A Harvard Business Review (HBR) study showed that 70% of companies fail to achieve profitable growth on a recurring basis. The primary reasons for this are how organizations strategically plan, align their internal resources, execute to the strategy and measure and improve for success.
Every company has the ability to break this cycle or to break through to new, predictable and profitable growth by avoiding the following:
1. Being “Hooked” on “Hopium”. Being overly optimistic in the assessment of opportunity or relying too heavily on “gut feel.” Always take an objective, data-validated approach to identifying new opportunity. Become a student of markets, customers, organizational capabilities and focus on reality-based opportunities and strategies.
2. Perpetuating the Status Quo. The Afterburner Group did a comparison of the Fortune 500 in the year 1995 to the Fortune 500 companies in the year 2015. Over 65% of the companies on the 1995 list had disappeared from the 2005 list.
A common tendency is to think that what has made you successful yesterday (and today) is the key to future success. To think this way assumes that market conditions, internal resources, budgets and your customers also remain the same. Intuitively we know that nothing remains in “stasis” but is constantly evolving and changing and presenting new need and opportunity. Look to move beyond the status quo to new revenue, profitability, products, services, markets, customers, and opportunity.
3. Only Looking Internally. Organizations tend to focus on their own problems and how to overcome them. Companies tend to look to their own needs first. Fresh thinking and perspective is required at every turn. Look outside to customers, markets and other experts to discover opportunity. Maintaining an ‘internal’ perspective is a sure prescription for failure.
4. Emphasizing Strategy or Plan over Execution. In the same HBR study, it was found that 90% of businesses have a business strategy while 70% did not achieve recurring profitable growth. The missing link was execution—the operationalization and completion of the strategies within the organization. In fact, of the companies studied, more than 60% didn’t align budgets to the strategies—virtually assuring strategy failure. Don’t prioritize planning over execution; give your plans enough time to be executed and measured.
5. Not Communicating. The HBR study indicated that 95% of surveyed company’s employees did not know or understand the company’s strategies or how to contribute. And, that most of the companies did not have a clear, consistent way to describe their strategy. It is critical that all objectives, strategies, and tactics be consistently and clearly communicated to everyone in the company. If your people don’t know what the goal line looks like, how can they work toward achieving the success you desire? You can never overcommunicate strategy and expectations.
6. Maintaining Risk Avoidance Posture. Work hard at creating and validating appropriate risks during strategy exercises. Then, instead of seeking to avoid risk, build into your strategic plan and actions the required steps to overcome or manage risk to an acceptable level. Managing the strategy and business to avoid risk most certainly leads to less than full reward. Leaders carefully consider and manage risk. Followers and laggards seek to manage out risk as the highest priority.
7. Not Connecting the Strategy to the Organization. A business or company strategy must connect to each employee, partner, product and service. Every strategy must have defined actions and tasks, owners, timelines for completion and anticipated or expected outcomes. Never let a strategy remain “shelf ware” or disconnected from those who must go and make it happen.
8. Executional Inflexibility. Strategies and action plans are “living” by nature.Every organization must have a process to observe changes in market, product, customer, economy, regulation and business, then making fast strategy adaptation. Don’t establish a rigid strategy and plan which must be worked to final completion in every area, irrespective of the changing world around you.
9. Poor Accountability. Everyone should be accountable to performing and delivering actions needed to achieve the business strategy. Create an environment where compensation, personal objectives and deliverables are all focused on strategy achievement—through clear and understood rewards and penalties.
10. Little Measurement. You grow what you measure. Make sure your organization and company clearly understands what success looks like and measures every activity or deliverable for progress toward and achievement of the strategies. Measure at intervals which allow for fast adaptation to obstacles or new discoveries. Measure in a quantifiable and objective manner so as to eliminate the subjective and increase focus on success.
The Afterburner Group has been guiding companies in the technology, energy, services, manufacturing and non-profit industries to new, achievable strategies for over 25 years.
If you think that your strategy needs a cold-eye review, refresh or a new process that leads to new opportunity, fill out the contact form below and we’ll let you know what that might look like and how you’d benefit.
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