Before the financial crisis of 2008, the leaders of Royal Bank of Scotland (RBS) claimed that they didn’t need a strategy, as everything they did led to success! Maybe if they’d had a strategy the UK Government wouldn’t have had to inject £45 billion of taxpayers’ money to save the Bank. In reality, RBS did have a strategy, it was reflected in the decisions and actions its leaders took. Whether the outcome of this ‘default’ strategy was the one they intended is a very different question.
The purpose of any strategy should be to change the fortunes of the organisation by putting it on a trajectory that takes it to a different – and improved – future. Developing strategy therefore involves exploring and understanding possible futures and deciding what trajectory to take. Unfortunately, evidence suggests that organisations are not good at strategy, particularly when measured against the outcomes they were intended to deliver. In most cases they are either too complex, or too incoherent, to be understood by those who were not directly involved in their development. As a consequence they tend to have little impact and the organisation continues on its existing path.
There are many reasons why strategies fail: the maturity of the organisation, the industry sector in which it operates and the level of recent success are all contributing factors. However, there are a few common mistakes that organisations and their leaders make, including:
In our view, the most successful strategies are those that begin with the leadership team confronting the default future of their organisation, and then taking action to put it on a different trajectory. A recent example was when Jeff Immelt of General Electric (GE) recognised that the strategy set by his predecessor Jack Welch was not sustainable and that he needed to put GE on a different trajectory based on a data analytics industrial internet. A further example is Xerox, which in 2000 declared that ‘the company had an unsustainable business model.’ And, in a completely different sector, a medium-sized UK NHS trust concluded that being ‘consultant-centric’ would fail to deliver the patient experience needed.
In these examples, understanding the default future of the current trajectory brought clarity to the decisions and actions that needed to be taken to take the organisation in a different direction.
David Trafford and Peter Boggis help executives and leadership teams deliver successful change, specifically technology-enabled change. They provide thought leadership and thought partnership on all aspects of assessing, developing, and operationalising strategy. They are founding partners of Formicio and authors of the book Beyond Default.
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