Why corporate strategies fail and how organisations can close the execution gap

Every year, thousands of executives gather in strategy off-sites to define the future of their organisations. Yet research consistently shows that between 60% and 90% of strategic plans never materialize. There are three places where strategy typically breaks down. The first is the strategy itself.

 

1. The strategy is too vague, or, basically, a wish list combined with financial targets

Strategic plans can fail for many reasons - a company can miss the market, or the timing, or 100 other factors that interplay. But often, one overlooked factor is that strategy becomes a wishful-thinking exercise.

“Becoming the most innovative company in the world”, “Being the most customer-centric organisation”- those types of strategy statements can not guide everyday decisions; they do not give leaders and employees across the organization a clear answer: what is the focus, which project shall we deliver, what things shall we say no to.

So people turn to the business as usual and hope they will hit the target by working harder. And leadership stays assured they did their part - gave the strategy to everyone.

What to do

1. Make sure the strategy is simple enough to remember, and specific enough to guide others. It identifies the key challenge you are overcoming, provides details on how you want to get there, and is focused.
2. Communicate it regularly: during townhalls, regular meetings, QBRs, one-to-ones, make connections in people’s minds on how what you say is connected to the bigger picture
3. The way you formulate a strategy should provide a clear answer to how people spend their time and what they focus on. Should they have a call with the customer in Vietnam, or should they work on a new user journey? That type of day-to-day priority should be easy to answer.
4. The strategy statement should make it clear what the company says NO to as well, as stretching organizational capabilities is one of the most common pitfalls in strategy execution.

 

2. Strategy and execution are often treated as 2 separate disciplines

Strategy is discussed at the C-level, and research says it often breaks down below the C-suite. This happens often, as C-level conversations tend to focus on what the company needs to do and, in the best-case scenario, how it will get to where it wants to be, and almost never on HOW exactly the company will execute its strategy. Strategies rarely fail in a single front, as research consistently shows that effective organizations need to simultaneously adjust their competitive positioning, business model, environment, and company capabilities to execute strategy.

What to do

1. Dedicate time during strategizing on how the company is going to execute decisions and agreements. Do you need to adjust not only one element, i.e., market positioning, but also company capabilities, capital allocation, and business model?
2. Identify what stands in the way: the incentive model, structure, culture, and the mindset. Create targeted solutions on how to overcome those challenges.
3. Have a solid governance model and invest in change management. It takes time to build new habits for making decisions, focusing, and having productive conversations. Use external help, as sometimes organizations stick to the usual.
4. Supporting leaders on the ground. Training in decision-making or strategic thinking rarely changes behavior on its own. What works is building a system where leaders regularly share and work through real execution challenges together. Mentorship, shadow coaching, and peer coaching develop the judgment and execution muscle that classroom training cannot.

 

3. Strategizing as a discipline

Many companies still stick to the idea of an annual strategy session as the way to define strategy and then execute it during the year. This approach was already showing its limits before the pace of change accelerated, but with changes in AI technologies, value delivery, business models, and channels emerging overnight, focusing on the annual cycle is irrelevant. Strategy cannot sit on a deck anymore. As research consistently shows, strategizing has become one of the most critical routines for achieving sustainable business results. McKinsey's research supports this as well: companies that reallocate capital and resources across business units in short cycles — rather than annually — materially outperform those that wait for the yearly planning round.

What to do

1. Use strategizing as an ongoing process, a discipline that requires a culture of candid conversation within the organization. When executives convey pure confidence in presenting their ideas, it does not make it easy for others to challenge those ideas. Leaders should discuss strategy with Adam Grant's "confident humility," which encourages uncomfortable questions, curiosity, and learning. This mindset will signal that, though strategy is defined, it is a set of assumptions and hypotheses that need to be tested, justified, and challenged.
2. Test-and-learn approach. The company should find a way to test its strategic assumptions early and learn from them, ensuring that what it thinks will lead to success actually works. It's a good idea to have learning OKRs, not just aspirational ones, which allow for explicit exploration and testing of new ideas. It is relevant not only to new business streams but also to core products.
3. Do not mix adaptability and instability; the organization should avoid overcorrection and give itself enough time to get traction. It is not an easy path to balance, given the test-and-learn culture, so it requires clarity on expectations and robust decision-making.
4. Implement an effective governance model. Good-quality OKRs make strategic goals part of day-to-day operations. They also require a mindset of accountability and competence for tough calls. What is consistent across effective organizations is that their OKRs break silos and focus leaders on what matters most to the strategy.

The strategic offsite is where the journey only begins. From our experience at SOTA, a good strategy starts with being specific. It spans business model, capital allocation, and capabilities, has adaptability at its core, and a well-thought-out execution and governance model. Whether leaders let it drift or transform it into a daily discipline that brings success is a matter of choice.

 

Research support:

1. The Center for Effective Organizations at USC Marshall, led by researchers Christopher Worley and Edward Lawler, https://ceo.usc.edu/wp-content/uploads/2018/03/10_Agility_and_Org_Design.pdf
2. McKinsey & BCG — Strategy as an Operating System, https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-to-put-your-money-where-your-strategy-is?cid=other-eml-alt-mip-mck-oth-1810
3. "Mastering the Complete Strategy Landscape" https://d30i16bbj53pdg.cloudfront.net/wp-content/uploads/2024/06/Mastering-the-Complete-Strategy-Landscape.pdf

 

*By Kate Miroshnichenko, co-founder of SOTA