strategy test
Creating a strategy is not difficult. In fact like kicking a football, almost anyone can do it. But creating a winning strategy is a completely different ball game and the successful achievement of a company's strategic objectives is what will demonstrate the real capability of a leadership team in the long run.
Whether a strategy is geared towards profitability, market share, sustainability or risk, the least any leader can do before forging forward is test the strategy. Yet in a survey of over 2,000 executives, 65% indicated that their strategies had passed 3 or fewer of the 10 timeless strategy tests and a mere 10% were able to claim that their strategies had passed 7 or more of the 10 tests.

Strategy Failure

The grim reality is that most strategies are not successful, with failure rates of 50 to 90% reported through different studies. Too many leaders say they have a strategy, when in fact they have the recipe for a bitter future and possibly what will eventually prove to be a fatal dose of bad strategy.
GM, Blockbuster, Nokia, Borders are just a few big names that tasted bad strategy. Wal-Mart once had strong competitive advantages over its competition, but failing to effectively frame their problems, energise their workforce and equip the organisation with the right capabilities, were at the heart of their toxic strategy.
In this HBR article about J.C. Penny, Roger Martin wrote; “The problem with J.C. Penney is that it serves no compelling customer purpose” – and the company and its people suffered terribly at the hands of such bad strategy.

Pointless Projects and Programmes

The saddening part of this is that strategies throughout the world that have not been subjected to the rigours of testing, give rise to many 1000s of projects and programmes which require funding and the efforts of so many people. Because if the strategy itself is not right, valuable company resources are consumed on a pointless journey.

Face Up to Testing The Strategy

Would you expect the CIO to switch on new IT solutions before thorough and formal testing? Of course not!
So CEOs need to be brave, do the right thing, and face up to strategy being tested. If it's that good, there is nothing to worry about. If it's not that good, the 10 tests below from McKinsey will help identify and address the weaknesses, before they are exposed to the Chairman of the Board. Let's face it, the Chairman will eventually uncover any weaknesses, whether that's up-front when reviewing the strategy or later down the line when the numbers come in.

  1. Will our strategy beat the market?
  2. Have we translated our strategy into an action plan?
  3. Is our strategy granular about where to compete?
  4. Is our strategy contaminated by bias?
  5. Does our strategy put us ahead of trends?
  6. Does our strategy rest on privileged insights?
  7. Does our strategy embrace uncertainty?
  8. Does our strategy tap a true source of advantage?
  9. Does our strategy balance commitment and flexibility?
  10. Is there conviction to act on our strategy?

The survey findings and McKinsey experience suggest that companies that pay more attention to more of these tests early on, will have a better chance of developing successful strategies later.
Some might say that the tests listed above are all part and parcel of their discussions during the development of their strategy, but according to the survey results, few take the time to develop their strategies with a process that could include the assessments these tests cover.
Read the full McKinsey article here
Also read “The perils of bad strategy”