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Why Do CEOs Set Themselves Up For Failure?

Change projects must happen in a collaborative environment - or be destined for the scrapheap.

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Change projects must happen in a collaborative environment - or be destined for the scrapheap.

Opinions

Why Do CEOs Set Themselves Up For Failure?

Change projects must happen in a collaborative environment - or be destined for the scrapheap.

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No CEO intentionally sets out to fail. Yet the vast majority of time, that is precisely what they do. 88% of change initiatives fail, according to Bain & Co. Numerous articles in the Harvard Business Review and Forbes have estimated that almost 90% of strategies fail due to poor execution.

Every CEO has a strategy – one they think is clear and achievable. Yet nine times out of ten, it is not delivered. The CEO’s biggest challenge is not formulating the strategy. It is getting their organisation to execute it.

There are many reasons why CEOs fail so often. Setting unrealistic expectations is one. Lack of clarity about what they are trying to achieve and why is another. Inadequate risk analysis: “What could possibly go wrong?” is a question that is not asked often enough or in sufficient depth.

The planning phase should include honest analysis of a) the organisation’s strengths and weaknesses, b) competitor strengths and weaknesses, and c) market/industry trends. Let me repeat the word “honest”.

There are no Brownie Points on offer for kidding yourself at such an early point of the strategy development cycle. Another thing that too few organisations do to any sufficient degree is ‘scenario planning’. Done properly, such an exercise can help ensure you are ready for almost anything the future may bring.

But the two key reasons why CEOs fail to live up to expectations are: a change-averse culture and disingenuous engagement with their people. Your people are the only ones who can deliver your strategy.

Culture.

Louis Gerstner, when he was CEO at IBM said, “Culture is everything.”

An organisation’s culture underpins its success – or failure. It affects the quality of the people you can recruit. It affects your share price. The ‘Wolf of Wall St’, bonus-obsessed culture of our banks and their cosy relationship with the regulators was the root cause of the 2008 Great Recession.

The way your people behave; the way they interact with one another drives the way they treat your customers. Culture drives your organisation’s ability to make decisions; your ability to respond to challenges and opportunities; and your ability to change.

The City of London

Corporate culture was blamed in part for the 2008 financial collapse

The development of a change-ready culture is one of the essential ingredients to successful change: sustainable change is simply impossible without it.

The pace of change is accelerating. While globalisation and the internet have transformed almost every industry over the last twenty years – this is nothing compared to the disruption that the next wave of AI and automation will bring with it over the next decade.

Those organisations who are able to cope with change may survive. Those able to seek out and embrace the change will thrive.

You must be able to take your organisation in new directions swiftly and decisively when the need arises. But your people will need help if they are to embrace change willingly.

This requires the establishment of an environment where people eagerly look for improvements in the way things are done, are allowed to question the status quo, are encouraged to learn from failure, and are open to new ways of working.

Genuine engagement with your people.

As an employee, there is nothing more patronising than disingenuous corporate communications. Your communications may be ‘professional’ but if your employees don’t believe they are genuine, they will have very little impact. In fact, they will be worse than none at all.

The same is true when it comes to employee engagement. Genuine engagement involves listening and acting upon the insight you receive.

A simple test is how you conduct your staff survey. Conducting a disingenuous employee survey is worse than not even bothering to conduct one in the first place. If running an annual web-based survey is all you do – stop it immediately. That isn’t engagement.

It is a cynical and counter-productive tick-the-box exercise. (I knew of one company who took this one step further. They didn’t even provide employees with answers to 25% of the questions because the leaders didn’t like the responses!) A questionnaire alone is not enough.

It needs to be accompanied by other forms of interaction – employee forums, brown-bag lunches, workshops – that involve genuine engagement. How do you know if your employee engagement it genuine? That’s an easy one – ask your people.

Successful strategies (i.e. strategies that are actually delivered) cannot be developed in a vacuum.

communication

Is communication at the heart of your business plan?

The recipe for almost certain failure is for the CEO and one of his/her trusted colleagues to disappear into a room and reappear some days or weeks later with the new strategy à la Moses returning from Mt Sinai with his tablets.

No matter how innovative, these strategic pronouncements will rarely be greeted with the rapturous applause and glowing acclaim that the CEO expected.

Obtaining ‘buy in’ to ‘your strategy’ is a common approach and one virtually guaranteed to fail. To be successful, you don’t want Zombie-like employees mouthing platitudes and going through the motions.

You need your people to embrace the strategy so much that it becomes theirs – and they can only do this if they have been engaged in its development and the implementation plan. After all – they are the ones who will have to deliver it!

When it comes to strategy, too many CEOs rely on ‘broadcast communications’; one-way transmission of messages to the rest of the organisation. How often do we pause to check whether our people fully understand the implications of what we are saying and what they now need to do differently?

Putting ourselves in the audience’s shoes and making sure the subject matter is relevant to them and phrased in such a way to ensure maximum understanding are critical if we want our people to embrace a new direction.

Your people will want to know how this new strategy affects them and they will be asking themselves, “What is in it for me?” You will need to provide them with the answers if you wish to shorten the odds of success.

Campbell Macpherson is author of ‘The Change Catalyst: Secrets to Successful and Sustainable Business Change’, a 2017 Wiley publication. 

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Why Do CEOs Set Themselves Up For Failure?

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