In 1999 Fortune Magazine reported that 70 per cent of strategies implemented by Fortune 500 companies failed. This disturbing statistic was nothing new; Fortune Magazine had reported similar results in a survey from 1986, and there are regular reports in the media of failed strategy implementation with percentages ranging from between 50 to 90 per cent. McKinsey, for example, suggests a 70 per cent failure rate.
These figures may be controversial but it is clear that implementation failure remains a common occurrence. There is no shortage of articles on the web citing reasons why, and many have common suggestions; but Dr Quy N. Huy, a strategy professor at INSEAD, has some interesting observations on the cultural and emotional reasons as to why strategy implementation often fails.
When I recently had breakfast at Edinburgh Airport, I read a comment in the restaurant's magazine taken from Sam Walton's book 'Made in America'.
Walton, the founder of Walmart, argued strongly that almost all good ideas for improving business came from the shop floor.
This got me thinking.
Strategic planning is about change and, hopefully, improving the business; but many large organisations operate a centralised decision-making culture where devising strategy is the exclusive preserve of top management. Yet there is a huge reserve of untapped knowledge within organisations that is very rarely sought in these circumstances.
The act of consulting with operational management and staff, and listening to and learning from their insights is often unheard of.
Senior management need to develop strategy with the involvement of a wider range of stakeholders in the business. This is essential to ensure strategy is executable and to develop the motivation required for successful implementation. A far wider group of managers should be involved in contributing to the strategy process and planning its execution.
It would be very interesting to hear from readers of this blog about their experiences of strategic planning and implementation in their organisations. I leave the final word to Dr Huy:
'To execute a strategy successfully, you need a good plan and an even better culture.'