Blame the leaders and CEOs for failure in strategy, but is this fair?

November 20, 2021 — 4 minute read

For a long time already, it is estimated that 67% of formulated strategies fail. In most organizations it is leaders who are responsible for setting out the organization’s strategy. Because of their position at the top, they have insights and oversight that others in the organization don’t have. Therefore, leaders are in the right position to make strategy and to make it work, right?

Or so it seems. Strategy is too complex to leave to just leaders. It is not enough to produce simple inspiring strategies and we need everyone’s knowledge and commitment to make strategies that are smart enough to beat the competition and executable too. The fact that two-third of formulated strategies fail, is a clear indicator that the leaders-only approach to strategy formulation does not work.

A recent report by PwC’s Katzenbach Center illustrates this point effectively. For their Global Culture Survey, PwC conducted a survey amongst 2,000 people in 50 countries. The core message of that report is that culture matters, and perhaps even more than an organization’s strategy or operating model. Furthermore, it shows that people strongly believe a change in their organization’s culture is necessary.

That is interesting and definitely worth paying attention to. But what I find even more interesting about this report is the big divide it shows between leaders and employees. Throughout the survey it turns out that leaders think quite differently about their cultures and the organization in general than employees do. Here are some of the key findings that show this:

  • 63% of leaders believe that people in the organization act according to the claimed culture, whereas only 41% of employees believe so.
  • 58% of leaders believe that their formal organization chart reflects how things get done, while only 45 % of employees believe so.
  • 71% of leaders thinks they have leadership on their agenda, but only 48% of employees confirm this.
  • 87% of leaders feels proud to be part of their organization, while only 57% employees does.

Whether leaders are right or employees is not the point. It is the different viewpoints that matter. What these findings show is that people have different perspectives, perceptions and experiences. The numbers show us clearly that leaders see things differently than their employees do.

This doesn’t just apply to culture and the organization chart. It applies to any other aspect of business as well. And it also doesn’t just apply to leaders vs. employees. Also between departments, divisions and business units similar differences in viewpoints about the organization can be found.

Two key lessons

There are two key lessons to be learned from this. First, more effort is needed to align people’s understanding throughout the organization. Having such inconsistent views on organizational reality doesn’t work. It means taking confusion as a starting point rather than solid insights and understanding. Therefore, organizations need better processes and mechanisms to facilitate interaction, communication and collaborative sensemaking. Only then can we expect a coherent view on organizational reality to emerge.

A second lesson is that these findings show that leaders can’t make strategy on their own. The viewpoints and experience of people in the rest of the organization are simply too important to ignore. Of course we know this. And that’s why in many organizations more participative forms of strategizing are used. But there is still a long way to go.

As far as my experience goes and what I have found in strategy research, employee involvement is often still limited to providing inputs and receiving the outputs of the strategy process. True involvement throughout the strategy process in making and executing strategy together is still rare though. But if we want to solve the divide that PwC’s study provides an effective illustration of, that is the direction to go: truly participative approaches to strategy.

This article was published earlier on my forbes page.

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I am Jeroen Kraaijenbrink and I have been consulting and mentoring CEOs and leaders in strategy affairs for over 10 years.

With my 20+ years venture as an academic in strategy and management theory, I've written several articles to improve your strategy, management and organization.

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