Last year, your company spent four months and €80 000 on creating a strategy. Ask three random employees what it says. If the answer is silence, this blog is for you.
Average sales growth for our customers
Completed project
Internationalisation project in the Nordic countries and Europe
A familiar image. The management team spends four months revising the strategy. Two one-day workshops. Market analysis by a consultancy. A presentation is formulated, a vision is crystallised in three sentences, objectives are set, metrics are built.
In January, the strategy will be launched. All staff are invited, the CEO gives a speech, the slides are well done. People nod their heads. At the coffee table, it’s noted that it was a clear case. Everyone goes back to their computers for emails.
In June, the strategy was forgotten. Not because employees don’t care, but because they never had a practical way to implement it in their daily lives. They do what they’ve always done, only a little more tired because they’re expected to think more strategically without any guidance on what that means for their Tuesday at eleven o’clock.
In December, the CFO sits in front of his numbers. The targets were not met. Let’s start a new process.
This pattern is repeated year after year in Finnish companies. It is not due to bad strategies or lazy employees. This is because the strategy and its implementation are treated as two separate issues. They receive about a tenth of the time and attention of the promotion.
The best-known estimate of strategy implementation is crude: around two out of three well-formulated strategies fail because of poor implementation. Well-designed. Not those that were done in a hurry, but those where the strategy itself was sound. Change management researchers have arrived at the same magnitude decade after decade.
The conclusion is always the same: the problem is not the quality of the strategy. The problem is that the strategy remains on paper or, in the worst case, in a cloud subfolder where no one opens the path after the first week.
Another figure from the same source: 40-60% of the performance promised by a strategy is lost on the way from plan to action.
Kotter has famously suggested that 70% of change projects fail, a figure he himself has called an estimate. A more recent study elaborates: organisations that try to push through more than five strategic priorities simultaneously lose 30% of their implementation effectiveness compared to those that focus on three.
The common conclusion from all of them: the problem is not the quality of the strategy. The problem is that the strategy remains on paper, or at worst in a cloud subfolder that no one opens the path to after the first week.
Here’s a simple test. Choose three people from different departments: one from sales, one from production, one from support. Ask each of them the same question: “What is the core of our strategy, in one sentence?”
If all three of you answer roughly the same, your strategy is working. If everyone tries to remember the title of the CEO’s Christmas speech, you have a document but no strategy. If one asks “what strategy”, you have to start again.
I have done this test with dozens of customers. One third pass. Two thirds fail.
We have sat through dozens of strategy processes over the past couple of decades. The reasons cluster precisely in three places.
One: the strategy is built against competitors, not for the customer. The management team starts with a competitor analysis: how do we compare, how do we catch the market leader? Understandable questions, but they lead to a strategy that is a slightly better version of the competition, not a truly differentiating one. And your employees can smell it. They don’t get excited about chasing the market leader. They get excited about building something that the customer no longer wants to do without.
Two: the strategy is written for management, not for employees. “We are strengthening our competitiveness in the integrated value chain of the future scenario.” A worker who answers the phone in customer service or drives a forklift will read this and wonder: what does this mean for my job? A good strategy starts with the phrases that are naturally used in an organisation. Bad ones produce a vocabulary that no one uses by choice.
Three: it has a schedule but no rhythm. If the goal is “in 2029 we will be the Nordic market leader”, that will not guide the decisions taken this Tuesday. The strategy has to work in three rhythms at the same time: the rhythm of the week (what this means for this morning), the rhythm of the quarter (whether the observation is aligned with the annual target) and the rhythm of the year (whether the annual target is aligned with the long-term direction). If even one is missing, the strategy is not alive.
One observation from over 100 strategy processes: you don’t have to beat the market leader if you can play a different game.
When the strategy is “we have to be better than them”, you play their game. They set the rules and have been in the game longer. At best you get caught, usually you get left behind.
When the strategy is “we’re solving a problem that no one else has solved yet”, you’re playing your own game. A competitor cannot copy a solution quickly because they have not spent the same amount of time understanding the problem. Research confirms this year after year: customer-centric strategies deliver significantly better customer satisfaction and profitability than those based on competition.
