It is always easy to plan and make strategies of their own choices. However, it is much harder to execute them as planned in the hyper-competitive marketplace of the present era. Hence there are many reasons why companies have to face strategy execution failures.
Here we take the example of Kodak-a great strategic failure- became guilty of effectively determining its own fateful extinction, or at least, the business dilemmas. It could not keep pace with the changing digital landscape of the market, and even when it tried to do so, it was implemented at a slow-paced under a continuous change strategy, and at last, it did not remain compatible as its core competency (Swasy, A., 1997)
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There are many reasons for the wrong execution of strategies; however, one of the most important may be the strategy’s focus to shift over time. In fact, synchronization-getting the right product to the right customer at the right time- matters a lot while executing a given strategy. However, it is much harder to synchronize due to various reasons. For instance, large companies, especially multinationals, sell multiple products to a huge array of customers in multiple geographies. It could be a regional manufacturing initiative in Europe, which has to reconfigure 15 different supply chains and understand the markets of 15 different countries. Thus they have to consolidate their offering to pursue scale benefits of size (Ansoff, I., 1965).
Lack of Communication:
Sometimes, companies have to suffer execution failures due to a lack of proper communication strategies for all the people involved. Most of the time, it happens in large companies that a major strategy thus is developed, and then a month or two later, different lower and middle layers of management are asked about the progress. However, the answers that they haven’t even heard of that program stuns the whole top management. This is a waste of timeands the rich resources of the company, which could have been deployed for some better results.
Resistance to Change:
Sometimes strategies fail because individuals resist the change. There may be a case that the top management wants more standardization in a product, but a local marketing team disagrees with the idea. This conflict may be based upon their own marketing observations. In such a scenario, a company can get cost-benefit and consolidate if everybody agrees that they are actually going to execute the strategy.
Very frequently, organizational internal cultural factors present hindrance for execution. In fact, many companies try to apply a tried-and-true strategy without realizing that they are doing business in different markets that need a different strategic approach (Barney, J.B., 1991).
However, the inattention in execution remains the biggest factor. In most of the cases, there is surprisingly little follow-through after a plan has been decided. Thus the execution of the plan is seldom monitored properly. It has been estimated that less than 15% of companies routinely track their performance as they thought they would perform. Instead, executives prefer measuring the first year’s goals. In fact, first-year goals are deliberatively set low to ensure a threshold for a bonus. By lacking introspection, companies easily ignore failed plans, and this ignorance leads them to identify execution bottlenecks and take corrective action hardly.
For instance, Kodak shifted its goals over time by switching from competitive pricing strategies, service, and then conflicting high-cost channels. Moreover, it tried to reinvent the old structure and technology rather than quickly adopting the new digital technology (Anonymous, 2004). However, Kodak, by following the International Diversity (IDP) Perspective against the Global Convergence Perspective (GCP), took some advantage of the disparate demands of consumer markets around the world and further diversified its business in the East (Porter, 1998).
Furthermore, Kodak tried to build new capabilities in-house following the MBV approach through acquisitions and mergers. For instance, it made agreements with Cingular Wireless and Nokia to develop mobile phone cameras to keep pace with the digital age. In executing such rash strategies, it tried to absorb as many new functions as possible. Thus it had to pay the price in the shape of dented cash flows (Swasy, A., 1997). These actions led Kodak to face the complexities of restructuring and thus held it back from clearly internally defining its market presence and its subsequent network-level partnerships. Also, it was unable to synchronize new capabilities by aligning its goals with RBV and MBV approaches. It could not decide whether it should stick to core competencies historically developed in film and paper and deliver in those-although shrinking-but highly specialized markets (Hamel, G., & Prahalad, C.K., 1990)
- Swasy, A. (1997). Changing Focus: Kodak and the Battle to Save a Great American Company. Times Business, Random House.
- Ansoff, I. ( 1965). Corporate Strategy.New York: McGraw-Hill
- Hamel, G., & Prahalad, C.K. (1990, May-June). The Core Competence of the Corporation. Harvard Business Review,79-91.
- Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), pp. 99-120.
- Porter, M. E. (1998). The Competitive Advantage of Nations. Free Press.
- Anonymous (2004). Kodak, a failure to innovate?. Innovative Tribune, Retrieved at http://portail-innovation.typepad.com/eng/2004/12/kodak_a_failure.html