Many of the business strategies your company launches won’t work. But you guys aren’t alone. According to Forbes, a third of all business strategies fail. I think the real number is actually much higher.
We’re all pretty smart people. Why don’t our companies win more often?
- Not understanding the customer problem? Nope
- Not breaking the initiative into small enough increments to execute? Eh.
- Overestimating the size of the market? Na.
- The plan doesn’t engage the whole company? Getting warmer.
Most new strategies fail because they aren’t fully integrated throughout the entire company.
What Companies Hate Most
It’s true. Companies hate change. Unless of course, you’re Amazon.
There’s a laundry list of companies that saw the new strategy writing on the wall and still avoided it:
- Kodak developed the first digital photo technology and put it on the shelf.
- Blockbuster passed on the opportunity to buy Netflix.
- Hoover walked on buying Dyson’s bagless vacuum tech.
However, companies know they have to change to stay relevant. This is why functions like R&D, Innovation Teams, and Customer Research exist. They exist to de-risk wide-scale change by running strategic bets on the fringes.
This is smart.
Keeping innovation small and narrow initially allows the company to learn, iterate and improve quickly and cheaply. But when the new strategy passes all the micro tests…it’s time to commit.
The Wrong Way To Commit
Committing to a new strategic direction doesn’t have to mean writing a big check, blindly jumping in the deep end, or taking a big bang approach.
The wrong way to commit looks like what Greg McKeown, in his fantastic book Essentialism, calls Straddling.
“In the simplest terms, straddling means keeping your existing strategy intact while simultaneously also trying to adopt a new strategy.”– Greg McKeown
Keeping both plates spinning is hard. Ask Toys R Us. Better to slowly spin one up as you put one down.
I get that’s a fairly abstract metaphor. And Toys R Us isn’t around so we can’t ask them.
So, how can we tell if our company’s new strategy will work?
3 Predictors of Success:
- Incentives: If it was called volunteering, when we log on in the morning we’d say “I’m going to go volunteer today.” It’s work because we’re trading our time and energy for compensation. Incentives drive behavior. Usually, companies partially get this right by incentivizing just the sales team. I call this stopping short. The trick is to incentivize all leaders involved. Not just Sales. Incentivize Operations, IT, Products, HR etc. Get everyone rowing in the same direction.
- Measurement: What are the leading indicators and KPIs to course-correct as your phasing your strategic rollout? Are they easy to understand? Are they communicated across the entire organization to rally the troops or kept top secret?
- Customer Service: Often, this function gets completely overlooked, which is why it’s such a great crystal ball. If senior leaders are asking “how does our after-sale support model need to change to align with this new direction” then you know people are thinking this through.
Your Company’s New Strategy
A few weeks ago I wrote that change is hard. It takes a lot of musicians to have a symphony.
There’s an infinite number of reasons why a strategy can fail, but only one that guarantees it.
By not fully integrating the new strategy throughout the entire organization, a lot of companies never give themselves a chance.
Think about your company’s new strategy. Are you engaged in it? If you aren’t, how can you change that?