But even more convincing is an everyday observation: people get more excited about a strategy that talks about helping the customer than a strategy that talks about overtaking the competition. When the goal is “the customer can’t imagine their life without us”, the employee knows what to aim for in every encounter. When the goal is “5% more market share”, he looks at the numbers quarterly.
These are different games. One of them is possible to win.
With the right strategy, implementation will succeed or fail on three counts.
First: who owns the strategy in everyday life. Not the CEO who confirms it once a year, but the person whose calendar shows it every week. On Mondays, he asks: what did we do for the strategy last week and what are we doing this week? If this person doesn’t exist, the strategy belongs to no one. And what doesn’t belong to anybody doesn’t happen.
Second: whether it is linked to personal goals. Every manager runs on three tracks: his or her own number, his or her own team and his or her own strategy. When they cross, the first two are driven and the strategy waits. The solution is simple but demanding: managers’ objectives include at least one strategic outcome. It’s pay or no pay. If strategy doesn’t show up in anyone’s bonus, it won’t show up in anyone’s daily life.
Third: whether you have the courage to stop things. Strategy means choices. Choices mean leaving something undone. The most common reason for the failure of a roll-out is that everything old is left behind next to the new. The calendar fills up and nothing new gets air time. The best measure of the seriousness of a strategy is a list of what is stopped. If there is no list, there is still no strategy. There is only more to do on top of the old.
These three sound obvious. Yet few companies implement all three. It is those companies that succeed.
A three-year strategy made sense in the 1990s, when markets changed more slowly. Now, customer behaviour, technology and regulation are changing faster than the strategy refresh cycle. Locked in for three years, the strategy will almost certainly be wrong in its final year.
In its place: the long direction remains, but the steering changes. A year is a rhythm of doing: a precise plan for this year, a looser direction for the next two, a renewal every year. The quadrant is a rhythm of review: the management team meets for half a day to see what has been learned and what assumptions are updated. The week is the rhythm of steering: the agenda of the weekly management team meeting revolves around strategic priorities, not just operational problems. If the strategy doesn’t show up on the weekly agenda, it doesn’t show up anywhere.
If the strategy is a cassette, it remains a cassette. If it’s a playbook, it lives. The cassette tells us where we are going. A playbook tells us how to play when the market goes down or a competitor cuts prices. The cuff sheet looks good on the wall. The playbook is open every week and gets stains on its edges.
A good playbook contains five parts, no more.
One page per direction. Where we want to be in three years’ time and why, written in a way that the new employee can understand at a glance.
This year’s three themes. Not six or ten. Each theme tells you what is being done differently this year compared to last year, and how you can tell.
Game situations. What do you do when the market goes down, when a competitor cuts prices, when budgets tighten. Three to five situations written in advance, so you don’t have to start from scratch when they come.
Roles. Who owns which theme and to whom to report. A strategy without roles is everyone’s business, not anyone’s.
The rhythm of the review. When the playbook is read, who reads it and what is changed in it. Without a rhythm, it ends up in a desk drawer next to the previous strategy.
These five parts fit into ten or twenty pages. If your playbook is more than fifty pages, you’re building another film series.
A company that uses its playbook will stand out in two years from those that decided on a similar strategy but did not translate it into a book. The difference is not in intelligence or resources. The difference is in repetition.
Take one test next Monday. It will take twenty minutes.
Walk up to three people from different departments: one from middle management, one from experts, one from operations. Ask each of them the same question:
Don’t explain the question and don’t help with the answer. Listen.
If you get three answers in the same direction, your strategy is alive. You are the minority who are not affected by the figures in this blog.
If you get three different answers, the strategy exists on paper but does not guide your daily life.
If two answers are the same and the third is different, you are in between. This is the most common result and also the most dangerous: management thinks the information has passed, but half the organisation is pulling in a different direction.
This is not an assessment of the success of the management, but a measure of where the implementation is right now. And if the result surprises you negatively, that’s good news: now you know what to pick up next week, rather than in three quarters when the results don’t come in.
A strategy that lives is no more expensive than a strategy that dies. It is a question of rhythm, ownership and repetition. Start with these three.
A strategy lives or dies by what it does after the board meeting. We help turn strategy into a playbook and into day-to-day work so that everyone knows their part.
