Six Strategy-Crushing Mistakes Organizations Make And How You Can Rise Above the Rubble
By Mark Morgan, CEO and Founder of StratEx Advisors, Inc.
Oh, the mistakes organizations make. Business plans or strategies usually sound fantastic at the outset. But far too often what sounded good at the beginning somehow just did not work out.
In 35 years of business, I have my share of things that seemed like a slam dunk turn. However, they became the slam without the points. Maybe it was a new branch of business or a new product line. Maybe it was the creation of new business processes or the installation of a new system. But somewhere along the way, it just did not happen. Here are six crushing mistakes organizations make and what you can do about them.
Sound familiar?
Don’t feel alone. About 90% of business strategies never make it to prime time. When it comes down to making things happen in organizations, it follows the old saying…
“When all is said and done, there is a lot more said than done!”
This is very frustrating and expensive. Consider that it might cost a business 10-20% of annual revenue to significantly grow the business. For every million dollars of revenue, it could cost up to $200K of investments. They need to invest in the products, promotion, channel development, and customer service to really make it take off. If the strategy does not work or doesn’t get implemented, that is a lot of cash down the drain!
Question: So what is it that organizations tend to miss here? There are six big mistakes that businesses make that crush their chances of success. Here they are:
Mistakes Organizations Make
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Forgetting to leverage the motivational part of the business.
People will do for a cause what they will never do for money. That has always been true, but in the industrial age, we could get away with treating the organization like a machine. Not now. We have entered the age of a purpose-driven organization. People lack a clear line of sight between what they do and what is important about what they do. Every organization serves a purpose or it goes out of business. Businesses that are founded to accomplish great things are far more likely to execute their strategies because their people know how important it is that they do what they do. Strategies die of apathy and a lack of emotional commitment.
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Being unclear on the direction.
A Harris poll once asked people in multiple organizations whether they understood the direction of the organizations they work in. 90% said No! This would be somewhat like a soccer team where only one person understands where the net is. What’s worse is that because of reason number 1 above, not only do they not know which goal is theirs, they don’t even care! Not knowing what the direction and goals are is a strategy killer because there is not enough time to allow people to find their way to the goal line in the dark.
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Being fuzzy about identity.
No business is all things to all people. Herb Kelleher once remarked that he hoped all the customers who did not like what Southwest Airlines offered would simply go use another airline instead of complaining about his. It was a way of saying that casting too big of a net is one of the fastest ways to fail. In the time that Southwest Airlines has been in business (and been profitable the whole time), over 100 airlines have failed. Knowing who the business is and who the business is not is critical to execution because it keeps the organization from pouring effort into too many things and succeeding at none of them. A diluted resource pool is a sure way to crush strategy because all the time the teams spend contending for resources lets the strategy slip into darkness.
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Meaningless measurement.
Many organizations have dashboards full of metrics that measure seemingly everything that can be measured. One organization had over 100 metrics on the dashboard with no connection to what could be done about any of them. Some organizations measure things because they CAN, not that they SHOULD. Most of the measurements are about things that have happened in the past and have no predictive value. For instance, income and expenses from last year are not predictive of the same things this year or next year. The big mistake here is measuring things that do not matter to a client or customer and focusing on things in the rearview mirror. There is a great reason that airplanes don’t have rearview mirrors: an airplane has no use for information about the air behind them.
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Faulty translation.
One big gap in this area is that the strategic planning process does not link up with the operating plan process. What happens is that the strategic plan “offsite” does not generate action “on-site”. Every strategy has to be broken down into component parts. The problem tends to be that when the strategy gets broken down into pieces, it is hard to tell what piece went with what strategy. The second big “swing and miss” comes from a lack of resource application in priority order of value. There are always more ideas about what we could do than resources to accomplish them. The translation process often does not finish the task of putting our commitment (money) where our strategy (mouth) is.
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Poor follow-through.
Like it or not, sexy or not, the ability to manage a project through to completion is how strategy gets delivered. Projects are the often messy and laborious part of pushing the ball across the goal line. And this is where it gets expensive. A strategy can be re-written in a short period of time at a relatively low cost but consider this: In the US, about 25% of the GDP is project related and about 30-40% of the projects will fail. That translates to a wasted effort of about 3-4 Trillion Dollars ($3,000,000,000,000 to $4,000,000,000,000). A $250 Million business might have $25 Million in projects.
