What Causes Strategy Failure?
The data tells us that the majority of strategy projects failed. Either Failing outright or failing to deliver the desired results, the results management used to justify the investment in the first place. Why? When executives step back and reflect, the root cause is because of one or more of the following:
- Strategic Misalignment
- Silo Trap
- Implementation Misalignment
What is Strategic Misalignment?
Strategic Misalignment results from the compounded effect of decisions that are not aligned with the Business’s Corporate Strategy; each decision widens the gap between the business’s current state and its Strategic Path.
Practically, unless leaders intentionally and mindfully manage the business’s daily activities to ensure alignment with its Corporate Strategy, it is not easy to identify Strategic Misalignment until after the business performance is impacted. Evident when the actions to get the business to get back on track to achieve its goal is disruptive and expensive; and when the phrase “Course Correct” is used to describe the urgency of the situation.
What causes Strategic Misalignment?
It would be cruel yet correct to say that the root cause of Strategic Misalignment is bad decisions – inferring that these decisions were uninformed or intentional. Though correct, this is an absolutely useless statement because it provides no context or information on how to get back on track. No solution. No guidance. It is more relevant and helpful to state that the Root Cause of Strategic Misalignment is the decision-making process and the quality of the information considered when deciding.
“The Root Cause of Strategic Misalignment is the Decision-Making process and the Quality of the Information used when making Decisions.”
One more note on a business becoming Strategic Misaligned. A business does not become Strategically Misaligned because of one or a few uninformed decisions but after a prolonged period and practice of making Strategically Incoherent Decisions.
What is Silo Trap?
Silo Trap or “Siloization” is a practice of making decisions in a Silo, meaning making decisions that are best for your function without consideration of the impact on other functions. Another phase you hear often is “working in a silo”. Siloization does not necessarily mean that the Functional Leaders are vengeful or deliberate; it simply means that, for whatever reason, it appears as if no consideration was given to the possible effect of that decision on the other functions of the business.
Siloization is detrimental to an organization because everything in the business is interconnected. Every decision made will ultimately produce output that feeds as input/information into the task of another function, affecting the effectiveness with which the other function can complete its task. An easy yet relatable example is the decisions made in Sales to win the Sales without considering how it will impact operations. This leaves operations exposed to delivering lower-quality goods and services, affecting the Operations’ Performance metrics.
So how is Siloization different from Strategic Misalignment?
Both Siloization and Strategic Misalignment are rooted in the decision-making process and the information used in decision-making; the difference is; with Siloization decisions fail to consider the impact of those decisions on other Functions, while; with Strategic Misalignment, the decision fails to consider the impact of those decisions on the Business’s Corporate Strategy. Similar yet drastically different.
Signs of Siloization?
Siloization is Horizontal conflict within the organization, while Strategic Misalignment is Vertical conflict among all levels of the organization. Siloization creates somewhat toxic or dysfunctional behaviours, while Strategic Misalignment doesn’t necessarily mean the functions are not aligned. Two Signs of Siloization include:
- An increasing number of disagreements between the functions of the organization. The reasons including:
- different priorities,
- different strategies,
- different goals,
- the different interpretations of what the goals or the strategy mean.
- We often listen to CEOs reciting some version of “we are all cogs in the wheel”, or when we work together, we can achieve great things. The pep-talk used to pacify disagreements between the functions when the effects have cascaded down the organization affecting staff, operations and likely, customers.
When you step back, really step back and look at what happened when Siloization was allowed to continue, the result is often tragic – the compounded effect led to the decline of the business.
“The compounded effect of Siloization is the Slow Decline of the Business.”
What is Implementation Misalignment?
Implementation Misalignment occurs when the business undertakes special projects it is not equipped to or cannot successfully execute. More appropriately described as the misfit between the Project requirements and the business resourcefulness. Implementation Misalignment occurs when the business pursues projects that look good on paper without doing proper due diligence into its capabilities, resources, skillset, and limitation. Ultimately, having to accept that the business cannot successfully deliver the project and deciding to either stop or accept compromised results.
Despite each project being unique and one of a kind, inherent with uncertainty, risk and challenges, there are signs of Implementation Misalignment requiring solutions that are outside of the control of the Project Management team.
