For better or worse, why do so many companies veer off their strategic plan?
Look for a disconnect between strategy and how resources are allocated, say Harvard Business School’s Joseph L. Bower and Clark G. Gilbert, in their article “What Really Drives Strategy?”
“Organizations of any size are built around a series of building blocks, and the bigger the company the more responsibility in those building blocks. Today they are called SBUs-Strategic Business Units-or they are country organizations. If you add up what those people actually do, which ideas they choose to bring forward, and which of those get funded, the consequences of that activity is what adds up to the strategy of the company, not words on paper. And once you see that, you begin to ask questions such as: What determines which ideas get sponsored and funded? If I’m the top management, how can I shape that process, manage it, and give it direction?”
That’s what their book, From Resource Allocation to Strategy, is about.
BOTTOMLINE: Interestingly enough, the “disconnect” between strategy and how resources are allocated, as identified in this HBR article, is precisely why it’s critical to align your resources and systems. Since up to 90% of effectively formulated strategies fail due to execution, it’s critcal to understand that it’s after the goals are set that companies run into one of their greatest challenges – their own internal systems – processes, policies, technologies, measures and people.