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Great strategies often fail as a result of poor execution and, at the same time, great execution cannot save a truly poor business strategy.
Even great organizations can struggle due to the limitations of their thinking or approaches. The existing leadership team may fail to plan, execute, measure, and refine business goals as the company grows and faces the tough headwinds of a competitive marketplace.
Decision-making gives way to “analysis paralysis” as the team contemplates large-scale change with very high stakes. The longer this cycle continues, the harder change becomes.
Here we take a deep dive into the most common reasons business strategies fail and how to fix them with the help of interim executives who bring a unique combination of strategy and execution.
1. Believing that All You Need is a Great Strategic Plan
In general, strategy is more of a journey than a destination. Whether you are an entrepreneur, small business owner, or the head of a large corporation, a successful business strategy requires setting clear expectations for what will be achieved at each step along that journey.
Strategic management calls for the stakeholders to meet annually to reset their one-year strategy and quarterly to turn that strategy into action. This approach ensures that the organization is constantly reviewing strategies across the company as well as in each specific business unit, product, or service and revising plans as the environment changes. This cycle is shown below.
Bringing in an interim executive with years of experience developing effective business strategies and then executing to achieve those business goals gives the organization two big advantages: the fresh perspective needed to look critically at the company’s strengths and weaknesses and the deep well of experience to set a corporate level strategy and execute the plan.
2. The Business Strategy Does Not Capitalize on the Company’s Competitive Advantages
This does not mean you cannot branch into new markets or create new products. But the business model has to start by tending to the day-to-day customers that keep the lights on. Once that business is secure, you can create a differentiation strategy to achieve new business objectives.
In one case, interim executives were instrumental in saving a publicly traded supply chain software company. The firm was nearly out of cash, customers were turning to competitors, and the board fired the CEO and CFO.
They turned to an interim CEO who was charged with assessing the condition of the company and creating a sustainability plan.
A knowledgeable senior employee was assigned to each target customer and empowered to mobilize the company’s resources to resolve issues immediately. As a result of these and other changes, the company was able to avert its liquidity crisis, increase sales, return to profitability, and recruit a very senior permanent CEO.
3. Failing to Properly Allocate Resources
Even a well-crafted business strategy will fail if the company is unwilling to dedicate adequate resources to the effort.
Quality interim CEOs, COOs, and CFOs have experience solving resource allocation and availability issues. They can quickly and dispassionately assess where to put available resources so they are delivered to the most valuable activities in the company.
4. Inability to Move Quickly
Larger organizations can be inherently slow to implement new strategies. Smaller organizations can fail to plan for likely hardships or barriers as they attempt to quickly execute their roadmap to success. Organizations of all sizes can struggle to maintain quality while pressing the limits of available capacity.
Since interim executives work to both scale companies and turn around those that are struggling, they possess the skills and know-how to use the tools designed to maximize the speed of execution while increasing the quality of supporting processes.
5. Lack of Change Management Experience
Growth strategies that can be disruptive to an organization often fail. It’s difficult for leaders who have always done things one way to pivot to doing them in a different way when the long-term goals of the company shift. But, as the saying goes, “There can be no change without change.”
Interims, free from many of the encumbrances that saddle employees of the company, can see radically different end-states than can be imagined by the company’s permanent leadership. Expertise in leading companies through large-scale change and the challenges that process brings, make interims adept at planning for and managing change and using effective communication and other proven approaches to overcome this inertia.
6. Poor Execution
Overall poor execution, which may include any of the above issues, is the single biggest cause of business strategy failure. For companies that struggle with execution, interims’ experience can lead them to suggest (and help implement) the types of business strategies, tools, and frameworks that have proven to work at other companies they led.
Why are Interim Executives Best Suited to Create and Execute Business Strategy?
Interim executives are pragmatic in assessing all levels of business strategy through environmental scans and audits, SWOT analysis, internal business unit reviews, market position research, customer interviews, and employee interviews.
In a 2010 Harvard Business Review article, Robert Simons posts seven key questions companies should ask in reviewing their current strategy:
- Who is the primary customer?
- How do your core values prioritize shareholders, employees, and customers?
- What critical performance variables are you tracking?
- What strategic boundaries have you set?
- How are you generating creative tension?
- How committed are your employees to helping each other?
- What strategic uncertainties keep you awake at night?
Interims often step into companies that are struggling to convert good strategy into tangible results. An interim will provide a fresh perspective, looking at the whole picture to create a plan that includes the following major components for success:
Goals and Objectives
The business strategy orients the company around large concepts that will drive all aspects of execution for the foreseeable future. The first step in translating this into a plan is to clearly state the goals and objectives of the plan.
Powerful strategies impact the entirety of an organization, meaning that functional-level strategies are created to address all of the needed transformations within an organization. Goals should be set for market share, value creation, and other key performance indicators.
Scope
Generally speaking, high-level scoping is sufficient for significant transformation. Without proper scope, plans can fail due to scope creep as large unplanned components are added late in the transformation process, disrupting the focus and creating constant change.
Budget
The budget should be as detailed as possible and should segregate expenses from assets, be clear regarding cash out the door, and spell out financing or fundraising needs.
Resources
Major transformations typically occur in real-time while the company is still operating its day-to-day business, resulting in the over-allocation of key resources.
Communication
Transformation can terrify employees at all levels of an organization. Experienced interims know that communication is as critical to plan success as the details themselves.
Issues and Impacts
As basic as it sounds, any large issue or impact (good or bad) should be specifically stated as part of any plan. The plan ties together the execution aspects of strategy and creates a common reference point for what is to be accomplished. Therefore, any known knock-on effects or issues that need to be dealt with should be stated up front, minimizing surprises.
Phasing
All plans should look to create as much value for the organization as quickly as possible. This creates the need for short-term and long-term approaches. Each phase should fit into the desired whole.
Interims are uniquely positioned to help an organization go beyond creating a strategy and actually implement the plan.
They have the experience of past successes to help them work through the plan. They understand the metrics that will determine success. And they bring a fresh perspective that can serve as a catalyst for identifying new opportunities and new ways of doing business.
Contact InterimExecs to learn more about how a RED Team Interim Executive can help your company create and execute a solid strategy.
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This article draws on the chapter “The Interim Executive Approach” featured in X-Formation: Transforming Business Through Interim Executive Leadership, a guide to interim management written by several veteran executives on InterimExecs RED Team.
The needs of a typical organization can be broken down into four major areas, each representing an execution discipline interims practice to assess needs and take action. The other three parts are: Optimize, Maximize, and Organize.