WHY is our STRATEGY FAILING?

Since my recent post (“Why aren’t my people more strategic”), I have received several calls from organisations interested in improving their strategic performance.

One new client asked me why their six-month old strategy was failing. I found that they really meant there had been no shift in the pattern of decisions and actions taken by people to improve the value they were delivering to clients.

After my research and internal discussions, I found three relevant factors:

1. Focus is achieved by Imbalance

Their strategy seeks to deliver excellent service, consistently, at a good price with high levels of innovation and customer care. It was clear that this attempt to “balance” multiple factors was not achieving competitive cut-through. Simply put, competitive advantage is achieved by focus, not balance. And focus is the result of imbalance.

Imbalance is achieved by trading off certain characteristics in favour of others. We don’t ignore everything else - we simply emphasise certain areas over others to support our competitive strategy. And this was not happening.

2. Ongoing volatility produces the 'Biology of Risk'

I observed high levels of volatility in the organisation - frequent changes in processes and decisions. This level of uncertainty, combined with the need for fast ‘Agile’ work reactions, had caused high levels of stress.

While short bursts of stress register as novelty and encourage people to try new behaviours, continued volatility induces a rise in cortisol and produces risk aversion. People simply felt safer following the ‘old’ behaviours and ways of doing things.

The ‘biology of risk’ meant that the continued volatility inside the organisation resulted in unwillingness to attempt the new processes and behaviours.

3. Organisational capability is more than skills

The final factor is the confusion between skills and organisational capability. While skills reflect the ability of an individual to perform a task, capability drives the ability of the organisation to deliver strategy and achieve competitive advantage. Capability is the combination of skills, process and organisation design. These processes and organisation design should to align with the desired strategy and competitive advantage.

In this case, my client had actively recruited appropriate skills in their workforce, but had not combined this with the processes and organisation design aligned with the strategy.

Success in strategy depends on how we set up our organisation 

My work in this business has been focused on three change initiatives:

• Gaining commitment to the idea that "tradeoffs are your friend". We made carefully considered choices about how certain activities were to be emphasised and others reduced. By re-prioritising and re-allocating resources in the organisation, we are aiming to lift our game in parts of the strategy (customer care in this case) while recognising that other elements are less important. The tradeoffs are key to enabling this new focus.

• We have also committed to "changing the way we change".  Given the increase in stress levels during periods in which new processes and initiatives are introduced, we will now have designated periods in which these changes are made, followed by periods of relative stability to allow for consolidation. The short bursts will register as novelty and encourage people to try new behaviours, while the periods of stability will prevent cortisol build-up and risk aversion.

• The final initiative is the alignment of organisation design to support the focus on customer care. New processes and structures will be implemented to complement the customer care skills. The organisation will be designed around specific customer segments rather than functions and internal processes.