Why Most Corporate Strategies Fail (and What To Do Instead)
After investing 15 years and billions of dollars, Microsoft has finally decided to throw in the towel – that is, on their Windows phone strategy.
Although many of us predicted that this strategy was doomed from the beginning, Microsoft finally came to that realization themselves and opted to discontinue most of its line of Windows phones, while writing off $7.6B from its Nokia acquisition and cutting 7800 jobs (mostly in its phone business). This effectively cedes the smartphone market to Apple and Google.
Unfortunately, failed strategies like this are all too common. According to a survey by Marakon Associates and the Economist Intelligence Unit, companies typically deliver only about 63 percent of their strategy’s financial performance potential.Of course, there are many lists of reasons why company strategies fail, most of them focusing on execution, follow-through, commitment, and executive involvement.
Although all of these are valid reasons,I believe that there is a stronger, underlying root cause as to why so many strategies don’t receive the commitment, attention, and follow-through that they might deserve.
Behind every failed strategy, you’ll likely discover a vague, mediocre or boring vision statement and strategic goals. In most cases, the mission, vision and/or high-level goals that are defined at the outset of a typical strategic are “nice,” but fail to motivate anyone who’s tasked with carrying out that strategy. Goals like “Grow the company by 20% in the next two years” or “become the go-to provider of financial services in the northeast region” may make good business sense, but to the vast majority of people, they are about as inspiring as reading the phone book or an insurance application. (To return to Microsoft’s strategy, “let’s run Windows on phones” is much more of a “me, too” initiative than something anyone is likely to get excited about.)
Defining a strategy for a company often receives nearly all the attention; what the strategy is meant to achieve sometimes seems like an afterthought. A strategy is a path; isn’t the destination at least as important as the map? If no one cares about the destination, no one will care about the map for getting there. And they certainly won’t get out and push if the bus gets stuck along the way.
The reason most goals and visions are mind-numbingly boring is simple: they are nearly always about making more money (directly or indirectly). Here’s one of my favorite examples, from the book Say It and Live It: The 50 Corporate Mission Statements that Hit the Mark:
“Our mission is to achieve or enhance clear leadership, worldwide, in the existing or new core consumer product categories in which we choose to compete.”
Try reading this statement out loud: maybe it’s just me, but it generates about as much emotion as saying “pass the salt” or “tomorrow is trash day.” How many of their employees do you think jumped out of bed early this morning to rush to work and manifest this mission? Nevertheless, a team of highly paid executives (and probably at least one highly paid consultant) thought this was pure gold. (I won’t tell you which company it is; you’ll need to read the book to find out.)
You might think that making your company more financially successful would be motivating to your employees, but it isn’t. Most business leaders don’t understand what every good salesperson knows: people make decisions with emotion and justify them with logic. You can’t coerce, bribe, incent or cajole people to care; they either do or they don’t.
But, you can inspire people to care. Take a moment to evaluate your company vision and strategic goals and ask yourself, “how inspired am I by these?” If you’re honest, your answer is most likely, “not at all.” (Even if you are, I’m betting your employees aren’t motivated to get off the couch after hearing them.)
What does inspire people is making the world a better place. This is especially true of Millennials, who barely notice traditional motivational techniques. This is why companies like USAA and Google are so successful, and so popular with both their employees and their customers.
The core of your strategy, then, rather than some self-serving mission, must be a higher purpose, a specific way that you plan to change the world for the better. It must be sufficiently clear that you can use it as the basis for decision-making, goal-setting and strategy. Your vision must be an articulation of what the world (and your company) will look like when you have successfully manifested that purpose – and include enough detail so that you can take steps to manifest that vision. And your strategic goals are the milestones you must achieve on the path to that new world.
“Where’s the profit in this,” you might ask? Not to worry – there’s plenty of ROI to be gained on the path to manifesting your purpose. In order to make a real difference in the world, your company will have to grow more quickly and become more successful than your most ambitious self-serving goals would ask of you. After working with a client company to help them identify their higher purpose, they opened a new market, expanded from 4500 customers to 2.5 million, and grew revenues by 1221% in three years. Before they found their purpose, their most ambitious goals were a tiny fraction of these actual results.
Before you begin your next strategic planning session, test the goals that your strategy will serve to manifest. Read them out loud, and have others do the same. Rate the amount of emotional passion and inspiration they generate in you. If you do, your employees will have a much better reason to care about making your strategy work this time – instead of tossing that “program of the year” binder into their desk drawer.