Business Strategy Barriers
Jan 24, 2019
"Getting" business strategy is the indisputable starting point for any meaningful contribution to strategic processes. The company's strategies should form the basis for talent strategies—and more often than ever, talent is itself a pivotal competitive differentiator in business strategies. But, for a number of reasons, pinning down business strategies may be no easy matter. Some of the common hurdles include:
Business leaders may not articulate their strategies well. Companies whose leaders capture the unique, compelling message of their company's strategies and are skilled, consistent, and unwavering in communicating this message through structures, processes, and actions as well as words, clearly improve chances that their strategies will work. However, when leaders go "off message" by being bland, unconvincing, cryptic, or silent, the damaging effects ripple throughout an organization, leaving what the strategies actually are and how to accomplish them open to speculation and interpretation.
Business strategies compete for success in time-sensitive markets. Compared with business circumstances fifty, twenty, ten, or even five years ago, businesses, their strategies, and the objectives of those strategies often race frantically against obsolescence. Businesses unveil new technologies and introduce entirely new product/service categories at a blistering pace, while on a parallel track, the network of business relationships and business financing arrangements to support them have moved apace. For example, although it took facsimile technology twenty-two years to generate sales of 10 million units, it took VCRs nine years, CD players seven, PCs six, and Internet browsers only ten months. Moore's Law, the remarkably sturdy forecast first phrased in 1964 by the cofounder of Intel, states that the amount of information storable on a given amount of silicon would roughly double every twelve to eighteen months, continues to be emblematic of the blistering pace of business and its underlying strategies.
Business strategies grow ever more subtle. Nearly 85% of a business's value may be based on intangible assets and that, for nonfinancial corporations, intangible assets represent more than 50% of all assets. Intangibles elude neat classification. And, to make things more challenging, It is often the context and blending of these assets—for example, a unique combination of branded products, a rigorously trained sales force, a proprietary customer relationship management system, a product support infrastructure, and a carefully nurtured company image—linked to strategies, rather than formal strategies by themselves, that make the difference. The strategies are more than the some of their parts; and these contexts and combinations are difficult to master.
Business strategies may be fragmented. In an effort to channel complexity, companies almost inevitably parcel out strategy responsibilities into separate functions and projects assigned to different places, departments (including, for example, HR), and people. Taken to decentralized extremes, the strategy fragments get detached and the overall strategies obscured. Under these cannot-see-the-forest-for-the-trees circumstances, business strategies can be difficult to get in focus—and, of course, to coordinate and execute.
Strategies morph quickly in unstable markets. In the new economy companies such as Amazon, Yahoo!, and eBay have pursued exploratory and constantly evolving strategies that try to take advantage of unanticipated and fleeting opportunities. Yahoo began as a Website catalog, became a content aggregator, and recently emerged as a media network—all in an incrementally opportunistic rather than in a formally strategic way. Some would argue that in the information and service economy strategies sprout, mature, and whither so quickly that trying to stay "on strategy" is at best a distracting, frustrating, and unprofitable exercise.
Executive teams may not reach consensus on what strategies are. Because of complexity, dynamic changes in markets, and nagging differences in opinion, a clear and fully committed strategy model may not emerge. Executive teams are often stretched thin. Team members may not actually see each other often. When they convene to deliberate strategy, they are likely to do so in circumstances combining insufficient information, intervening distractions, and incomplete trust. One estimate is that fully three- quarters of executive teams never reach full consensus on crucial strategic issues such as corporate image, intended relationships with customers, or even product and service attributes. And when this happens:
Announced strategies may not always be real strategies. Absent consensus, executive teams may hide their differences behind pretended solidarity and vague statements of strategic purpose. Such announced strategies may represent a company's effort to put a good face on the situation. They tend to be lofty, bland, and indistinguishable. Hard to find fault with, but also hard to do anything about.
Strategies may be "visions without decisions." Strategies may be authentic but not backed up by resources. In uncertain environments business leaders may be particularly risk averse. Although leaders and teams might reach true consensus over a vision of future events and intentions, the vision may not be backed by commitment in resources, structures, systems, or processes. Is there a strategy in mind? Yes. Is there a strategy in action? No. Words, ideas, and actions labeled strategies are not really strategies. Consider the spectrum of actions and ideas that occur in organizations, all the way from the most mundane, repetitive tasks to the most visionary or abstract ideas. Business strategies may be confused with supporting processes (strategy planning, for example), management techniques (management by walking around, Total Quality Management, or process reengineering) or even big picture philosophy (vision statements). While business strategies may involve or benefit from some or all of these things, they are not strategies.
"Getting" business strategies demands proactive and rigorous understanding. Those intent on "getting" business strategies or operating at the strategy level need to bring something to the table in preparation and understanding. Although all business strategies are, at least in some ways, unique, they also almost always bear the stamp of strategies that have been thought through and tried before. Learning something about these models is one important foundation for understanding real strategies.