If you've faced difficulties with implementing your strategy, you may need to change how you set strategic goals.

Experts have written many articles and books on the topic, but I believe many of them miss a critical point. Maybe it is because some of the works were written by academic scholars without hands-on managerial experience.

But I had worked as a CEO for more than 13 years before I became a strategic consultant. And I have been sitting on boards of directors as a strategy committee chairman for more than seven years. So I can look at the problem from different angles.

And I believe that the crucial point (as it often happens) is human psychology.

"Idiots from the headquarters"

Once, I was having lunch in a small cafe. It was crowded due to the lunchtime, and the tables were close together. I don't like to overhear, but I couldn't help but listen to a conversation at the next table.

Three young men were having an energetic conversation over lunch. One of them seemed furious. "Those idiots from the headquarters," — he said — "want us to increase productivity, decrease cost, spend less, deliver more, and implement their stupid strategic ideas at the same time. I tell you, they have lost touch with reality."

I don't remember how two other men responded, but they certainly didn't object.

I started my career many years ago at the bottom of the corporate hierarchy. I know that workers love to discuss their higher-ups' stupidity and criticize their decisions. It's a sort of psychological compensation for having to handle their orders.

So, I usually wouldn't pay too much attention to what these people say. But I am afraid this time that furious guy was right.

Strategic cognitive biases

When C-suite executives do strategic planning, they believe they think clearly and make rational decisions. That's not exactly true. Or, rather, it's untrue. They are under the influence of several cognitive biases. Some (but not all) examples of these biases are below.

Planning fallacy makes them underestimate the resources, including the time needed to complete the job. Simply put, they are too optimistic while planning. From my experience, I know that bosses are especially optimistic when they evaluate the time and effort that subordinates need to complete a task. I used to be such a boss many years ago.

The effort paradox — even though saving time and effort is a natural human trait, people love challenges. So, when a new strategy implies significant changes, some executives may feel excited about that, which makes them even more optimistic.

The "addition mode." When a problem or issue occurs, people tend to find a solution through addition rather than subtraction. So, if a company faces a new strategic challenge, top managers simply add new tasks to the old ones. But often, they should have started by canceling some projects that have stalled or ditching unpromising activities. As a result, their subordinates feel literally buried under the mountains of tasks. And all these tasks are urgent.

Add to all of the above that some C-suite executives are very ambitious and want to show their superiors how demanding and efficient they are. So, to please their bosses, they are ready to commit to unrealistic tasks. And their subordinates will be the ones who will suffer.

But this is only a part of the problem.

Strategy + tactics

I want it all

I want it all

I want it all, and I want it now

Queen, I Want It All

If a company is not a garage startup, it has customers to serve, processes to perform, short-term targets to reach, and KPIs to fulfill. And the company must do it day by day. So even if it has a new strategy, it doesn't mean it can stop performing daily.

But when a new strategy appears, it brings changes. Strategy always means transformation; otherwise, nobody needs it.

So, ordinary workers and middle managers face a challenge:

1. To do their work as best as they can, spend less, and deliver more, and, at the same time:
2. To change their working practices on the go.

Can even the best car racer improve their vehicle and at the same minute take part in a race?

It is not a new problem. And there are many ways to solve it. But a company can solve it only when leaders send the right signals and change their approach to evaluating short-term results.

The curse of quarterly reports

"On the back of the quarterly report, the XYZ company's stock plummeted." Have you ever read such headlines? It is a nightmare for a CEO.

And as long as we stick to this dangerous paradigm, we'll have difficulties implementing our strategies.

Some years ago, I conducted a strategic project. I helped a car spare parts wholesaler devise a new strategy. When we finished our job, everybody seemed happy, including the founder, who was a CEO at the same time. But three or four months later, when I called one of the top executives to ask how things were going, she told me that they hadn't even begun to implement the strategy.

They had a meeting, and the CEO said that their new strategy was certainly great, but it didn't cancel out the task of making money here and now. At that moment, the company faced some financial troubles due to external turbulence. And the CEO said that the strategy should be "put on hold." He believed the team should "patch all the leaks" first and only then switch their intention to long-term tasks.

Doing new things implies conflicts and mistakes

Strategy means changes.

Changes mean doing things a company hasn't done before.

And this, in turn, means conflicts between old and new tasks and mistakes.

So, when your team's implementing a new strategy, you need to evaluate day-to-day results differently than when massive changes are not on the agenda.

Your quarter results may be (temporarily) worse than expected. Your team members may seem to underperform. Your company may not meet all the targets on time. However, it is the price for changes for the better.

My son works for a large European IT company. Three years ago, the firm's leaders realized it was time to transition from good old programs installed on users' computers to cloud versions. It was not just a change but a tectonic shift. C-suite managers had to turn the enterprise inside out — to change thousands of procedures, to retrain many people.

The company ended up in the red for two years due to these changes. But leaders found a way to explain it to the shareholders, and now the company is profitable again.

I am sure strategies mostly fail because of the leaders' unrealistic expectations. They need to tolerate some mistakes on the way to strategic goals.

But suppose the leaders continue to hammer into the heads of inferiors that they must achieve brilliant operational results while executing the strategy. In that case, the strategy will take a back seat in the minds of subordinates.

Strategy is about the future, after all. So they can attend to it later.

Conclusion

Some experts see a solution through thorough planning. They believe that if we cascade or break down our strategic goals into objectives and operational tasks, it will increase the chance that the company will achieve its strategic goals.

It doesn't work this way.

Careful planning is helpful. But give me a task to create a spacecraft for three weeks, and I will break it down into subtasks in a few minutes. Even a completely unrealistic goal can be cascaded down to a day-to-day routine.

Other experts believe a company should thoroughly calculate resources before making strategic decisions. I have some doubts about that, either. The future is unpredictable, so the future resources are incalculable.

There are two ways to handle the problem:

1. Some companies separate operational activities and strategic development. Some people in another office work on strategic projects until they are ready to be scaled across the company.
2. Others encourage staffers to embrace and implement changes, and their leaders tolerate minor alterations in operating results.

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Svyatoslav Biryulin