Top ten reasons why business strategies fail
Business strategy is a vital framework for any business to keep its position within the market. According to Harvard Business School Press, 90% of strategies fail due to poor execution, so it is not only important to create a great business strategy but it is also important to implement it right. This fact is widely acknowledged, but despite this have you ever wondered why business strategies fail? We have identified 10 root causes that contribute to the long-term failure of a business.
1. Wrongfully assigning responsibility to your team, as they should be included both in strategy creation and strategy execution
It is vital that the team is included since the design phase of the business strategy in the executive process. By excluding the team from this vital process, it makes it hard for them to understand the business strategy of the company.
2. Fail to turn the Strategy into Operations
Once you are in the phase in which your business posesses a well written strategy, of upmost importance is transforming and implementing that strategy into an operation. Your plan should include clear deadlines and can make a use out of risk management strategies.
3. Having the wrong people in leadership positions
The employee that is going to be responsible for the implementation strategy should be fully aware of his duty, to have all the expertise needed to understand the strategy and turn it in daily , weekly , monthly, quarterly and yearly tasks for the employees. Leadership is about persuating employees to act in a certain, desired way without making them feel aware of that influence.
4. No accountability or follow through
The team leader or the CEO should develop a plan to follow up with employees and make sure everyone is accomplishing the tasks assigned , otherwise adjustment should be made. Taking account for failures is part of the development process of a team though. If a leader does not assume the failures, he will not be able to assume succeses either.
5. Partial commitment
The staff should be fully committed in order to accomplish the tasks given. They should believe in the business’ strategy plan and they should feel that they have a significant role in accomplishing the company’s goal.
6. Lack of willingness for the organization to change the business strategy
In the current business environment, it does not matter how strong a company is, but how flexible the business model is to changes or how agile is the strategy implementation. The only constant in entrepreneurship is change, so an entrepreneur should be prepared for such events.
7. Lack of a strategy to analyze and communicate results
Company does not continually measure strategy results and link them to a performance scorecard system with individual and team rewards for achieving your company’s strategic plan. Holding quarterly meetings with the execution team it is vital to make sure everything is going according as planned.
The company CEO’s or the team leader should keep quarterly employee meeting to update them with the results, modifications of the business strategy. If the results have been met rewards should be announced.
8. Lack of strategic vision
As part of its culture, a company should have a vision that leads the activities and operations, being the reason why something is done. Furthermore, the strategic vision of the company should not be general, it should be precise and easy to turn it into short term and long-term objectives. It appears that if a general business strategy is written, it makes it more difficult for the team to implement it.
9. Unclear customer segment
In the initial phase of a business, the organization relies on few, unsegmented clients to close deals with. As the company develops it should identify its customer segment and should struggle to satisfy those clients, even if that means moving away from the initial clients.
10. Failing to follow the strategy
More often than not, executives fail to envision and follow the strategy, being more concerned about day-to-day operations. Most of their time should be spent planning, implementing, checking the strategy, making modifications if needed and communicate on a daily basis with their employees in order to make sure everything is going as planned.
To help you overcome these risks, we have created the following checklist:
- Construct a precise business strategy;
- Improve your vision and stick to your strategy;
- Assure the flexibility of the business as to be able to implement changes;
- Make sure your employees are working towards the accomplishment of the strategic objective.
As stated before, this guide is not guaranteed to succeed, but it delivers some guidelines for entrepreneurs on how to develop their business. A team of professional business consultants can develop this guideline in a real working strategy for a business. If you want to develop your business strategy do not hesitate to contact the Idea Perpetua Team which can help you throughout the process.
About the author:
Junior Marketing Consultant
Makis attends the Faculty of Applied Modern Languages, specializing in English-French at the University of Bucharest. Within Idea Perpetua, Makis implements Entrepreneurship Consulting and Offline Marketing Consulting projects. At the same time, Makis is oriented towards developing a long-term relationship with people, adapting his international experience to the national specific and doing quality networking with entrepreneurs from various fields of activity.