Rumelt states that the most common characteristics of a bad strategy are: the failure to face the challenge, mistaking goals for strategy, bad strategic objectives and fluff (it's a technical term). Let's look a little deeper at the failure to face the challenge.

Failure to face the challenge - Strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to overcome it.  There are always challenges that must be overcome when pursuing any worthy goal. Examples of challenges to a goal of growth could be external challenges such as competition or internal challenges like quality. 

Rumelt uses International Harvester (IH) as an example of failing to face the challenge.  He shows how IH failed to take a hard look at their internal operations and competitive position. Instead they focused on standard cost cutting and market share gains in their strategic plan.  IH failed to recognize their grossly inefficient production facilities or the fact they had some of the worst labor relations in US industry. The results of these problems were that IH's profit margin had been about one-half of its competitors for a long time.  

Why did the IH executives choose to ignore these problems, the underlying reasons for their poor margin performance?

They ignored these problems because focusing on internal issues is very hard for most organizations to do. To focus on internal problems someone or some division has to be called out. It is easy to understand why no one inside the organization wants to fire the first shot. Sometimes internal challenges can be flushed out early in the strategic planning effort through a very open brainstorming session on the company's weaknesses. I always use anonymous internal and external surveys to root out these issues before the planning begins. Benchmarking is another great tool that forces teams to look at the clear comparison between them and their competitors. It is hard to avoid the conversation when you can clearly see the problem via surveys and benchmarking.

In my experience, failing to face or recognize the challenge is the most common mistake in strategic planning. It is the most difficult part of any strategic planning session and the part that almost every team member would be happy to avoid. Every organization must confront the brutal facts of their situation. As a leader, you will have to force your organization down this road. They will not do it on their own. 

How can you be sure your organization is effectively facing the problems in your strategic planning? Here are 4 steps:

    1. Don't assign blame. Attack the problem and the systems that allowed it, not the people in charge.

    2. Compare/Benchmark. Where are your competitors beating you, or where could they surpass you?

    3. Ask: "What problems could stop us from meeting our goals?"  Brainstorming sessions and anonymous internal and external surveys are needed. 

    4. Force it. Do not accept a weak strategy that lacks a firm understanding of the obstacles that must be overcome. 

As the leader it is up to you to face the brutal facts about your organization and where it stands in your industry. It takes courage. Many times it is best to get someone from outside your organization to help you take this hard look. Whether you do it yourself or you hire someone to do it, it must be done if you want to build or sustain a great company.

About Curt Fowler

Curt Fowler is the President and Founder of Fowler & Company, a business advisory firm founded to help its clients maximize the value of their organizations. Curt is a Certified Public Accountant and earned his Masters in Accountancy from the University of Georgia. He also earned an MBA in Strategy and Entrepreneurship from the Kellogg School at Northwestern. He has spent 20 years studying and learning from some of the best businesses in America including Verizon, Sara Lee, Cox Communications and many more.