Business
THE 10 PITFALLS TO STRATEGIC FAILURE AND HOW TO AVOID THEM
Published by Gbaf News
Posted on April 5, 2014
5 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Gbaf News
Posted on April 5, 2014
5 min readLast updated: January 22, 2026
In business, even the most robustly designed and painstakingly planned strategies can fail. Even worse, it is often the blindingly obvious that can trip you up. This is relevant for any business, of any size, in any sector.
Here, we will discuss the top 10 pitfalls to strategic failure and what senior managers need to avoid in order making their strategy work in practice.
Short termism
The pressure of succumbing to short-termism is easy, whatever sizes your business. SMEs and entrepreneurs in particular can feel pressurised to focus on short-term results in order to impress stakeholders, backers and prospective employees. It is essential to prioritise long-term investment over short-term margins.
Ignoring external trends
The 10 Pitfalls To Strategic Failure And How To Avoid Them
A failure to pay attention to short term external trends – for instance, not properly tracking customer needs and understanding competitor motives – will trip up even the best strategies.
Continuously tracking market trends and customer preferences, monitoring the media as well as your own sales, and delegating the right people to spot trends should all be part of a business’ strategy, whatever its size.
Overconfidence based on existing success
Even in difficult and challenging markets, companies can overestimate the value of their business model, customer base and ways of doing things.
The message here is simple: you need to be ruthlessly honest. Otherwise, you may wake up one day to find your business is gone.
Failure to respond to structural changes in the market
Refusing to acknowledge that structural changes are real can also lead to flawed strategic responses. When something new comes along, the answer is usually to move early, no matter how painful it might be. Generally speaking, if you do not cannibalise yourself, someone will definitely do it to you eventually.
Failure to employ the best possible team
Putting up with a sub-par or mediocre team will make your strategy unachievable or sub-optimised at best. Companies should prioritise going after the best people and motivating them to do extraordinary things. Focussing on management is usually the best place to start.
Failure to focus
However seductive proliferation and diversification are, failure to ‘stick to the strategic knitting’ will take you off course. The key to avoiding this pitfall is to learn to say no.
Among many other companies, an example of a brand caught out by this pitfall is Adidas. They added numerous brands and product lines that clouded the company’s focus on sportswear. Failing profits followed, and it took a new management team to turn the company around and return it to its core purpose.
Inability to foster belief in the strategy
A failure to passionately and consistently reinforce the strategy will undermine it and belief in it will wane. Remember: memories of strategic announcements are short, but memories of strategic failure are long.
Getting people to buy into your strategy makes it easier to implement and to implement well. Communication is therefore critical, and keeping it simple but convincing pays dividends.
Inability to translate the strategy into a corporate purpose
Increasingly, enterprises need an enduring purpose to inspire and motivate their people. The whole team needs to know that what they are doing matters to the company (and increasingly, to society). But how do you persuade employees to ‘buy in’ to the proposition without having to ‘buy’ their loyalty with high pay and expensive benefits?
Instilling a sense of purpose has an enormous commercial benefit. Starbucks and Gap are great examples of brands that make an effort publicly to treat their employees with respect, provide career progression and emphasise links to the community, making them appear positive places to work. All of which are cheaper than offering five-figure bonuses whilst also making us buy t-shirts and coffee for double the price offered elsewhere.
Failure to instil a sense of pace
There are countless examples of companies lulling themselves into a false sense of security about the speed at which they move. There is little upside, if any, in delaying once you are convinced that a certain reality is true. In terms of bad news in particular, the sooner you announce it, the better. Act early – bad news does not improve with age.
Failure to create accountability for results
The heart and soul of execution is accountability – it is this which motivates people to follow through on their commitments. It is essential with any plan that it is clear who is responsible for what, and that accountability is tied to results, not activities. This is essential because, while activity within an organisation is unceasing, it is only results that really matter.
Avoiding these ten pitfalls will set you well on your way to executing your strategy effectively. Create bold plans, hire the best people to implement them, pursue a focussed strategy in a consistent, single-minded way and adapt rapidly. Crucially, a leader’s ability to do this is directly linked to the quality and single-mindedness of the top team – if they consistently believe in and implement the strategy, there is a very good chance these pitfalls can be avoided.
Chris Outram has been a strategy consultant for more than 30 years. In this time he has consulted to a multitude of corporations around the world in many industry sectors. In 1987 he co-founded OC&C Strategy Consultants, which has grown to be a major challenger to the more established, usually US-founded firms and now boasts more than 450 consultants, operating out of nine countries around the globe. His book, ‘Making Your Strategy Work; How to go from Paper to People’ is published by Pearson and is available at http://amzn.to/1dIdrOx
Explore more articles in the Business category
