Why So Many Companies Fail at Strategy — and How to Fix It

There’s a reason why 95% of employees have no idea what their company strategy is

Credit: Mike_Kiev/Getty Images

SStrategy should be crucial to most companies, but at some point, when none of us were paying attention, “strategy” became just another buzzword. In other words, “strategy” rarely carries any tangible, practical meaning.

I guess this shouldn’t entirely surprise us. Other terms that should mean something — like “innovation,” “engagement,” and, my personal favorite, “work-life balance” — have also morphed into buzzwords over time. Which is sad, because the literal meaning of these terms can relate to real and important goals for most companies. But instead, the words on this list have ended up like all other buzzwords: intended to make things appear shiny and exciting, despite no concrete actions behind them.

I’ve written before on strategy, including why most strategic plans aren’t that great and why your strategic “roadmap” probably isn’t leading you anywhere. This time, I’d like to start by discussing a few key data points surrounding strategy, go into reasons it’s not working for most companies, and then offer some suggestions to fix the problem. Ready? Set? Let’s go!

The sad strategy and planning numbers

Let’s start with quarterly returns. As this article from Harvard Business Review explains, quarterly returns murder long-term strategy and promote myopia. We all know this, but it’s really hard to change a model so ingrained in modern business culture.

This myopia isn’t just theoretically harmful — it also affects companies on a practical level. Here’s an example that’s a bit sad: One Harvard Business study found that 95% of employees at most midsize to large companies don’t understand the strategy of the company. Hmmm. And apparently, per McKinsey, just 21% of board members fully understand the company’s strategy. This all ties with some previous research: 67% of senior managers can’t name the CEO’s key priorities or strategy.

You can and should take these three data points with a grain of salt (as with any set of limited data). But think about where they intersect. Essentially, strategy and planning might be happening at some level for these companies — but if it is happening, and no one seems to know where it ended up, what’s the point?

“We often create strategy and planning in an executive-level vacuum, but often the execution leaves a lot of people in the dark about what’s going on or what they should be doing.”

So why does this happen?

Reason 1: Employees in key strategy roles aren’t qualified to make strategy decisions.

Employees generally advance into strategy roles at companies for two reasons. The first is the execution of predetermined projects, and the second are their relationships with the existing power core. Those things typically don’t require long-term thinking, which is what strategy and planning are. As a result, as people rise up a chain and need to own these topics, they don’t really know where to begin. They’d rather focus on execution, because that got them here.

Reason 2: Communication in the workplace is really bad at most companies.

So maybe a CEO or CFO set strategy and planning priorities, but forgot that crucial step: telling other people what the hell is happening.

Bad internal communication typically means the information others need to effectively do their jobs is hoarded at top levels, making it hard for those that need to execute on the work to actually, well, execute on the work. They don’t know what’s happening. They don’t have context. They don’t have resources. They don’t know where to begin.

Good communication, on the other hand, means that while the top levels help set the strategy, they also sit down with the managerial level and explain how the strategy was set, what’s changing, what isn’t, what the new metrics are, etc. Then those managers sit down with their reports and explain the same things. Now information has filtered down effectively throughout the company.

But the larger answer to “Why is strategy becoming a buzzword?” is actually this: A lot of people that come to run companies think “strategy” means “make a lot of money,” which is actually quite flawed. As I mentioned in an earlier article on strategy: “The goal of firms/organizations/businesses/etc. is to create customers and a demand/need for something. Profits and stock price are the result” of these goals.

Strategy and planning are complex topics that involve people, psychology, personalities, products, services, margins, etc. Oftentimes, we reduce them to very simple documents hoarded by the executive levels. When you take a complex topic and try to simplify and control it, usually the end result is a lot of confusion and aimlessness and anger.

What do most companies do about strategy and planning?

Often, they employ two main techniques:

There’s nothing wrong with these two approaches, per se. Projects need owners, and outcomes need to be recorded and analyzed. But a few points are perhaps being missed:

  • How exactly was this strategy set? Was it just from the senior levels or did other parts of the company have some voice?
  • What is the plan for communicating this strategy down the chain?
  • Where’s the alignment between this strategy and people’s day-to-day execution-level work?
  • If people’s responsibilities are going to change as a result of this new strategy and planning, who will tell them that?
  • How is this all tied to the mission and vision of the company?
  • Where are the key performance indicators? (How will people know if this is successful?)
  • Who are the best contacts for someone with questions about the strategy and planning?

I could make that bulleted list go on for 15–20 more points. You get the idea. We often create strategy and planning in an executive-level vacuum, and in some ways, that’s rational and makes total sense. But often, the execution leaves a lot of people in the dark about what’s going on or what they should be doing. That’s reflected in the numbers above.

Can we get better about strategy and planning?

Yep. But it’s a little bit tough. Here are a few things to initially consider:

Reduction in silos: Silos, or isolated departments, have no place in modern business. Functional skills are great, but teams need to work together. All silos do are slow down decision-making and increase frustration. It also allows everyone to recontextualize priorities as “this is what my team does,” as opposed to “this is good for the company, which will be good for me.” (Well, you’d hope.)

Only hire when there is a real reason to hire: One of the most pervasive myths in business is “we are so understaffed.” This comes about because the manager of the team feels very busy, so they assume everyone else is busy. In reality, four of their 10 direct reports might surf Facebook all day. Unclear job roles hit the bottom line hard and make legit execution of strategy and planning a big challenge.

Rein in the executive buzzwords: Senior leaders should be out making deals and relationships and then updating people on priorities and developments. They shouldn’t just be seen at all-hands meetings where they say “strategy” 141 times with no real meaning. Just be real and say “Hey, this was a good quarter because…” or “We got hit in the face this time around, so…”

Set priorities, align people, reorganize: At most places, once someone is in “product marketing” or “HR,” that’s it. They are there. That’s their thing. But businesses are dynamic. You need to put people where they’ll hit the most targets for you, and sometimes that’s not where they were hired. This stuff needs to be more fluid, which means this function probably needs to leave the process-laden human resources department.

The strategy and planning bottom line

This is how you develop your business, your revenues, your people, and everything else: You set clear, well-communicated strategies. You plan around those strategies. There are pivots. You adapt and repeat.

At too many places, people have no clue what’s happening with strategy and planning. In too many situations, these are just buzzwords executives can toss about at a meeting to sound important. But stuff can’t just be left as meaningless as terms like “synergy.” We’re at a time when so many people are feeling left behind or disengaged at work. And when you see stats around 95% of employees having no idea about strategy and planning, you can’t help but understand why.

Blogging, largely about work and how to improve it. How I make (some) money: http://thecontextofthings.com/work-with-me/

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