4 Signs of Implementation Misalignment:
- Lack of Management Buy-in: Management buy-in is present when the collective leadership team agrees with and supports the project. Management buy-in becomes a problem when one or more of the leadership team members do not agree with the decision to pursue this project. Thus, likely that there are unresolved issues even after the decision was made, resulting in a project lacking the full management buy-in.
- Unexpected Challenges: During implementation, the project experiences an unnecessarily high number of challenges resulting in scope creep, delays, rising cost etc. Challenges that weren’t previously anticipated, or challenges or issues the sponsor during strategic planning assumed were not going to be an issue; or did not give any thought to because they did not anticipate that this would be a challenge for the business.
- Underwhelming Results: Upon completion, the Project result was under-whelming, or the business did not gain the benefits it anticipated from the project.
- Failure: Project failed, or the business was forced to terminate the project early.
Solution: NMCS Strategic Initiative Process
Boost Strategic Planning and Strategy Execution while Developing the Essential Details to Optimally Manage the Business
NMCS Strategic Initiative Process is a structured, organized, gated processes designed to help businesses Identify, Develop, Execute and Operationalize the right initiatives to Transform the business for Growth, while simultaneously further the achievement of the Business Corporate Strategy, its Vision, Mission or Purpose. This Strategic Initiative Process:
- Using NMCS Strategic Alignment Process, analyses the Business Corporate Strategy to:
- Define Core Goals,
- Define Core Goals Success Principles that reduce Interpretation Errors,
- Priorities alignment with and define the business Strategic Path,
- Define Corporate Goals.
- Define Strategic Initiative
- Performs a Business State Corporate Goal Gap Assessment to identify Strategic Gaps,
- Analyzes the business resources, risk, capabilities and risk appetite to define Business Limitations,
- Performing our Business Limitation Analysis; weigh, rate and prioritize the impact of the business limitation on each Strategic Gap, to identify Potential Strategic Initiatives the business is Equipped and Able to Successfully Execute.
- Pursue Transformation Initiatives to Grow the Business or Transformation Initiatives to Stabilize the Business, that are specific and right for the business, right now. The Strategic Initiative Process provided an Executive Strategic Initiative Report Framework to facilitate the optimal review to decide on which Strategic Initiative to pursue.
- Throughout the Structured, Organized, Gated-Process, develop the Essential Information and Details to Optimize the Management and Operations of the Business.
- Information used when making Strategic Decisions
- Information used in onboarding new leaders
- Information used when managing the operations of the business
- Information used when resolving conflict
NMCS Strategic Initiative Process delivers on its promise by Logically, honing in on the key point of weakness of a Strategic Planning Process, and getting to the root cause of where Expensive Strategic Mistakes are made. Addressing:
- The reasons wrong projects is selected,
- The reasons why certain investment fails,
- The reasons behind an organization being pulled into different, conflicting directions,
- The reasons strategic gaps develop within an organization,
- The reasons for misalignment between the Operations of the Business and its Corporate Strategy,
- The reasons why a business loses its competitive edge, and customers leave.
NMCS Strategic Initiative Process addresses the root cause behind Expensive, Strategic Mistakes. The reasons that are only obvious after the fact, after the damage has been done.
This solution not only provides a Strategic Tool to Optimize Strategic Planning and Strategy Execution, but it does so in a subtle, elegant manner without any negative stigmas; correcting the ineffective management practices discussed above.
It provides the Framework, Insights, Strategies, Tips and Information to create the environment that stifles the Strategic Misalignment, Siloization and Implementation Misalignment.
Strategic Initiative Miniseries Summary.
Over the period of January to June of 2022, NMCS published a 6-Part Strategic Initiative miniseries on our Blog Page and our NMCS YouTube channel, with over 2 hours of information packed content; discussed in much more detail than can be presented in one post or blog. After completing this complex 6-part miniseries, we had one more gift for our readers. A summarized overview of the full ended to end process in one publication. Now you can get an appreciation for the full process, with some insights into each step in the process and the benefits of its design,
Part 1: What is Strategic Initiative?
A Strategic initiative is a Corporate Level Special Project, carefully planned and designed by leadership, to resolve a Strategic Gap, clearing a path forward for the business to now be able to achieve one or more of its Corporate Goals. A Strategic Initiative differs from other projects undertaken within the business because it effect a transformational change to the business; making a fundamental change to the business. See Types of Strategic Initiatives for more detail.
