Why Do Business Plans Fail?
Ninety per cent of developed strategies fail. The problem is not the quality of the strategy itself, but the organisation’s ability to execute it.
“I have seen more than 5,000 business plans, and only three of them were implemented as originally intended. In most cases, the successful teams were those that could quickly adjust their plans as new opportunities emerged. That is why companies need a 90-day plan to get things done—not a three-year plan.”
— Professor Bill Sullivan, Harvard Business School
In universities and various development programmes, it is common practice to focus primarily on creating a plan or strategy. Yet 90% of developed strategies fail. The problem is not the quality of the strategy itself, but the organisation’s ability to execute it.
This is an interesting paradox: anything can look good on paper, but execution requires discipline and often a change in behaviour. People must deliver on what has been agreed, experiment courageously, learn from mistakes, and adjust urgent priorities as reality changes.
In his book Playing to Win, Roger Martin writes that a successful strategy requires answers to five simple questions. The fifth question is usually left unanswered, even though it ultimately determines whether the strategy will be executed or not.
The five questions are:
What is the game you want to win?
The description of winning should meet the Mount Everest criterion. If you say that you intend to reach the summit of Mount Everest within three years, everyone immediately understands what you are planning to achieve.
Be specific when defining victory. The longer and more complicated the description, the more room there is for interpretation—and the more confusion it creates within the organisation.
Where do you intend to win this game?
Your definition of success determines where you plan to compete: in which market, part of the value chain, sector, or field.
Again, specificity matters. Ambiguity creates confusion, and confusion directly reduces people’s performance.
How will you win the game?
Once you know what game you want to win and where you intend to play, you must decide how you will win.
The basic choice is simple: you gain a competitive advantage through either price or a differentiated service. In both cases, quality is essential hygiene, and processes must operate efficiently—even when your advantage is based on differentiation.
Which three to five strategic success factors matter most?
Once you know how you intend to win, you can define the three to five most important strategic success factors that will enable you to win the chosen game in the chosen way.
What capabilities must the organisation possess to provide products and services at the desired level of quality and price?
Which management systems and processes must the leadership team implement to build the required capabilities quickly and effectively?
How will the organisation ensure that agreed actions are completed? In other words, what kind of organisational culture is required?
This final question is the key indicator of whether objectives will be executed and the desired results achieved. In most business plans, this is precisely the question that remains unanswered.
Practice has demonstrated over centuries that an organisation’s rapid and sustainable development is directly linked to the maturity of its leadership team.
Success depends on the leadership team’s ability to answer the questions above through strategic thinking, translate them into a short-term focus—such as a 90-day plan—and align the entire organisation around execution through execution planning.