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Why strategy fails


Robert Likhang

IN the last issue, we discussed three key questions a business owner/manager should ask himself/herself in developing a strategic plan. In the earlier article we had shown the importance of strategic planning. A strategic plan is simply part of the full business warfare and the war will not be won unless execution is done and successfully done. One entrepreneur told me in the face that he has stopped believing in management fads such as strategy and he has begun to implement. I did not know what he was implementing, but the results of whatever he was doing ended up in business failure. I also know of many “big” businesses that engage the “big” consulting firms even outside the country and pay millions and after the expensive exercise the big business still has no new direction, and growth does not result. I have also seen changes in the executives with the view of expecting higher delivery, alas! The organization only goes down.

The problem is not in that strategy failed but it is either the strategy was not good from the start or it was executed wrongly. I have coined, what I call “Seven C’s of Strategy” which in my observation, experience and academic research are critical in ensuring that your strategy works. They are: Commitment, Capabilities, Coordination, Culture, Cost, Communication, and Creativeness.

  1. Commitment

The commitment I am referring to is, the commitment to identity. Most entrepreneurs and corporate leaders run the organisations without clarity on what their identity is, what they stand for, or what their value proposition is. They also don’t know how they deliver the value, that is, their business model.  What the business is; that is, its identity clearly differentiates itself from others. It must be clear in the mind of customers what your business is good at.  In today’s competitive environment, it is the superiority that sells, not the size of the organisation. If you are not able to say what you do in just a sentence, then you are doing too much and that too much is loss of identity and thus loss of differentiation, as such loss of strategic focus and effectiveness.

  1. Capabilities

A business enterprise competes successfully based on its unique competences and resource capabilities. Excellence is the factor that makes a customer choose you from the others. As stated in the earlier article, customers do not only look at price, but also differentiation. The old Porter’s tool for generic strategies wherein your business could compete by cost leadership or differentiation is becoming irrelevant. In the Blue ocean arena (as opposed to Red Ocean), the business has to ensure both cost leadership and differentiation, and to achieve that level of knowledge, innovation, talent has to be high. If you are not unique and competitors can easily copy you, then your strategy is bound to failure.

  1. Coordination

The company will have strategies mainly across all its critical success factors. Assuming the business will have its critical success factors such as the perspectives in the Balanced Scorecard:  1) Financial, 2) Customer, 3) Internal Business Processes, 4) Learning, Innovation and People; then strategies in each perspective must tally with others in other perspectives.  The Kaplan/Norton tool of Strategy Maps can be useful in testing the coordination of your strategies. Uncoordinated strategies cannot be successfully implemented.

  1. Culture

The organisational culture should be an appropriate one to reinforce the distinctive strengths of your organization. Culture is the way people think and behave, and if inappropriate it can undermine an otherwise good strategy. You need to spend time understanding the culture, identifying desired culture and working on the gaps. I have seen excellent strategy documents that don’t work, because there are cultural challenges within the organization. It may be important to conduct climate surveys, emotional intelligence trainings etc. with the view to catching on the right culture. Capacity is nothing if the culture is wrong.

  1. Cost

The Chartered Institute of Management Accountants has over the years promoted the concepts of Cost Transformation and Strategic Cost Management. The principle is easy: “Spend more resources (budget) on what matters most, and cut spending on non-essentials.”

Cash or resources are scarce, and there are opportunity costs in spending. If you spend on your powerful, distinctive capabilities, you will win the business warfare than if you put your money on incoherent activities that hold your strengths back. One organization wanted to reduce the rewards of the executive team which for its tenure had increased the value of the organization almost hundredfold only to bring the organization into the rubbish dump. One organisation had a large network of customers and had to spend on a Customer Relationship Management software but instead spent on other non-value adding activities and the company went to its knees.  It is imperative that you should know your strengths so that you put money on them for obtaining leverage.

  1. Communication

The strategic management is a system, which means the organs of the system must obtain stimuli from other organs and operate in an interconnected manner. It is to this end that the strategic plan should be cascaded into departmental business plans, and operational plans at lower levels, and double feedback system has to be incorporated so that the man at the floor level knows how his actions are affecting the company as a whole, and the executive have to know how their decisions will impact on the morale and productivity of the floor men and women. The use of Business Performance Scorecards, proper Board Behaviour and focus are critical as they can create noise or communicate angelic messages. We will discuss Board Behaviour in the future and how it is can build or destroy strategic performance.

  1. Creativeness

Creativeness and innovation are highly necessary in this VUCA world (Vulnerable, Uncertain, Complex, and Ambiguous). Companies need to be thinking not only how to re-engineer themselves to remain relevant, but even how to execute their strategies in a manner that they can achieve their goals. The old saying that ‘what took here, is not necessarily what will take you forward’ is so true in business today. History is irrelevant, rather freshness of ideas and culture are what keeps companies ahead.


We are living in difficult times, and thinking has never been more important than now. Opportunities pass us each day, and the world is unforgiving to those who will not take them.

Mr FCIS, ACMA, CGMA, CA(L) – is a consultant and trainer in strategy, governance and financials at RL Consulting, business@beyondaccounting.co.ls   +266 27001023


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