It is important to clarify that the completion of a Strategic Initiative Project by itself does not achieve any of the Business Corporate Goals, it simply removes an obstacle, in the business so the business can now begin the work on the activities necessary to achieve its Corporate Goal.
The different types of Strategic Initiatives discussed in this series are
- The Create Strategic Initiative
- To create something that currently do not exist within the business
- Something that is necessary to have, and operational, before the business can execute the activities to achieve one or more of its Corporate Goals
- Example: a Vertical or Horizontal integration, or a Strategic Partnership, which is needed before the business is able to execute the activities necessary to grow the business.
- The Fix or Repair Strategic Initiative
- To Fix or Repair something currently existing with the business
- Something which in its current state is an obstacle, prevents the business from executing the activities necessary to achieve one or more of its Corporate Goals
- Example: to Upgrade the Business Production Facility to increase capacity to the facility true potential. In its current state, the facility is no able to produce the quantity required to achieve it corporate goal.
- The Discontinue Strategic Initiative
- To Discontinue some aspect of the business that is no longer aligned with the Business Corporate Strategy.
- Something which is consuming resources while widening Strategic Gaps within the business, pulling the business further and further away from its Corporate Strategy.
- Something currently blocking the business from executing the activities necessary to achieve one or more of its Corporate Goals.
- Example: to Discontinue a non-strategic product line that monopolizes production time. Preventing the business from optimizing the production of its more profitable products. Something if not discontinued prevents the business from expanding its more productive product lines.
NMCS Strategic Initiative Process
NMCS Strategic Initiative Process is a 7-Step Process, starting with the analysis of the business Corporate Strategy to determine the strategic path forward, and ending the Operationalization of the output from the Strategic Initiative Project, so the business can move forward, executing the operations of the business to achieve its Corporate Goals.
The Seven Steps of the NMCS Strategic Initiative Process:
- Clarify Corporate Strategy
- Corporate Strategy -> Corporate Goals
- Identify Strategic Gaps
- Corporate Goals <-> Business State => Strategic Gaps
- Design Strategic Initiative
- Strategic Gaps X Business Limitations X Business Capabilities => Possible Strategic Initiatives
- Evaluate and Select Strategic Initiative
- Executive Strategic Initiative Report X Decision => Select Strategic Initiative
- Plan and Mobilize Strategic Initiative
- Planning Detail for funding, resources
- Secure Funding and Resources
- Execute Strategic Initiative
- Insights to Mindfully manage Execution of the project with the Project manager
- Operationalize Strategic Initiative
- Go Live, Open Flood Gates of the transition onto the business.
Part 1 Full Video Link: What is Strategic Initiative?
Starting in Part 2 to Part 7, we discussed each Step of the NMCS Strategic Initiative Process in detail.
Part 2: Clarify Corporate Strategy and Identify Strategic Gaps
A Summary of the key take away from Part 2: Clarify Corporate Strategy and Identify Strategic Gaps includes:
- An Acknowledgement of the fact that not all businesses have a well defined Corporate Strategy, so we discussed insights on how the business can make progress with what they have. After all, you have to start at some point and the right point is where you are currently.
- Discussed NMCS strategic Alignment process in detail, unpacking the business Corporate Strategy through a succinct process to define corporate goals as well as all other information management depend on to effectively manage the business.
- Discussed our 5-step process to analyse the business current state compared to the ideal state necessary to achieve its Corporate Goals, and to identify Strategic Gaps.
Part 2 Full Video Link: Clarify Corporate Strategy and Identify Strategic Gaps
Part 3: Design, Evaluate and Select Strategic Initiative
A summary of the key takeaway from Part 3: Design, Evaluate and Select Strategic Initiative includes:
- Part 3 discussion started off by raising awareness to the fact that as we transition from the “dreamlike”, excitement of the earlier Strategic Planning steps in the process, it can be difficult for some leaders when they are forced to face the reality of the business weakness.
- It’s like the cliche “looking in the mirror” at your weakness, limitation; Looking Objectively!
- Analyzing the impact of the identified weakness and limitation on the business and having to decide what, if anything, to do about it.
- Some Resistance Triggers leadership encounters at this juncture in the process include:
- The Reality of the sheer effort required to execute a Strategic Initiative Project, and whether they are willing to undertake that stress.
