It’s no secret that strategic initiatives fail at an alarming rate. At every turn, you can find statistics that would give even the boldest leaders reason to hesitate before launching a significant change initiative. As just one example of the problem, in a study with C-suite leaders on strategy execution, The Project Management Institute and the Economist Intelligence Unit, found that on average just 56% of strategic initiatives are successful. Data from the Performance Factory finds that on average companies lose 40%-60% of their strategic potential during execution of the strategy. This problem costs real time and money – and can derail the best laid plans for growth and gaining competitive advantage.
It’s no surprise, therefore, that we often get called into companies after a big change effort or strategic initiative has stalled or derailed, the investment is at risk and they need help figuring out what went wrong, and how to get back on track quickly.
Inevitably, the root cause is connected to gaps in communication between leadership and those in the organization who implement the change. In the words of a strategy leader at a $30B global retailer we worked with, “The elephant in the room is that we haven’t allocated any time or resources to helping the global leaders translate this into action over time.”
But isn’t that their job? In a word, yes. However, during a significant strategy shift or transformation, it’s not uncommon for leaders to invest heavily in front end communication with the help of carefully developed corporate talking points and tool kits, and forget that change communications is a marathon, not a sprint. As the long road-map to a transformation is rolled out, change fatigue inevitably sets in and engagement wanes. This is where mistakes get made and communication becomes most critical.
A Cautionary Tale of Botched Execution
A multinational industrial company we worked with, not long ago had launched a business process redesign to drive costs down and fund expansion into new products. As part of the strategy, they were implementing a new ERP system globally – banking on cost savings, efficiencies, and operational improvements. The implementation had an aggressive timeline, but occurred during a period of high sales and a busy production cycle. The disruption and complexity it created quickly started to undermine order fulfillment and pull key people offline to participate in user testing. They began losing revenue because they couldn’t process orders and deliver on client obligations. To manage their order flow, they had to bring in unbudgeted external contract resources to shore up an under-prepared and under-resourced team. The project derailed quickly, and ultimately was delivered 6 months late and $1 million over budget, driving a number of key players to leave the company.
The CEO called for an audit to figure out how the project failed. The purpose of our work was to deconstruct and diagnose the human factors that contributed to the loss in the hopes of preventing future failures.
Pinpointing the Core Derailers
We found that despite a belief by senior leaders that they had constructed good governance and a sound plan, project IT leads and business level teams were unclear on accountabilities and escalation points, and were afraid to “speak up” for fear they would appear uninformed or worse, incompetent. The ship set sail filled with holes in the hull and took on water fast. The lack of purposeful planning upfront, on the part of the leaders at the top of the house, resulted in cost overruns associated with the implementation and cleanup, and damage to the team that was irreparable.
As we dug into the communication challenges more deeply, we found these specific elements compounded and exacerbated the problem – challenges that we see many organizations fall prey to in their own execution efforts.
- The slippery slope: unverified, untested, unaligned assumptions
Executive level owners of the initiative thought they had successfully agreed on and communicated all of the important program elements such as business requirements, scope and costs. They charged forward without confirming a shared understanding with the critical stakeholders, who went on to make erroneous assumptions about these variables without clarification or verification, and continued to do so in spite of evidence that their assumptions were faulty.
- The missing link: absence, avoidance, and uninformed decision making
From the senior leadership team on down to the project team, key stakeholders relied on a flawed approach to decision making. The right questions were never asked and important information was lacking from the decision process. Senior management failed to listen actively, often missed important governance calls, and wasn’t paying attention to missed milestones and resource constraints. This set up a disastrous scenario of misaligned expectations.
- The deal-breaker: loss of communication integrity
Throughout the project timeline, communication integrity was compromised continuously resulting in second-guessing, lack of confidence and ultimately, finger-pointing and unhealthy behaviors.
- The final straw: climate of fear and reprisal
The churn and constant upheaval, combined with the loss of communication integrity created an environment of fear of retribution for those who considered or dared to raise a red flag about the mounting missed dates and budget overages.
Three Steps to Close the Gap: Upstream, From the Top and Over Time
The overarching lesson for other leadership teams is to build in the communication strategy and approach at the start, and take ownership for its effective execution at the onset and throughout the life of the initiative. Communication accountability starts at the top – leadership needs to be accessible, involved and responsible for ensuring integration of the initiative in concert with other competing C-suite initiatives. And they cannot give up after the first flood of town hall meetings.
Here are 3 critical steps for leaders to take to bring the organization along on the execution journey:
- Create and manage a proactive, clearly delineated, sustainable feedback loop. Create a plan for ongoing, iterative communication, information, updates and answers throughout the stakeholder chain, and down to the site level of the project or program. This cannot be ad hoc, or based purely on assumptions. It has to be mapped and agreed to by the enterprise. It also has to extend far beyond the launch phase to sustain momentum over the long haul of implementation and change.
- Create a cross-functional communications committee responsible for oversight of the feedback and information-sharing. Success requires a formalized forum for the key stakeholders and affected teams and functions to come together to share information and ensure it gets shared back out. Plan this with the project team leading the execution of the strategic initiative and make sure their voice is heard by the committee – and vice versa.
- Create a safe environment and a clearly articulated mechanism to surface concerns and risks without fear of retribution. This has to go beyond lip service to include channels for all levels to communicate those concerns and modeling the behaviors from the top that it is good to call out a situation.
This level of communication is not an easy task, without the careful investment of time, strategic thinking and a willingness on the part of the senior leadership team to own the outcomes. But as this company found, there is a much bigger cost to skipping straight through to execution, one it may be hard to come back from.