7 reasons why strategies fail in implementation

In "The Fractal Organisation", Patrick Hoverstadt claims that between 90% and 98% of strategic plans are never implemented.

The reasons for this include:

1. Strategies are not differentiated and specific.

The first failing of strategy must be vagueness and/or blandness. As Machiavelli has said, "There is nothing more difficult to carry out nor more doubtful of success than to initiate a new order of things". To have any chance of success, a strategic plan must from the outset be bold and clear.

2. Strategies are not known and understood.

Articulating a differentiated and specific strategy is no good if the people who must implement it are:

not aware of it, or
aware of it, do not understand it.

The strategy must be articulated and communicated in such a manner that it engages the implementers. This often requires a style of communication quite different to what is appropriate for the people who formulated it (if they are a different group). It is better still if the implementers know and understand the strategy by because they were involved in formulating it.

3. Strategies are not actionable.

Understanding a strategy will not deliver results unless the strategy is actionable. That is, each person in the organisation must know what it is they will do as a result of the strategy. What they will do can fall into three categories:

start doing,
stop doing or
do differently.

It is only in the doing that new organisational habits develop and the strategy will become sustainable. Merely knowing how things should be different and wanting them to be different is insufficient. You must know how to act differently.

4. Strategies are not linked to departmental, team and individual objectives.

Such actions must become embedded in existing departmental, team and individual objectives.

If this is not so, then existing objectives will continue to work against and undermine the delivery of the strategy. Note that even if the existing departmental, team and individual objectives are not formally written down, they still exist in established norms and behaviours and must be addressed.

5. People do not act according to their departmental, team and individual objectives.

If this is the case, then you have a fundamental problem of discipline. Linking the objectives to reward (see below) may go some way to alleviating this.

6. Strategies are not linked to structure, resource allocation and reward.

The old adage that "Structure follows strategy" is most certainly true. You cannot expect an existing (organisation) system to produce a different result without changing the system. Such changes do not only enable the delivery of the strategy. They also send an important signal to the whole organisation that the strategy is a real, tangible and significant change.

7. Feedback and management reporting is tactical, not strategic.

Likewise, it is said that "You get what you measure", and measurement systems must also be brought in line with the new strategy. Organisations are frequently tempted to measure:

that for which the data is readily to hand or just
that which is required of them, by regulation, for example.

A new strategy will require new measurements. Often these will require new measurement processes and systems. Failure to invest in these will ultimately mean that the organisation will revert to the behaviours encouraged by its existing measures.

At the heart of all of this, is one simple fact: strategies will not be delivered if they are formulated, communicated and implemented in a way which allows individuals to continue to act in the way they did before the strategy was formulated. That is, if they are vague enough that different people with different agendas can honestly all find in the strategy sufficient justification for their pre-existing plans. A successful strategy must engage all implementers in all their activities in different behaviours.

StratNavApp.com is the online tool for collaborative business strategy development and execution which is designed to overcome all of these problems.

Finally, it is worth noting that the successful implementation of a strategy will count for nothing if the strategy itself was not good in the first place! But that is a subject for another day.

photo credit: Tony Webster Fail Street - Camden, Alabama via photopin (license)

Scenario Planning for Business Strategy

Scenario Planning is a powerful methodology for considering the implications of your strategic analysis for the future. Although you can't predict the future, it is possible to anticipate a range of different outcomes.

You can achieve this as follows:

1. Identify the critical uncertainties facing your business (2 or 3).

These should follow from the threats and opportunities you've already identified in your SWOT, PESTEL and/or Porter's 5 Forces analyses.

2. Identify discreet possible outcomes for each.

For example, if the uncertainty is around a political election, then you might consider 2 discreet outcomes (1) Party A wins or (2) Party B wins. You're aiming for a small number of distinctive but realistic possibilities. So you don't need to include every possible outcome, such as (3) a hung parliament, or (4) stronger or weaker wins or losses.

3. Map and vividly describe the permutations of outcomes

Consider the permutations of all of your uncertainties together - they don't happen in isolation. Each permutation is then one scenario.

For example, your critical uncertainties might include the outcome of a political election and the introduction of a regulatory change. In that case, you might consider that the outcome of the election will impact the likelihood of the regulatory change.

4. Consider how well you would fare under each scenario

What impact would each combination of outcomes have on your business? Remember to consider the impact on:

demand from customers,
suppliers,
employees,
other stakeholders,
your internal processes, etc.

5. Identify the key variables to watch

These are the early warning signs that will help you understand how the critical uncertainties are playing out.

