Why many strategic projects still fail Maud Oortwijn
The success rate of strategic projects has always been low. Not surprisingly, as a small team of ambitious, smart, 30-or-so professionals analyze all data available to come up with a new direction for the company to take. Even though a paper exercise well done could lead to a well chosen strategy, it is quit a different thing to realize a strategic change successfully. To develop and realize a strategy for the complexity of the real world, requires even stronger analytical skills. I will explain below.
In-depth analysis is the foundation of strategy development. Best in class analytical and project management skills are required to grasp the complexity of large organizations and their environments. Traditional strategy firms can attract and retain these talents, more so than any other player in the management consulting arena.
The majority of the strategy consulting firms claim their work leads to more than just extra reports in company archives. What makes them stand out from competitors is the ability to develop strategies that do gain momentum, inspire the organization and show results. The truth is, only 30% of all strategic projects succeeds. Project failure rates of 70% have been common for a long time. Most projects either a) end up significantly over budget, with deliverables incomplete or months later then expected, b) leave sponsors dissatisfied with deliverables or c) never pay off the benefits expected.
Black and Gregersen analyzed why strategic projects fail. The main failure factors include: 1. Insufficient mobilisation: employees are limited or not at all involved. 2. Inadequate leadership: higher management insufficiently shows their support. 3. Poor change management: no or limited professional change management. 4. Bad team composition: team members are not up to the challenging job 5. Incrementalism: only small, low risk and low effort changes are implemented. 6. Analysis paralysis: the project stays (too long) in analysis modus. 7. One-dimensional design: scope is limited and does not address real world complexity.
Not surprisingly, the main reasons for failure relate to the "softer" aspects of strategic change. Apparently, data crunching alone is not enough. Involvement of leadership, line management and key personnel is essential to success. This is confirmed in recent research (Kloppenburg, 2005; Dvir, 2005), which more in-depth reviewed respectively the involvement of a) project sponsors and b) employees from the affected line organization. Sponsors, for instance, have to position the project appropriately. Line management involvement is required to assure plans do take into account the reality of day-to-day operations. And by solving line issues in the strategy development process, support is created for help in realization later on. So far, nothing new.
Analytical factors, of course, also have a significant impact on success. The failure factors lower on the list, all relate to analytical capabilities to support decision making. To move forward and make the best choices, one needs to have confidence in the quality of multidisciplinary research and have good qualitative feedback to put findings in perspective. All this requires analytical capabilities.
My main point is, that analytical skills are just as important for the so-called "softer aspects" of strategy development and strategic change. Somehow not many professionals seem to be aware of that. There is more to strategic change then organizing a company gathering to discuss on what to do next. Sure, consultants need to have the capabilities to facilitate a meeting, communicate ideas, discuss them and challenge or just interact in a motivational manor. Managing interaction between people in all sorts of meetings is not an easy part of the job, but not the main point made here. What is often underestimated, are the analytical abilities necessary for effective interaction with line management content wise. This part of strategy development requires most analytical skills. To understand the complexity of day-to-day business life and combine these with the in-depth analysis conducted within the project team is not an easy task. To do this on the spot in meetings is extremely challenging. Consultants that are indeed able to discuss and take into account day-to-day issues, a broad range of solutions and the shortcuts of real business life, have a very unique selling point. Especially if they want to integrate these inputs back into the hard data analysis.
A truly integrated approach of analytical strategy development embedded in the organization means adding more complexity to the problem solving process. Not just with regard to a more dynamic client setting, but also content wise. But, it does lead to the best and wisest decisions on directions to take.
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