Strategy Failure - 5 Reasons Why Strategy Fails

Highlights from Entrepreneur article, "Strategy Failure - 5 Reasons Why Strategy Fails" written by Nilofer Merchant, CEO of Rubicon Consulting. Nilofer Merchant has gone from admin to CEO and today she serves on boards for both public (NASDAQ-traded) and private companies. She is the author of two highly regard strategy books.

Nilofer explains that there a countless reasons that people blame when a strategy fails. They argue that the failure is due to: poor leadership, improper execution, bad market data, customer needs changed, poor timing, etc., etc. The author, however. suggests that there is something else that is the real problem. The problem is that the strategy creation process that has gone off the rails.

“When the strategy doesn’t gibe with what employees know to be true, they may wonder if they’re supposed to speak out or remain silent. Employees wonder if they’ll get in trouble if they do, or even if they don’t, say anything. They worry about being called “too tactical” or “insubordinate” because their reality-check doesn’t match up with what the CEO wants enacted. “

Large companies often see strategy as an annual activity done by an elite group of people who sequester themselves in a conference room somewhere. In smaller organizations, it more often comes as an edict from on high to the people who must enact it.

Nilofer sees that a lack of employee involvement is one of the major predictors of strategy failure.

It is important to understand the existing strategy. Why was it established? How does it work? What are structural elements that inhibit the organization from achieving its goals? Answering these questions properly, can help in uncovering true root causes.

There are two basic forms of strategy: predictive and emergent. Predictive strategy is top-down and sets a direction based on predictions about what the market will be like. This work is usually based on research, data and input from top experts. Emergent strategy is bottom up and is based on a wait-and-see approach. Both models have their strengths and weaknesses. A key may be to leverage the strengths of both approaches, and avoiding the inherent weaknesses of each as well.

Read the article - 5 Reasons Why Strategy Fails 

Highlights by David Willden