- The Cost – Transformation Projects are Expensive – leaders must decide whether the business can incur such a cost, and they can accept the impact on the business and their compensation.
- Management Buy-In. At this step, leaders once excited about a prospect begin pulling back their support, Questioning whether it’s beneficial or not after consideration of the business limitation and constraints.
- Investment funding, the business question whether they will be able to secure the funding given the ROI for the business and potential investors of each Strategic Gap.
- Risk Severity and how well this is married with the Leaders’ Risk appetite
- Culture. Transformation is complex, requiring teamwork, sacrifice and discipline; something the leaders must consider when making expensive decisions to pursue disruptive projects.
- Discussed our Design Strategic Initiative Process, designed to diligently evaluate all Option presented to select the most financially and strategically feasible Initiative for the business to pursue
- Step 1: Understand the Business Limitations.
- Step 2: Evaluate and Categorize Limitations.
- Step 3: Perform Business Limitation Strategic Gap Rating.
- Apply other Core Goals to rule out Strategic gaps conflicting with other Business Core Goals, extracted directly from the business Corporate Strategy.
- Step 4: Prepare Executive Strategic Initiative Report
- Entered into a discussion on the decision-making process and supporting the Decision Makers as they decide on which Initiative to pursue.
Part 3 Full Video Link: Design, Evaluate and Select Strategic Initiative
Part 4: Plan & Mobilize Strategic Initiative
Part 3 was somewhat of a rude awakening, transition from the excitement of planning the perfect future to an objective assessment of the business to determine; of which of the many strategic gaps identified, the business is equipped and able to execute with some level of competence. Part 4 took a step further, as we transitioned the conversation from a Strategic focus to the Tactical level of the organization.
The Purpose of Part 4: Plan & Mobilize Strategic Initiative was two folded; first to develops the critical & essential Specific Strategic Initiative Project, Project Management details required; before the business takes any action to secure funding and secure resources for the project. Then we utilized the Project Management Information to engage investors, suppliers and potential Human Resources needed throughout the life of the project and after the project goes live.
The Key Insights discussed includes:
- We started the conversation with a brief statement on Expensive Strategic Mistake and surveying the leadership for their true opinion.
- A discussion of Planning Funding Insights one must be mindful of before seeking funding for the project.
- One: Understand the type of investment you’re seeking funding for, because not all investor fund all types of investment.
- Two: Be very specific on the Strategic Initiative Project Return on Investment and how it will create value for the business and investor.
- Three: Understand you Investment funding Cost ceiling, beyond which it becomes too expensive for the business
- Four: Determine how you will repay the investment cost during the life of the project, it is an additional cash burden on the business; the business may or may not be able to cover.
- Five: If the option is presented, are the shareholders willing to give up equity to fund the project?
- Note: Not so Fine Print – we’re not financial experts; as such we highly recommend that you seek the consult of certified financial advisors, however, be prepared to discuss each point in applicable detail with potential investors.
- A Discussion of Planning Project Management detail the business must prepare before performing any action on the project. Information we recommend you develop with the Project Manager who will be responsible for the successful delivery of the project.
- One: Project Detail Description, including Deliverables, Success Principles and Success Factors
- Two: Project Constraints
- Three: Project Risk and Deal Breakers
- Four: Project Milestones
- Five: Project Schedule and Timeline
- Six: Project Resource Schedule
- Seven: Project Finance and Cash Flow Schedule
- Eight: Project Communication Plan
- Nine: Project Deployment Plan
- Mobilize Funding Insights – a discussion of different types of assurances; different types of investors will be seeking during the negotiation process to decide on whether or not to fund your project.
- Mobilize Non-People Resources – A Discussion of insights to be considered when sourcing and securing equipment, material, third party resources, etc. so the Resources are accessible and available when needed throughout the life of the project.
- Mobilize People Resources – Finally we discussed HR Insights, having the right people with the right skills onboard at the right time to execute the activities of the projects as per the project schedule. Also, to secure any additional permanent resources needed after the project goes live.
