3 Mistakes CEOs and Senior Teams Make When Developing Strategy

Strategy development is a challenge for any organisation. It’s tough at the top, and even the most organised C-suite executive can spend much of their time firefighting and dealing in the short term. However, attention to strategy is more crucial than ever in such a rapidly changing world. In this article, we will examine 3 mistakes that CEOs and senior teams make in strategy development and potential solutions.

Mistake #1 – Making assumptions

It’s often our experiences that shape our beliefs and the way we view the world. This is the essence of how organisational cultures develop. But when thinking strategically, it is critical to take an objective view – anecdotal evidence or long held beliefs about a particular industry or even your own company need to be challenged. For example, it’s very unlikely that the next generation of employees and customers value the same things than the previous generation; the economic landscape is ever changing, and more recently, political edicts can have huge ramifications.

It is far better to objectively gather intelligence about the environment in which your business sits, as well as the inner workings of your organisation, to establish whether you are still operating effectively within that environment. Adopting a blinkered view can be a slippery slope – assumptions lead to strategic drift, which leads to a misaligned organisation, and ultimately, unhappy shareholders.

An emphasis on strategy governance can help avoid this. Below are a few considerations:

• Ensure your organisation has measures in place to consistently scan the horizon for upcoming trends or challenges. 
• Keep an eye on the competitive landscape as well as industry sentiment. 
• Ensure regular review of your internal alignment, making sure that your strategy, systems, and structure align to the resources, skills, and culture that you’re trying to establish.
• Build capability to mine innovations from within your organisation to create competitive advantages

Mistake #2 – Failing to consider your people

This mistake is perhaps a large contributing factor the fact that most change projects fail to meet expectations. A strategy is worthless unless it understood, accepted, and embodied by those responsible for executing it. And yet on countless occasions, those responsible for strategy creation have not considered this. In fact, according to Kaplan & Norton, writing in the Harvard Business Review in 2005, 95% of employees are unaware of, or do not understand their company’s strategy. Even if things have improved since then, that’s still a staggering statistic. Taking an elevated view of your organisation to gain greater insights on it is absolutely the right thing to do, however it’s important to come back down to earth and assess the feasibility of a particular strategy. Will it be accepted by employees?  Will it contradict their values?  Will it create more work or more bureaucracy?  If the answer to any of these is yes or even maybe, the chances of organisation-wide adoption of a new strategy are slim. Many scholars extol the virtues of bottom-up strategy, the rationale being that those that are closer to the shop floor are best placed to understand the end user and improve a particular product or service. This can be an eye-opening exercise with surprising results. Consider asking the following:

• Do your employees know what the organisation’s strategy is?
• Do they know how their role contributes to the success of the company?
• Do they know the company’s vision or values?
• Do they feel valued by the company?
• Would they recommend the company to others?

Gaining clarity on these questions can bring the subject of whether a strategy can be implemented successfully into sharp focus. You may find that before a particular strategy can be put in place, some internal housekeeping may be in order to create the platform for success. Take the time to ensure that those responsible for strategy implementation understand what the strategy is (within context), the reasons behind it, and how they fit into it. Not only can this lead to higher adoption of strategy, but it can also aid employee retention. And the less attrition that takes place, the greater the awareness of strategic goals will be at the critical level of the organisation.

Mistake #3 – Poor use of strategic tools

Most Senior Executives will be aware of a number of strategic tools, either through their degree courses, through use in other organisations, or anecdotally. But very often, refreshing one’s memory on these tools is down the list of priorities, even on the eve of a large project. Employing a tool that is rarely used will not yield the results that it potentially can. Moreover, many senior teams use strategic tools in isolation, forgetting other tools that will augment the process and yield greater insights. For example, a SWOT analysis can be hugely beneficial following analysis of the wider environment and an internal review (which require other tools!). But can a SWOT analysis really be beneficial if a team doesn’t fully understand the external and internal factors at play?  Can it lead to actionable results if a subsequent analysis of what can be done with certain strengths and weaknesses in the face of specific opportunities and threats isn’t performed?  (TOWS Analysis) 

It’s unlikely to bear fruit on its own and can often end up being an expensive waste of time, with important insights left unrealised. There are some simple remedies to this problem:

• Ensure senior leaders within the organisation are well versed in strategic tools and make revisiting them part of Continuing Professional Development.
• Send middle managers on MBA courses and encourage them to do analysis on the organisation (subject to confidentiality) as part of their assignments.
• Bring in experienced strategy consultants to work with the senior team.

Strategic tools are very powerful in the right hands. And organisations that utilise them to the full, put themselves in a position of competitive strength.

Conclusion

In conclusion, strategies fail for myriad reasons, but the mistakes mentioned above are without doubt large contributors. Do any of them resonate with your business?  Imagine an organisation that had evidence-based clarity on its external and internal environment, having effectively used a number of strategic tools to generate competitive insights, and a workforce that was aware of, and understood the strategy and how they contribute to its delivery. This is entirely possible with the right approach!

Final note:  Another significant contributor to strategy failure is ineffective leadership, which is the subject of the next blog article.

References: The Office of Strategy Management by Robert S. Kaplan & David P. Norton, Harvard Business Review, October 2005