The Real Reason Why Business Strategy Fails

Companies desperately need to demystify what strategy really is and get back to the basics of doing it well.

Mass layoffs. Failed products. Falling sales and stock prices. Whether in the news or your LinkedIn feed, we’re surrounded every day by stories about organizations experiencing the outcomes of terrible strategy. Companies desperately need to demystify what strategy really is, and get back to the basics of doing it well.

The first step might be to simply stop calling “strategy,” strategy for the time being. As a concept, it’s given too much importance (a vision handed down from an Oracle!) and too little definition (is it a plan? A calendar of deadlines and to-do lists?) Ultimately, “strategy” involves making choices as a group. And in fact, if we replaced “strategy” entirely with the term “group choice making,” we’d probably approach it more effectively. Consider your own organization’s internal strategy and choice-making processes, versus the simple lessons we already know work to make groups better at making choices and decisions:

  1. We’d limit the number of decision makers to avoid confirmation bias. At most organizations, many hands touch and mold a decision (sometimes over and over again) before it is officially made to ensure alignment. Unfortunately, larger groups are prone to confirmation bias which makes them more susceptible to missing changes in the market or in consumer behavior.
  2. We’d seek out diverse perspectives. The group making the decision is often a fairly homogeneous one, with members that were often directly recruited by one another.  Yet  the more complex the task or decision, the more we need multiple perspectives—so we’d want greater diversity in our ranks of decision makers. 
  3. We’d add to rigor to avoid groupthink. Dissent may not actively be suppressed in your organization, but it is often passively frowned upon in the process or otherwise coerced out, and input is typically gathered in large meetings, in full view of one another. To counteract a rush to consensus and herd mentality, we’d designate at least two “devil’s advocates,” and gather input individually at first to avoid the bandwagon effect.
  4. We’d ensure psychological safety to encourage genuine debate. All too often, psychological safety is placed second to group harmony or mission commitment. Instead, we’d actively foster an environment in which folks could share their genuine opinions and concerns, without either toxic positivity or cynicism. 
  5. We’d listen to, but interrogate, experts’ opinions. An outside consulting firm’s recommendations for strategy are too often adopted without real debate, whether because of a belief in their expertise, or in an effort to displace blame if something goes wrong. While outside opinions can of course be helpful, we know that groups can fall prey to over relying on experts and therefore deliberations must come from the organization itself.
  6. Finally, we’d hold each member of the group accountable for the outcomes of their decisions so that everyone felt an equal responsibility in their participation. Consequences may follow from poor decision-making, but those consequences are rarely paid by those who made the decisions. We’d align “responsible” and “accountable” parties, and do our best to make sure incentives lined up accordingly.

Here’s one last uncomfortable truth: many individuals in your organization do understand strategy—but they’re making choices that put their own (or their team’s) success ahead of the department or organization. And they’re not necessarily doing this out of malicious intent; they’re probably following the examples set by others or responding to poorly designed incentives. 

In other words: it’s a broader cultural problem to solve, which means you’ll face substantial resistance. Learn more about how to start making change.

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