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Why corporate strategies often fail
Category:
New Organizations
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Companies must constantly adjust their focus and actions to succeed within the given context. Corporate strategy guides this process. It is designed to change the behavior of employees so that their work is aligned with the new direction of the company.
Unfortunately, this is the weakness of many strategies, which appear coherent on paper but are not translated into the desired behavior of employees in practice.
What’s the reason? Two decisive reasons are management’s misperceptions and decision-making.
It starts with thinking that since we understand something, others will do it too. Usually, strategies are developed within the top management circle and then communicated through the various hierarchical levels in the company.
The further away people are from top management, the less they deal with the strategic issues and thus the less likely they are to understand the implications of the strategy for their specific work.
This is particularly problematic because it is precisely these employees whose behavior is ultimately supposed to change as a consequence of the strategy.
The next misconception concerns motivation: We think that if someone understands something, it automatically means that she/he approves of it. This underestimates aspects such as conflicting interests or conflicting incentive systems within the company. Therefore it is no surprise that resistance arises, and change management is necessary.
If both of the above requirements are fulfilled – i.e. someone understands something and wants to do it – this does not mean that he/she can do it. He/she must also have the ability to implement things.
New strategies often imply new fields of activity or processes. It is not certain that employees and managers have the competencies to succeed immediately in these new areas.
To successfully implement a strategy, one MUST go through the whole chain: “from Strategy to Behaviour”. This requires explaining the strategy and its specific implications, aligning it with the objectives, and then deploying capabilities to perform the new tasks. Only with this consistent and systematic approach can strategy implementation succeed.