Creating and executing a successful strategy can sometimes feel like an impossible challenge. This is not helped by the fact that the statistics are stacked up against you, with McKinsey research suggesting as many as 70% of strategies fail to achieve the anticipated results.
Unfortunately, there's no one-size-fits all strategy that will lead your company to unbridled success. Finding an approach which will take into account all members of the organization and all your individual processes whilst maintaining the integrity and values of the business is enormously difficult, and there are many obstacles along the way. But one of the best ways to guarantee success is by being aware of what challenges are up against you and making sure you and your business are prepared for them.
To ascertain what some of the challenges are when creating a strategy we spoke with six industry experts.
Robert Cochanski Rodriguez, Director of Strategy for Cummins’ Components Business Unit
The technology around us is changing fast. And with new technologies, new business models and value chains emerge. All companies in the field – Cummins, our customers, competitors, suppliers, etc. – are looking for new opportunities. The competitive landscape is very fluid.
David Wittenberg, Director of Financial Strategy at World Vision US
One of the greatest challenges in moving from the for-profit sphere to the nonprofit sphere is that it's much more difficult to define and get an organization-wide buy-in on the definition of success. In a for-profit company, while we wrap our mission statement with wonderful ideal, at the end of the day the mission of a publicly traded company is to maximize shareholder wealth. And we have Nobel Prize winners who have helped us determine how to define, measure and determine the difference between 'some' profit and 'enough' profit to achieve our cost of capital and maximize wealth versus destroying shareholder value. That same objective, quantified guideline does not exist once we move from for-profit to nonprofit of any kind, whether it is a global humanitarian organization or an educational institution or even a government. We can attract people who have fabulous passion and skill, but without a common definition of success, an organization can be pulled apart in a score of different directions. Because it's less concrete it can be more difficult to find that common definition of success and implement an effective strategy.
Nick Halla, Chief of Strategy at Impossible Foods
There's always the challenge of looking at a sunk cost as a sunk cost and really thinking 'what is the best way forward from here?' When there's a lot of momentum building, it's hard to change direction, and I think this is where a lot of large company’s stumble. When you have a successful business and then the market starts changing, but all the momentum you built is in the direction you're already going, it can hard to change trajectory. Companies need to really look at what the reality is today, where it is going tomorrow, and what the best strategy going forward is, which is much more challenging to do.
David Chao, Chief Strategy Officer at ReadyTalk
You have to truly believe in a strategy to properly execute it. You can’t just settle for understanding it. You have to believe with all your heart and passion. The passion is key when it comes to dealing with problems every day, every hour, and still feeling that the work is worth doing. Then, and this is the hard part, you have to apply logic to the strategy. Does this make sense? You have to be ice cold in your analysis of whether the strategy makes logical and business sense. You have to rationalize all of it in your head, with some degree of critical distance. It’s almost like you need to have two brains going at the same time.
Another main challenge is patience. Without it, you may kill an initiative too quickly and not give it adequate time to take the pivots it needs. The good thing about startups is that every decision is based on break-even. On the other hand, it’s harder for existing more mature companies to execute if they don’t have discrete accounting for projects. The converse of the patience challenge is that sometimes, you don’t kill the projects that you should because no one accounts for those dollars.
Simon Hay, Head Of Strategy, Kiwibank
There are obviously many challenges that companies face when it comes to strategic execution, but the shortened timeframes in decision-making cycles and for implementing major programmes really stand out as we move into a digital world; and the need to retain strategic optionality, in response to the way in which the environment is evolving, whether it be by having an agile 'test and learn/fail fast approach' to innovation, or making as much cost as possible, variable cost and many more. Of course, there are two sides to this question, the first is the nature of the strategy itself, and the second is the organizational capacity and capability of the organization to execute it, which means that both parts have to work in lockstep to execute successfully. As we all know, the reality is often much messier in practice.
Mark Sheppard, Chief Commercial Officer, GE
The competitive landscape is changing, no longer is a disruption in a dirty world. The threat of substitution is more prevalent than ever, take a disruption story like Uber.
Uber owns no cars, yet it’s thrown the taxi industry upside down. The traditional business models we used to have have been turned on their heads by innovative business models and startups with fresh ideas.
It is not a competitor reinventing the jet engine we have to worry about. It is two guys in the garage, developing software that will make jet engines run more efficiently that we need to prepare for.
Follow the debate at our Chief Strategy Officer Summit in San Francisco, May 7 & 8.