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Reasons for failure?

I came across some frightening statistics once. They were:

• 90% of all organisations fail to execute their strategy.

That’s right. Despite all the brain power, consultancy fees and paper that goes into the development of the strategy and the business plans, 9 out of 10 fail to achieve all of what they set out to achieve. Some achieve parts, some fail completely, but only a very few achieve all.
• Only 5% of workforces understand the strategy

Only 1 person in 20 can explain what the strategy is, why it exists and their part in it. That is scary. Even if that figure is out by a factor of 5, it is still a scary number! Even only half an organisation knows what it is trying to achieve it is still extremely worrying.

• Only 25% of managers have incentives linked to strategy.

Frankly my experience is that I am surprised it is as high as that. Many have them linked to performance but this can be local performance, something as remote to most people as profits, or as nebulous and variable as the share price.

• 60% of organisations do not link budgets to strategy.

In other words, a major governing control system for the vast majority of managers is not tied to what the organisation is trying to achieve. This is just the budgeting system. What about all the other systems that prevent strategy being executed? Ever just had a new strategy announced, tried to purchase a simple part you need to execute it and found that purchasing won’t let you? What about HR recruitment & IT development? We are going this way, but with your hands tied behind your back, is not a convincing message.

• 85% of Executive teams spend less that 1 hour per month discussing strategy

So what are they doing? Gathering data, discussing results and applying corrective actions probably. This is, arguably, tactical fine-tuning. Are they considering whether the overall strategy is working? Are they asking, “Did we get this right”?

Are they thinking, “Should we modify this approach in the light of the new information we have?” And if they are not communicating and discussing the strategy amongst themselves, then are they discussing it with their staff?  If not, who is?

So it is clear we have to communicate strategy in a variety of ways. But what do we communicate – and how?

In part 3 we will discuss communicating the “why” of strategy