Why Strategies Fail

Even well-designed strategies frequently fail to deliver their intended outcomes. Research suggests that the majority of strategic initiatives do not fully achieve their objectives. This lesson examines the key reasons for strategic failure, including strategic drift, the tension between planned and emergent strategy, and the role of contingency planning and crisis management.

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Strategic Drift

Strategic drift occurs when a business's strategy gradually becomes less aligned with the external environment. The organisation continues to operate in familiar ways while the market, technology, or competitive landscape shifts around it.

Stages of Strategic Drift

Stage	Description
1. Incremental change	The business makes small adjustments to its strategy in response to environmental changes. The strategy remains broadly aligned with the environment.
2. Strategic drift	The pace of environmental change exceeds the pace of strategic adjustment. A gap opens between the strategy and the environment. Performance begins to decline.
3. Flux	The organisation recognises the problem and experiments with different responses. There is internal debate and uncertainty about the right direction.
4. Transformational change or death	The business either undertakes radical strategic change to realign with the environment — or it fails.

Why Does Strategic Drift Occur?

• Complacency — success breeds overconfidence and a reluctance to change
• Organisational inertia — deeply embedded routines and cultures resist adaptation
• Bounded rationality — managers' mental models become outdated but go unchallenged
• Path dependency — past decisions constrain future options
• Incremental thinking — small adjustments feel safer than radical change, but may not be sufficient

Example: Kodak was a dominant force in photography but failed to adapt to digital technology despite having invented the first digital camera. Its strategy drifted as the market shifted from film to digital, and by the time it attempted transformational change, it was too late.

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Planned vs Emergent Strategy

Planned (Deliberate) Strategy

A planned strategy is intentionally designed by senior management, based on analysis of the internal and external environment. It follows a rational, top-down process:

1. Set objectives
2. Analyse the environment (SWOT, PESTLE, Porter's Five Forces)
3. Identify strategic options
4. Choose the optimal strategy
5. Implement the plan
6. Monitor and evaluate

Strengths of planned strategy:

• Provides clear direction and focus
• Ensures alignment between different parts of the organisation
• Facilitates resource allocation and coordination
• Creates accountability for delivery

Weaknesses of planned strategy:

• Assumes the future is predictable — it often is not
• Time-consuming to develop — may be outdated by the time it is implemented
• Can create rigidity — commitment to the plan may prevent adaptation
• Over-reliance on senior management — ignores insights from lower levels

Emergent Strategy (Mintzberg)

Henry Mintzberg argued that much strategy is not planned in advance but emerges from a pattern of decisions and actions over time. Emergent strategy develops from the bottom up as managers and employees respond to unexpected events and opportunities.

Strengths of emergent strategy:

• Flexible and adaptive — responds to real-world conditions
• Draws on the knowledge and creativity of the whole organisation
• Well-suited to uncertain, fast-changing environments
• Allows for experimentation and learning

Weaknesses of emergent strategy:

• May lack coherence — different parts of the organisation pull in different directions
• Difficult to coordinate and control
• Can result in short-termism — reacting to events rather than shaping them
• May not be understood or supported by all stakeholders

Planned vs Emergent: A Comparison

Feature	Planned Strategy	Emergent Strategy
Origin	Senior management	All levels of the organisation
Process	Top-down, analytical	Bottom-up, experiential
Flexibility	Low	High
Best suited to	Stable, predictable environments	Dynamic, uncertain environments
Risk	Rigidity, irrelevance	Incoherence, lack of direction

In practice, most successful strategies combine elements of both. Leaders set broad strategic direction (planned) while remaining open to adaptation and learning (emergent).

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Contingency Planning

A contingency plan is a pre-prepared response to a specific risk or event that could disrupt the business. It answers the question: 'What will we do if X happens?'

Purpose of Contingency Planning

• Minimise the impact of adverse events
• Reduce response time when a crisis occurs
• Provide clarity and confidence during uncertainty
• Demonstrate due diligence to stakeholders (investors, regulators, insurers)

Common Contingency Scenarios