Part 4 Full Video Link: Plan and Mobilize Strategic Initiative
Part 5: Execute Strategic Initiative
We are mindful of the fact that we cannot execute any project, nonetheless a complex Strategic Initiative Project on a thirty minutes video. Also, the fact that the business would have hired a Professional Project Manger to deliver this high stake project. The Purpose of this episode was to home in on the the critical project management areas the sponsor must manage mindfully with the project team to reduce failure and overruns; increase visibility, provide support on a timely manner, and to be able to advise along the way as challenges arises; and believe me, you will need to support the project team on a timely manner because challenges will arise, to increase the chances of success.
Based on experience, it is strongly recommended to:
- Get Commitment from the Project Execution Team on the Project Description detail prepared in Part 4 before execution starts. Simply because commitment creates accountability, accountability improves execution and improved execution improves the chances of success.
- Get Clarity on Project Deliverables because assumptions, because assumption made during execution introduces interpretation errors, and a lack of clarity is one of the sources that causes project breakdown.
- Manage Risk & Deal Breakers. This goes without saying, there are different levels and severity of risk plaguing the project; with deal breakers being the most critical; requiring intentional and purposeful management. After all the last thing any sponsor wants is to terminate a project early, writing off a material investment cost to the business.
- Manage Project Cash Flow. Project Cash flow is an underrated monster which if not contained and managed, can easily bleed cash, affecting the business. After all Profit (a net of cost and expenditure) don’t pay the bill, cash (the available money in the bank) does.
- Manage Progress. You may be thinking Progress is all the Project Manager team does. Yes, but! There are different levels of progress and different criticality of progress. Here the purpose is to encourage the sponsor to mindfully manage the critical path and critical path adjacent activities, as well as to encourage the project manager to proactively manage all other Project activities. After all it’s wise to not assume that progress is made just because it’s on the project plan.
- Manage Communication; Communication Channels are Open & functional. Part 5 emphasize that communication channels are open and functional when things are going as planned, however, communication clogs begin forming when failure or blame or accountability enters the equation. We shared insights on how to encourage open communication channels in all circumstances within a project.
Part 5 Full Video Link: Execute Strategic Initiative
Part 6: Operationalize Strategic Initiative
Operationalization Strategic Initiative is the process, where the products created with the Strategic Initiative Projects are handed over or transitioned from the Project Management team to the Operations of the Business.
We emphasized that how the business transition of the products created from a Strategic Initiative project to the Operations of the business, is critical because:
- Go Live is a critical point of weakness in the Project, especially a Strategic Initiative because it effect a fundamental change to the business. A change that affects the way the business operates, the way staff do their jobs, the way customer responds to the change etc.
- If done properly there is a higher adoption rate and an eagerness to utilize the products created to achieve the business goals.
- If not done properly, the business is plagued with frustration and challenges. Depending on how badly the transition was, it can result in key staff members leaving the organization, an increase in customers attrition and worst a decline in the business as opposed to the growth you expected.
To help counteract the negatives of a poorly executed transition, we provided Transition Insights for the three types of Strategic Initiative discussed above (Create, Fix or Repair & Discontinue). Because each type of Strategic Initiative affect the business differently. In some transition insight the transition category would be the same, however the transition detail differs significantly and materially. For example with a Create Strategic Initiative, the Operating Model is an expansive change, requiring new resources, consolidation, in some functions a splitting of duties etc. While a Discontinue Strategic Initiative effective a contractive change to the business, shrinking workforce, remaining workforce performing double duties, taking on the responsibilities of their once terminated peer, etc.
It is important to note that the Operationalization of a Strategic Initiative’s impact on the business is often underrated, leaving room for Preventable Errors. Here we discussed what it truly means when a project goes live – the flood gates are opened and everyone and everything affected – Operating Procedure, How People do their Jobs, People’s Jobs, Customers, Suppliers, Business Partners, everyone and everything – hence the reason for the meticulous execution of the Operationalization of the Strategic Initiative.
Part 6 Full Video Link: Operationalize Strategic Initiative
Notes: Execution of Strategic Initiative Process
Now before we end, some final thoughts on this Strategic Initiative Process, which is also discussed in the Part 6 video.
This miniseries was intended to provide insights, and is not intended for training. It is too summarized, even the individual videos, are too summarized to be considered as training material. The intention was for this series to help you highlight gaps in your process, understand why it is important to fill that gap, then to provide insights on how you can fill that gap with your knowledge and experience. It’s a management guide only.