Make sure you have systems and accountabilities in place for monitoring those early warning signs and ensuring there is an understanding of changes as they emerge. Use this flow of information to update your scenario analysis as and when required. Don't just wait for next year's annual planning cycle.

6. Identify means to influence the outcomes

Where possible, identify means to engage with and/or influence the critical uncertainties, such as industry bodies, etc.

In many cases, you'll find your not the only player in your industry who has an interest in things. You may be able to achieve more, in some circumstances, by banding together.

7. Evaluate all strategic choices against your scenarios

Strategic choices that are robust across multiple scenarios are much more valuable than those which pay off under some scenarios only, and result in losses in others.

Additional success factors

There are 4 additional critical success factors:

Aim for realistic, plausible yet distinct possibilities.
Avoid bland outcomes, such as the stock market going up by 5% versus down by 5%.
Understand the causes and effects and the inter-relationships between your critical uncertainties.
Ensure executive engagement, alignment and commitment around the scenarios.

Develop you Scenarios in StratNavApp.com

You can develop your scenarios in StratNavApp.com. StratNavApp.com is the online tool for collaborative business strategy development and execution. Why not sign up for free now?

See also:

6 steps for using scenarios in strategic planning (info graphic)
Scenarios: Learning and acting from the future a detailed and academically referenced explanation of the nature and roles of scenarios.

photo credit: Sebastiaan ter Burg via photopin (license)

The Strategic Learning Cycle

One of the many reasons why strategies fail is that strategic planning separated from the rest of the function of the organisation. (See 6 reasons why strategies fail in implementation for more insight.) A handful of executives retreat from the organisation to draft a plan. This spends the year safely on their shelves until they repeat the process a year later.

The Strategic Learning Cycle embeds strategic planning in the executive process. This ensures that it has an ongoing impact on all decisions at all levels within the organisation.

The Strategic Learning Cycle is comprised of 4 processes:

STAGE 1: Analyse the business and its environment.

Assess the market. Assess the capabilities of the organisation and its competitors. Assess the needs of the organisation's current and target customers. Analyse the trends that could change these.

See also:

STAGE 2: Articulate a strategic vision, objectives and values.

Develop and evaluate options, and make decisions to define the business's response to its environment.

See also:

STAGE 3: Craft and execute a plan of action.

The plan must require the actors in the business to do (or not do) something other than what they would otherwise have done.

See also:

STAGE 4: Measure success against the vision and objectives.

It's important to measure against the vision, objectives and values, rather than just against the plan. You want to measure results, not just effort.

See also:

Feedback loops

We draw the Strategic Learning Cycle as a circle with two feedback loops. The first feedback loop recognises that the execution of the strategy changes the organisation and its environment. In this case, you may have to reconsider the whole strategy. The second smaller feedback loop recognises that the execution of the strategy may not go according to plan. In this case, you may have to adjust the execution plan.

The speed at which you should iterate around the Strategic Learning Cycle depends:

On the rate of change in your industry,
The strength of your current position in the market.

In a very strategically mature organisation, you can even operate all 4 steps of the Strategic Learning Cycle simultaneously and on a continual basis. This will free you from the perils of the annual planning cycle.

Resourcing your process

Each stage in the Strategic Learning Cycle requires different skills. For example:

Analysis: research and data skills.
Articulation: ideation and vision skills.
Planning: project and programme management skills.
Measuring: management accounting and audit skills.

In a small organisation, you may need to rely on one individual who is able to balance all of those skills. In a mid-sized organisation, you may be able to hire different individuals with appropriate skills for each stage. In a larger organisation, you may need to co-ordinate multiple people spread amongst different departments to manage all 4 stages.

How and where to use it

The Strategic Learning Cycle can be used by any Strategic Business Unit. However, with minor adaptations, you can apply it recursively through lower-level departments, even down to individual people.

You can develop and execute your own strategies using the innovative and free online StratNavApp.com. Go ahead and give it a try?

References

The Strategic Learning Cycle was partly inspired by Kolb's Learning Styles and Experiential Learning Cycle

McKinsey 7S Case Study

In response to my original article on the McKinsey 7S framework, @anniehu123 very generously sent me this PDF case study describing how ABC Company uses the McKinsey 7S framework for Organisational Development (OD).

What I particularly like about this case study is how effectively it demonstrates that frameworks can and should be adapted to specific circumstances and purposes. The objective is to enhance business decision making and execution, rather than to slavishly follow the framework. The third slide in the PDF is especially helpful in the manner in which it places the adapted McKinsey 7S framework within the broader OD context. In doing so, it take the framework from being a theoretical stand-alone exercise to being an integrated part of ABC Company's management processes.

