25 02 2011

“Told you so.”  It’s never a nice thing to have to say to someone but every now and then, for their own benefit, some people need reminding of things you had previously told them which they chose to ignore. So when we came across some research which supports our stance that most organisations do not understand how to properly develop successful strategies we couldn’t resist a little “told you so” of our own. Will you listen? That’s up to you.

Which road is your strategy taking you down?

Here at Cowan Global we come into contact with all sorts of organisations and their strategies, from sporting bodies to large corporations and from one man bands to the third sector.

The fact that most of these organisations come to us when they find their strategy simply isn’t working probably gives us a fairly negative view of the quality of planning across all industries but our gut instinct has always been that here in the UK and in Europe we are pretty poor when it comes to strategy.

Part of the problem has seemed to be that, for many, they know they should have a strategy and so create one that is a strategy for the sake of being a strategy, probably a fill in of a template borrowed from some other company that hadn’t realised strategy is personal and therefore template sharing is not a good thing.

The reason behind having a good strategy is to be better, to win, to improve market share, to identify new markets, to grow. It is not an exercise in (yawn) ticking the right (yawn) boxes, putting the right phrase (yawn) in the right column and (yawn) hey presto, we have a strategy (not).

There has been research, but little of the robust variety, suggesting that anywhere between 40% and 90% of corporate CEOs don’t understand strategy. There has also been research (but not sound research) suggesting that Board level understanding of what strategy is, is (politely) low.

Now the McKinsey Quarterly have tested the theories, our gut feel, the varying levels of prior research with their own survey and are reporting that creating a winning strategy is a struggle for most companies. So, the good news is, you’re not alone but that’s hardly the attitude to apply to growing your business!

In a survey covering 2135 companies across Europe, North America, India and China they have found, “only 53% of executives characterize their companies’ strategies as emphasizing the creation of relative advantage over competitors; the rest say their strategies are better described as matching industry best practices and delivering operational imperatives—in other words, just playing along.”

Forty Seven percent are playing along; they have a strategy because, well, erm, they should! We are surprised that as many as 47% admit to this and suggest the true figure may even be higher.

For those reading this in Europe, it gets worse. From a list of ten test statements describing their strategies, European companies scored lowest on 9 out of the ten. Only 25% agreed that ‘our strategy consists on decisions based on vigorous debate about alternatives.’ Take a second to digest that figure. Seventy Five percent of European corporate strategies do not vigorously consider alternatives.

It gets worse. Only 13% of Europeans passed the test of ‘our strategy relies on novel data and insights not available to competitors.’ Please, take another moment. Read that again. Eighty seven percent are planning to go into competition based only on intelligence they share with their competitors. What of the insights that will allow them to differentiate themselves from their competitors? What of consultation and research independent of that available to rivals? What of planning for success instead of mediocrity!

The report makes fascinating reading for us, especially in that it supports much we have been saying about how little the development of quality strategy is understood. It should also make fascinating reading for ALL organisations who are striving for success because it is an alarm bell, a warning but also an opportunity. You can do much better than you are.

Now, how do you break it all down into English, into bite size, understandable, achievable chunks which can be understood from Boardroom through management to delivery? That’s where we come in, why not get in touch? It’s your future; we’d like to help you ensure it’s a successful one.

To read the full report; ‘Putting Strategies to the Test: McKinsey Global Survey Results’ click here.

© Jim Cowan, Cowan Global Limited, February 2011

Twitter @cowanglobal



4 responses

26 02 2011

Terrific post, I look ahead to messages by you.

7 01 2012

[…] year a McKinsey survey placed European (including the UK) business bottom of the worldwide table for understanding of […]

14 01 2012

[…] assume you know what strategy is – the research tells us that most UK and European businesses do […]

9 05 2012

[…] problem with most businesses is that they simply do not understand strategy (as reported by a McKinsey survey in February 2011). This extends to the Vision which drives strategy […]

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