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Thursday, January 25, 2007

Why Good Strategies Fail

The shortcomings of a bad strategy are usually painfully obvious -- at least in retrospect.

But when good strategies fail it's often harder to pinpoint the reasons.

Execution can go wrong for a variety of reasons.

  1. One of the most basic is allowing the focus of the strategy to shift over time. The challenge of execution is mostly a matter of alignment -- getting the right product or service to the right customer at the right time. (or simply - doing the right things right.)
  2. At other times, strategies fail simply because they don't get communicated to all the people involved.
  3. Strategies also flop because individuals resist the change.
  4. Cultural factors can also hinder execution.

Yet the biggest factor of all may be executive inattention. Once a plan is decided upon, there is often surprisingly little follow-through to ensure that it is executed.

Frequent communication is essential if plans are to be executed well -- very effective companies have regular dialogues between the leadership team and unit managers.

Two schools of thought about the best way to improve execution.

  1. One school emphasizes people: Just put the right people in place and the right things will get done.
  2. A second school emphasizes process rather than people.

Research suggests that companies that have delivered the best results to shareholders combine both approaches.

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