It is certainly worth reading this case study and thinking about how you could apply the McKinsey 7S framework, or indeed other models and frameworks, within your organisation.

The Generation Game

It's popular to believe that different generations have fundamentally different social values. Understanding what these different social values are can be very helpful in setting your strategy and in particular your marketing strategy for reaching different socio-generational groupings. It is particularly important given that mature businesses tend to be run by older, more wealthy men who can be out of touch with their younger markets. Understanding socio-generational groupings can help to bridge that understanding on an intellectual level, even if executive are not able to bridge it on a personal level.

As an example of how generations differ, here are some research results reported in Newsweek in The Real Generation Gap:

	Millenials (age 18-29)	Generation X (age 30-45)	Baby Boomers (age 46-64)	WWII and Depression Generation (age 64 plus)
Have a tattoo:	38%	32%	15%	?
Have a social-networking profile:	75%	50%	30%
Have posted video of self online:	20%	6%	2%
Are veterans (normalised for age):	2%	13%	24%
Are more liberal:
Favour gay marriage:	50%	?	33%	25%
Oppose interracial marriage:	5%	?	?	26%

On a more general note, it is likely that different generations have different attitudes towards authority and respect. Whilst older generations were taught to respect their elders, more egalitarian younger generations believe that respect has to be earned. If true, this has a number of important implications for marketing, not least of which is that, for example, Gen X hates sales people. This may explain why social media is having such a profound effect on marketing as Millenials and Gen X seek to engage with brands that had previously been sold to Baby Boomers.

Equally interesting, there were a number of social metrics which remained consistent between generations, such as:

the importance of having a successful marriage; and
the importance of home ownership

It's also popular for older people to complain that younger people have no work ethic, and for younger people to complain that older people are fossilised. But it is much more useful to understand others as different rather than necessarily better or worse, and an understanding of socio-generational data can help to accomplish this.

I'll publish any additional socio-generational research and insights I find, but if you have any of your own, please feel free to drop them in the comments below.

Innovation: It's just like riding a bike

We can all ride a bike, right? After all, people have been doing it for generations.

In the extraordinary video, Danny MacAskill proves that you can innovate in even the most un-extraordinary activities.

Consider it as Parkour on a bicycle!.

4 strategies for charging for things that used to be free

I recently asked (on Twitter) for examples of things that used to be free but for which people now charge.

The reasons for my interest are probably fairly obvious. Firstly, if you can find a way to charge for something that used to be free, you can effectively make money for nothing (in a manner of speaking). But secondly, and more relevantly to my inquiry, there has been a lot of talk about reversing the trend towards "free" that seems to have taken hold on the Internet, with the newspapers leading the charge, and I am curious to understand how this might work and whether it might succeed. Suffice to say, on a personal level I hope it fails as I am a voracious consumer of news and information on the Internet, but on a professional level I hope it succeeds because it could open up a lot of business opportunities.

The answers I received seem to fall into four categories:

1. Product / service enhancement

The first category represents things that used to be free but are now charged for because they have been altered or enhanced in some way.

For example, @TonySanchez1 suggested water. I presume, of course, that he meant bottled water. Do we pay for the water, do we pay to have it supplied in convenient bottles, or do we pay to have it purified or enriched with minerals and other trace elements? I suspect that for most of us it is one of the latter two reasons. After all, tap water itself remains as free, or nearly free, as it ever was.

2. Price disaggregation

The second category represents things that used to be included in the price for a primary service, but are now charged for separately.

For example, Tom Smith and @hiblen (both via Google Buzz) suggested that there were various things on air travel, including going to the toilet on Ryanair flights! which were once free but are now charged for. The airlines suggest that these things are now charged for in order to keep the price of primary service, the flight itself, as low as possible. So it is really a transfer of price from one part of the service to another, rather than a new charge altogether.

@wallsandfutures also suggested bad advice as an example. I never got quite to he bottom of exactly what they had in mind and why they restricted their example to bad advice only, but this did call to mind the debate around the Financial Service Authority's Retail Distribution Review. This proposes, amongst other things, that customers should pay an explicit fee for financial advice. Currently, many advisers purport to offer customers free advice as they are paid by commission from the product providers. However, of course, the cost of these commissions is simply built into the product fees that the customers pay to the product providers. As I have pointed out in numerous forums, such fees are not a new charge against the customer, but rather a repackaging of the existing charges in such a way as to make them more explicit and controllable.

3. Pricing for communication

The third category is where a price is added in order to communicate a message rather than as a source of revenue.

