg noted in his book The Power of Habit, a habit has a cue, a routine, and a reward and “they shape our lives far more than we realize–they are so strong, in fact, that they cause our brains to cling to them at the exclusion of all else, including common sense.”
It may surprise leaders to learn that organizations behave habitually too, albeit collectively (see What To Do With Mediocre Innovation). Organizations have well-developed habits (unless you’re a startup) with cues, routines (i.e., processes), and rewards (both intrinsic and extrinsic). So, when a major strategic initiative is undertaken, something that requires fundamental changes to the habits of the organization, typical change management approaches are not at all adequate as evidenced by the high failure rate. People, sometimes irrationally, fight to continue doing what they’ve always done.
Much of the risk of failure in execution can be mitigated by using a model that connects, strategy, objectives, KPIs (especially keystone metrics), capabilities, the operating model (including processes), simplification (the decisions about what to stop doing), and deployment (including changes to the engrained habits of the organization). This is why we developed the StarPoints™ strategy execution model. We think CEOs are going to be much happier when failure risks associated with their strategic initiatives are identified and mitigated up front. And when they aren’t forced to double down on their investment to get something done in their organization.
I hope to go in depth and write about all the aspects of the StarPoints™ strategy execution model in the near future. In the meantime, how are you ensuring the success of your strategic initiatives? Share your point of view by leaving your comments below.
1. KPIs = Key Performance Indicators.