Also, it is worth re-emphasizing that this series because of the way it was designed, not only provides a Strategic Tool to boost your Strategic Planning and Strategy Execution but also through the process eradicate personal biases while developing in a collaborative manner the information and details relied upon when managing the business, promoting strategically alignment in all actions.
Assumption made in the development of this Strategic Initiative series
- The businesses are interested in growth and transformation.
- The businesses are interested in Strategic Planning and effective Strategy Execution, and is willing to do the work.
- The businesses interested are organizations with a hierarchy of resources, resources to undertake a Strategic Caliber Project.
- The businesses interested was or is Operationally profitable for several years, meaning a well established business.
- The businesses interested have a version of Corporate Strategy that they can use as a starting point for Strategic Planning.
- The businesses interested are not experiencing industry disruption, as we did not cater for market disruption in this series. Simply because Market disruption required a complete rethink of the business existence, and if it continues, a refresh of the business Corporate Strategy. A refresh of the business Corporate Strategy is a completely different task.
- Strategic Planning and Strategy Execution is the next natural step for the business. Whether that’s founded in transformation for growth or transformation to get back on track.
Assumption we assumed businesses interested in this series would make
- The business is in growth and or improvement mode.
- The business has the potential to get the investment funding required to fund selected Strategic Initiative Projects.
- The business has the executive support to see a project through, work through obstacles collaboratively and do everything in their power to succeed.
- The business has the resources and potential to acquire skills needed to undertake a Strategic Initiative project.
- The business is clear about its Corporate Strategy and has executive buy-in on the business Strategic Path
10 Benefit of the Strategic Initiative Process
This series was a well thought-out series, with consideration for where the business struggles, the root cause and to value the business most valuable resources – it people. Designing Processes & Strategies while sharing our Insights to add context and Tips so you can gain the most from this series; with intentional effort to respect your business, its staff and your passion to make real change, correcting the right problem; preparing the business for sustainable growth. We made lots of understood assumptions throughout this series, simply because we attempt to provide insights without inflating an already complex and lengthy topic. This is just one of the consequences of creating compact video content; fit for today’s audiance.
10 benefit of executing this Strategic Initiative Process as intended are:
- Clarify the Business Corporate Strategy, bring everyone onboard with not just your business Vision, Mission or Purpose Statements, but your interpretation and expectation of what you are working toward and how.
- The process was designed to develop the details and information required to eradicate Communication & Interpretation Errors, errors resulting from assuming that everyone else is thinking like you are, using the same rationale.
- It develops the details required to improve decisions alignment with the business Corporate Strategy, reducing confusion and obscurity.
- It develops a Strategy Map with consensus, clearly laying out the path forward for the business in the short and medium terms at minimum.
- It improves and / or formalizes the Project Management function within the business.
- It unveils limitation and constraints within the business the business may not have been aware of, with consensus on what the business is willing and able to address.
- It improves communication within the business, facilitating appropriate transparency and feedback.
- It develops the information, and discipline to better equips the business to collaboratively tackle challenges.
- It improves culture and teamwork.
- It provides the insights to execute changes more effectively within the business while promoting the Proactive and Collaborative Management of the Business, the activities to achieve the business goals.
2 Final notes from me to you:
- “Knowledge is power” is the old say. The assumption was that we use the knowledge we acquired consistently to improve our lives and businesses. I cannot tell you how many businesses I have worked in, in which the leaders knew exactly what they were supposed to do and why, yet for whatever reason struggled to apply it to the business. The strategy to break this cycle was as simple as transforming that knowledge into executable actions, small manageable actions they can execute within their busy schedule.
- Assuming we know exactly what the other person meant, or is intended to do. There are numerous text, articles and seminars on open-mindedness. Yet I have experienced in too numerous to count, instances in businesses; in which people listen only to respond, listen for an opportunity to talk, tell others what to do without listening or seeking others input, disregard other people ideas, etc.; the list goes on. A strategy to interrupt this practice eventually is the Strategic Alignment Process discussed above. One example of how this process opens the floor for input is in the step to define Success Principles. This steps only works well when you welcome different interpretation from different thinking process, meaning different members of the team. It stifles ego and improves respect; fostering collaboration and teamwork, if executed as intended.
Use the tool as intended and without a doubt, you will see improvement in the business.