EXECUTION, execution, execution, is the master strategists’ mantra, and if it goes horribly wrong you just hope that it’s not your head on the block.

Both Carly Fiorina, former CEO of Hewlett Packard, and Philip Purcell, former CEO of Morgan Stanley, have had strategy failures cited in their corporate obituaries.

They are not alone: the reality is that many strategies fail. Only 63 per cent of firms reap the financial rewards promised by strategic plans. Michael Mankins and Richard Steele, respectively the managing director and a partner at Marakon Associates, a strategy consulting firm, have calculated that the main contributors to the lost 37 per cent are poor communication, inadequate resources and culture.

“Lower levels in the organisation don’t know what they need to do, when they need to do it, or what resources will be required to deliver the performance that senior management expects,” they say.

Nick Greenspan, a partner at Bain & Company, a business consultancy, agrees: “The No 1 thing that goes wrong is not having the wrong strategy but that the organisation and day-to-day practices are not aligned with the strategy.” A great example of this misalignment is the US chain of fresh-baked cookie stores whose top team had learnt through experience which biscuits to bake, when and in what quantities. If store managers had followed the operating instructions all would have been fine. But HR advertised for store managers under the heading: “Be your own boss.” The new entrepreneurial recruits that the campaign attracted deviated from the tried and tested strategy: profits plummeted.

Business types love to talk about alignment and there are a multitude of strategy-implementation models to remind strategists of where it can go belly up; the most famous of which is the McKinsey Seven S Framework, where the S’s are: strategy, structure, systems, style, staff, skills and superordinate goals (see box).

Greenspan has a much simpler résumé of what can go wrong: he says that strategies fail on four counts: it’s a weak strategy; it isn’t translated into action; the right people aren’t employed; and the right things aren’t measured.

Jo Causon, the director of marketing and corporate affairs at the Chartered Management Institute, pares it down further. People are often just too busy, she says, to think strategically. We get bogged down in our to-do lists and don’t realise that our strategy has gone off course or the world around us has changed since we dreamt up the master plan.

But thinking could be where it all goes pear-shaped. Charles Roxburgh, a director at McKinsey & Company, a strategy consultancy, says that good executives sometimes back bad strategies because their brains are flawed. He says that behavioural science has a lot to teach strategists about why even the cleverest of us can sometimes screw up.




DATA FILE

Strategy is a word that has been hijacked by academics and profiteers. It sounds important and it promises to give us a leg up in corporate life, if only we knew what it meant. In this ten-week series Career is translating some of the gobbledegook.

Here we talk to Bain & Company (bain.com) and the Chartered Management Institute (www.managers.org.uk). We read Turning Great Strategy into Great Performance, published in the Harvard Business Review (hbr.org), and Hidden Flaws in Strategy, in the McKinsey Quarterly (mckinseyquarterly.com).

You can learn more about McKinsey’s Seven S Framework in The McKinsey Mind, by Ethan Rasiel and Paul Friga (e-book to download at amazon.co.uk, £14.48)

Next week: The latest strategy trends.

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