For example, @JoeWi and @foxbeefly gave the example of plastic bags at supermarkets. I suspect that plastic bags at supermarkets do not present much of a profitable business model. After all, no one goes to the supermarket to buy bags, and once you're there you either need them or you don't. But charging for plastic bags sends a very clear environmental message - "we care about the environment and we're doing something about it". Even customers who are not impressed by the environmental sentiment are unlikely to complain. So, charging for plastic bags is more about PR than it is a business model.

Tom Smith's example (again via Google Buzz rather than Twitter) of towels at the gym probably falls into the same category.

4. When loss leaders cease to lead

The fourth and final category represents cheap things that businesses used to deliberately give away in order to attract customers from which they make money from a completely different product or service.

@AndrewAppleyard suggested air at garages. This is clearly something that used to be free (and still is in many places) as a value added service for customers coming into refuel their vehicles. However, it is now often charged for without any changes to the product or the way it is delivered, with no discernible communicational value, and without any impact on the price of the primary service. It's just something that some gas stations have decided to start charging for. And it demonstrates one of the related problems - that of micro-payments. As @AndrewAppleyard quickly pointed out, the 20p cost is often an irritant, or even a deterrent.

I suspect that garages don't make much money selling air. But then again, if my understanding is correct, they don't make much money selling petrol either, and make most of their profit from selling conveniences in their forecourt stores. I would guess that garages just realised that free air no longer made any contribution to attracting customer to the forecourt but also that charging customers would not drive them away (or cause them to drive themselves to the next petrol station).

However, the very first example I received in response to my initial inquiry was from @Hilary_MRM, who jumped straight in with content on News International sites. That, of course, struck right at the heart of my enquiry. Yes, we know that news providers, particularly Rupert Murdoch and the New York Times have made a lot of noise recently about charging for access to news online, but how much progress have they made in implementing this? How many people actually sign up to pay compared to how many simply carry on reading the limited number of free articles you're allowed each month? And if forced, will people pay, or will they simply switch to a competing news provider who has yet to implement charging?

The problem, as I see it, is that news publishers used to consider online news to be cheap, like air at petrol stations. They were, after all, already producing it for their print publications, and could provide it online at relatively low cost. They could also use it to draw customers into their sites, where, like forecourts made money out of them in their convenience stores, newspapers made money from them from online advertising. However, with the collapse of both print news and online advertising, online news is not longer a cheap product, nor can it be justified in terms of the benefit of online advertising. And customers don't need to drive somewhere to find a competing free offering as the next news sight is only a mouse-click away.

Finally, whilst petrol stations can rely on the fact that most of us can come up with a 20p to drop in the slot to get our tires pumped, the news publishers face the challenge that even if we were prepared to pay for online news content, there is no readily accessible and suitable system for micro-payments online. The subscription model that Rupert Murdoch proposes seems unlikely to work as mos of use get our online information from a myriad of sources, and therefore could not satisfy all of our needs with a single subscription payment. Rupert Murdoch could do worse, therefore, than to support innovative micro-payment models such as Flattr proposed by one of the founders of the Pirate Bay.

@Hilary_MRM's suggestion did give me pause to consider the problem from the other end. How has the increasing availability of free information on the Internet impacted on those types of information that have never been free? I am thinking here of specialist research publishers such as Gartner and Datamonitor. Have their business models suffered as the quality of freely available information has increased, or have their markets proved resilient?

Beginning to charge for something your customers have become used to receiving for free can be done, but not easily. I suspect that Rupert Murdoch will need a better strategy than simply mouthing off about the unfairness of a model in which was, until recently, happy to participate. Like the music industry, I suspect that the news industry will have to reconsider both how it adds value (see, for example, The News Pyramid in the Social Media Age), and how it charges its customers.

This is an intensely interesting subject and a debate that is far from over. I'd be very interested in hearing your opinions and examples in the comments below.

Harvey Balls Font

Harvey Balls are those little circles which are all white or quarter, half, three quarter of fully blacked out. They are one of those incredibly simple but powerful staples of any business strategy consultant's toolkit.

If you're struggling to implement them in your documents and presentations by drawing and colouring in your own little circles, struggle no further. Alastair Bor provides a TrueType font including every imaginable Harvey Ball.

And it couldn't be easier to use. Each Harvey Ball is represented by a number. So you simply select the Harvey Ball font, and type 1 for a one quarter Harvey Ball, and 3 for a three quarter Harvey Ball.

You can read the full instructions and download the font here.

One of the problems is distributing your documents to people who have not installed the same font. Alastair provides detailed instructions for doing this. But I prefer to convert all of my documents to PDF format before sending them out to clients. This solves the problem more neatly.

And, of course, and even better solution is to use a dedicated tool for strategy development and execution, like StratNavApp.com, which already knows how and when to use Harvey Balls.