Why Strategies Go off the Rails

Why Strategies Go off the Rails
12:03 PM Tuesday May 15, 2012

Have you ever been in a situation where everyone seemingly agrees on a particular strategy, but somehow it never happens?

See if you identify with this example: A technology firm — with a number of different product areas, geographic units, and service functions — was figuring out how to integrate services for their largest global customers. After extensive planning, the senior management team decided to assign experienced executives to a dozen of these customers, and give them the authority to manage the accounts end-to-end. What they failed to address was that many of the best sales executives couldn't be released to take on these roles; the financial systems couldn't provide the right information on a customer-by-customer basis; compensation plans didn't support integrated selling; and research programs remained geared towards new technologies instead of integrated solutions. So while everyone agreed that an integrated approach was needed, very little change actually occurred.

The fascinating thing about this case, and many others like it, is that nobody took accountability for the lack of strategic execution. In other words, everyone felt individually successful, even though the company experienced a collective failure.

I recently saw this dynamic play out at a meeting of a large consumer products firm, where the top 100 managers were anonymously surveyed with two questions: How aligned are you with the company's ambitious change strategy; and how aligned do you think your peers are with the strategy? Over 90% of the managers said that they, personally, were aligned with the strategy — but 50% felt that their peers had doubts. In other words they were saying, "I'm fully on board, but many of the other people here are not."

Obviously something about these answers does not make sense. So to understand them, let me suggest three underlying psychological factors that often cause strategies to derail:

Passive aggressive disagreement: It's unlikely that everyone in an organization will agree with all of the nuances of a major strategic shift. Disagreement can be based on logic, experience, or (perhaps unconsciously) discomfort with change or loss of power. In any case, if the culture of the company does not encourage dissent, the resistance will go underground. People will voice their support but not actively do anything to make it happen. For example in our technology case above, the newly appointed account executives found that the finance function, while not standing in the way of the integrated customer approach, also was not doing anything to help.

Fear of confrontation: In most nice organizations where teamwork is encouraged, managers hesitate to confront colleagues who are not fully engaging in the strategic shift. They may not want to make waves or fear harming the relationship. So instead they try to work around it and end up sub-optimizing the strategy. Again, in our case, the account executives and their sales leaders didn't want to push too hard on finance for fear that it could make things worse for them later by damaging relationships.

Lack of persistent top-down demands: If the successful implementation of a strategy requires change across a number of functions, then a senior leader needs to get everyone on board. Without this explicit expectation — reinforced again and again — people will avoid taking action even though they will continue to smile, nod, and profess support. Many senior leaders are hesitant to push too hard for fear that they will have to take drastic action, like firing someone. So instead they just assume that the pieces will fall into place.

Obviously it's not easy to change these dynamics, especially when they are often invisible and rooted in long-standing cultural patterns. A good place to start is to point them out and provoke some dialogue, which was the purpose of that survey used at the consumer products meeting. Most people do not want to be part of a collective failure — so holding up a mirror can be a powerful way of helping managers realize when they are headed in the wrong direction.


What's your experience with the challenges of strategy execution?

by Ron Ashkenas
HBR