Strategy implementation: What is the failure rate?
Based on an article in the latest issue of Journal of Management & Organization
One of the most challenging and unresolved problems in the field of strategic management is the high rate of organisational strategies that fail, with some authors estimating a rate of failure of approximately 80 to 90%.
Although remarkable progress has been made to understand the reasons behind failure and improve the success rate of implementation, the reality is that the problem of strategy implementation failure persists. A useful first step to address this problem consists in assessing its real scale by determining the true rate of strategy implementation failure. This assessment is important for several reasons one of the most important being that the claims of high failure rates (90%) have often been used to guide the research and practice on strategic management. In particular, they have played an important role on the adoption or abandonment of some management tools by practitioners, and on the choice of topics researched by academics.
This study aims to contribute to the discussion on the estimation of strategy implementation failure rates by providing a clear and comprehensive understanding of the nature of this problem and showing that the percentage of strategies that fail to succeed is a controversial issue. In particular, by reviewing and discussing relevant literature, the study finds that the current state of affairs on the field of strategic management does not allow a single robust estimate of the failure rate of strategy implementation to be provided. In fact, the range of variation of the estimates is remarkable. When we analyze the studies that focus on business strategy implementation in general, we can verify that the estimated rates of failure have ranged from 28 to 90%. When we turn to the studies that have focused on the implementation of specific business strategies this range is even wider. While some studies have obtained rates of failure as low as 7–10% others have obtained rates of failure as high as 80–90%.
Therefore, although it can be claimed that up to 90% of strategic initiatives fail, as this is the upper limit of the estimates provided in the literature, this is likely to be an overestimation. The analysis of the literature also suggests that most of the estimates presented in the literature are based on evidence that is outdated, fragmentary, fragile or just absent. Careful consideration is therefore advised before using current estimates to justify changes in management theory and practice.
In order to further contribute to this discussion and help address the methodological weaknesses of previous studies, we also lay the foundations of a clear protocol to guide researchers in the process of estimating more rigorously the true rates of failure on strategy implementation. A number of issues where further research could be fruitful are also suggested.
We encourage you to read the full article ‘Strategy implementation: What is the failure rate?’ here
Article written by Carlos J F Cândido and Sérgio P Santos