That means that between $7.5 Million and $10 Million is being wasted at this very minute. The part of the process where all the dreams and schemes were created was fun and exciting. The part where we take accountability for delivery sometimes is less fun but, according to the financials, this is a critical problem. Project, program, and portfolio management get too little credit for the value they represent. This is where the rubber meets the road. It is also where many organizations run off the road.
There may be a hundred ways to leave your lover, as the old song goes. But there are only three fundamental things needed to get a strategy executed and prevent strategy-crushing results from the mistakes organizations make frequently.
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Take it from the top.
First, consider the business purpose. Is there a reason for the business to exist that is bigger than anyone, will last longer than anyone, and is a legacy worth leaving? Yes? Cool. No? Dig deeper. Because if the business is not up to something important, the team needs to re-think what the business is about. A team can’t be expected to execute at top form if they don’t have a reason that is bigger than their paycheck. Follow up the purpose check with a check on what longer-term goal is served. The question is what ultimate achievement is the business dedicated to that has enduring value?
Gaudi started building the Sagrada Familia Church in Barcelona that will take several generations to finish even though he died in 1926. What is the long-range achievement that the business I dedicated to? Next, the clarification of who the business is and who it is not must be razor-sharp clear. What the organization stands for and what it does not must be vivid in the minds of every member of the team. Lastly, what are the goals? Split them into short, medium, and long term. Make them SMART. (Specific, Measurable, Actionable, Realistic, and Time Bound). If making them SMART fails, count the strategy as a candidate for the dead zone because, without clear goals, strategy is meaningless. Having gotten this far, congratulations, the purpose, long-range intention, identity, and goals are now clear. This is a big step.
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There is much written and even more said these days about the word “alignment”.
The question is align what? First, align metrics. Start with the three most important measurements of customer or client delight (more than satisfaction). Trace those back into the business to determine what measurements must be optimized internally to get the client-facing measurements to a peak value. Next, align the action plans in priority order based on their contribution to goals and metrics. In other words, lay out the work plans according to the level of contribution to the goals and or the amount they will improve performance to metrics. (Hint: if there is a focus on what matters to clients, the metrics will probably take care of themselves).
Next, align the resources in priority order to determine where additional resources are needed to reach your goals and perform critical metrics. (Hint: if there is a focus on what matters to clients, the metrics will probably take care of themselves). Next, align the resources in priority order to determine where additional resources are needed to reach your goals and perform critical metrics. Last, align the way the team is organized to make it as easy as possible to focus on the right customer-based metrics. Congratulations again. Goals, metrics, strategic initiatives, structure, and strategic portfolio are now in alignment. One more giant leap.
Now the fun begins.
The key to executing strategy is to ensure that traceability is maintained between the work going on in the business to its payoff at the goal level. To do this, think of the collection of projects you have going as an investment portfolio. There will be projects that are doing well and returning value, and there will be some that sounded good at the beginning but are not paying off. On an ongoing basis, re-evaluate the projects on their own merit. Should some move ahead? Delay? Cancel? Replace with new?
Most of the real hard part of execution is gaining clarity and alignment but the diligence of mobilization is where the payoff is generated. Mobilization of a well-clarified and aligned portfolio of projects is far easier than diving into mobilizing a strategy that has been poorly clarified and aligned. The critical aspect of mobilization is keeping the eyes on the prize. Always concentrate on reaching goals and use strategy and execution as the means to the end. Nobody ever made a dime executing a strategy per se. Achieving goals as a result of executing a strategy is where the money is.
Conceptualizing strategy may be fun and exciting but realizing your goals is much more satisfying. By concentrating on the three main areas of executing strategy: Clarify, Align, and Mobilize, organizations can avoid the six strategy-crushing mistakes. You can lead to being part of the ten percent of businesses that execute effectively.
Now the question is…what part of the six strategy-crushing mistakes ring true for you? Are you ready to get going on what it will take to move our organization from where you are to what your potential has in store for you? If so, we should talk about how we can help you.
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Mark Morgan is the CEO and Founder of StratEx Advisors, Inc. He is a consultant, facilitator, and executive coach who specializes in assisting leaders as they face the prospect of transforming organizations and individuals. With a deep understanding of the change process, he helps leaders clarify their intentions and increase their impact, releasing old ways of doing things and adopting more effective means of generating great results. He is a co-author of Executing Your Strategy: How to Break It Down & Get It Done, and Executing Your Business Transformation. He is also an MG RUSH Certified and Endorsed Professional Facilitator.