If you aren’t sure, you’re not alone.
According to Robert Kaplan, creator of the Balanced Scorecard, the main cause of strategic planning failure is poor execution. And Kotter International determined that, on average, 70% of new, large-scale strategic initiatives fall short of their goal, as did a similar McKinsey & Company 2009 study.
These are pretty sobering statistics, given all the time and effort you and your management team likely put into the preparation of your strategic plan.
There are 3 primary reasons why strategic planning fails or prevents effective execution of a company’s plan.
1. Unclear Objectives
First, and foremost, most employees simply don’t understand the company’s strategies nor their order of priority. Try this simple test. Walk around your company and ask various functional team members from different departments this question: “What are our company’s top three strategies in order of priority?” Sadly, you often see a company where the employees can’t provide a consistent answer — from function to function across the company. To be clear, this is not the employees’ fault. That rests with reason #2.
2. Failure to Focus On Strategy
The senior leadership team will often spend less than an hour a month reviewing and discussing the strategic plan. It’s no wonder your employees don’t grasp the significance of the strategic plan — the company leaders don’t spend enough time on it. The strategic plan is an important document that provides clear strategies and tactics to significantly improve the company’s performance, yet no one talks about it. And the result is that employees continue to do what they have always done on a daily basis prior to the Strategic Planning blip.
3. Budget Alignment
The budget, incentive structure for the employees, and customer success metrics are not aligned with the strategic plan. Remember the old adage, what gets measured, gets done. If most of the company’s metrics are based on an incremental improvement over last year’s performance — and don’t integrate the new metrics needed to achieve strong execution of the new goals and strategies — then why should your employees spend time working on things they aren’t incented to do?
The good news is that each of these reasons why strategic planning fails can be addressed and a change in the right direction made. It’s not too late!