October 2015 Newsletter – Why 90% of Businesses Fail

Why 90% of Businesses Fail

According to two landmark studies, one by McKinsey & Co. and one by Harvard Business School, 90% of business strategies that fail do so because of lack of execution. In other words, the vast majority of companies that don’t make it actually had workable game plans – they just didn’t execute their strategy properly or fully.

Well, if these organizations had reasonable blueprints, what went wrong? Incomplete or improper execution occurred.

Let me share a typical example of this. A couple of years ago Tim, an energetic man in his mid-thirties who had a company that provided on-site maintenance and repair services to their customer’s equipment, came to us for help. He had worked for another company as an employee servicing the same equipment and then he decided to go out on his own.

At first things were great. He lined up the customers, ordered the parts and took care of the repairs or maintenance in a tip-top fashion. As the company grew, he added a second crew. Then he added another one. Then another, and so forth. He ended up with 7 crews when he came to us.

Tim’s Problems

Tim told me his problems started with his first crew and then just grew bigger and more complex as he Small Business Planning in Atlanta, Georgiaexpanded. The first problem was that his crews did not have his personal commitment to doing the job right and he ended having to go out into the field many times to fix their mistakes. He thought “they know to do that”. But in fact they didn’t, because no one ever told them explicitly what to do on a service call.

The next problem was his personnel would show up at the customer site without the necessary parts to complete the job and would have to come back a second time with the needed items – thus doubling his costs. Then, he decided to implement a central “inventory” system but no one ever properly maintained it, so it became a mess. Next Tim hired an “inventory control” person and told them – here it is, it’s your baby to control. But this person ended up stealing parts from him and doing jobs on the side.

Tim was ready to pull his hair out when he came to us. He said, “What went wrong?” What happened was he got caught in the “busyness” execution syndrome, instead of executing his strategy in a “structured” manner. What do I mean?

The “Busyness” Method of Execution

Small Business Planning in Atlanta, GeorgiaFrom one standpoint, execution in an enterprise is easy; you just do it (whatever “it” is). However, in reality there are two different types or methods of “execution.” The first is to just get busy doing various activities. I call this the “busyness” method. The activities engaged in the busyness method may or may not be productive activities. As long as people are “busy” working in the company, everything seems OK. The underlying problem with the busyness method is the majority of activities are tactical actions, which are not necessarily tied to the company’s Strategic plan. This is where Tim lived.

Just like the paraphrase from Alice in Wonderland, “the faster you go, the be-hinder you get,” the busyness method can lead to activity for the sake of activity. Its mantra is “just get busy doing something.”

In the absolute, the busyness execution approach can lead to operating in the envelope of the ill-fated “tyranny of the urgent”. This is where a business spends so much of its time in crisis management that it loses sight of the big picture of what it should be trying to accomplish and thereby sees little or no progress toward its long-term goals. The business then starts to operate primarily in a reactive mode where the concept of planning becomes nothing more than figuring out the solution to today’s “crisis du jour.”

Business Leader Burnout

The bottom line of the busyness approach to execution is that it is an unstructured method that is not tied to an overall Strategic plan. This method of execution does not fully utilize systems that are intentionally tied to the business’ overall Vision and Strategy. In the end this approach can lead to endless fatigue where the owner becomes burned out with the business. The enterprise ends up being overly dependent upon the owner and they get trapped doing the same things, day after day, week after week, month after month, year after year—the perfect recipe for burnout.

Structured Execution

The second approach to execution is what I call “Structured Execution”, which uses a structured approach Small Business Planning in Atlanta, Georgiathat is based upon the overall Vision and Strategy of the business. The key to Structured Execution is that it is an intentional method of developing and executing its systems in a disciplined manner. There are three keys to Structured Execution.

Intentionality

The execution does not take place haphazardly but there is a definite train of thought behind each action. The visible execution is a result of an overall game plan that has been laid out clearly behind the scenes.

Systems

Structured systems have been developed, implemented, and are being monitored so that the correct actions take on a consistent basis. Actions are not left up to the individual to do as they see fit, but the steps a person or team should take to accomplish a given task have been identified beforehand and optimized to get the desired outcome on a predictable basis.

Discipline

A disciplined atmosphere exists throughout the organization to ensure that once the optimized systems are in place they are followed explicitly, adherence to the systems is rewarded and deviation from them is penalized. The discipline to adhere to the systems in place is not mindless, but is an acknowledgment that the best systems are being used in order to produce the desired results.

By using a Structured approach to execution you gain the benefit of having an actual Execution Plan, instead of operating with execution by busyness approach. Therefore, the business owner does not become burned out because the business is executing based upon a defined overall strategy, not haphazardly – which in turn moves the business closer to its goals. This results in a sense of freedom for the organization’s leaders, as compared to feeling trapped by the next problem that is going to ensnare them.

Small Business Planning in Atlanta, GeorgiaBack to Tim. Over the next number of months we worked with him to implement this Structured approach, which resulted in dramatic results. He told me he was so overjoyed with his new-found freedom that he bought a vacation cabin and started spending weekends there with his family – and being totally unplugged from his company.

So, how can you start down this path? Begin by examining your operations from the perspectives of Intentionality, Systems and Discipline to determine if you need to improve the execution of your organization’s strategy. Then move forward to tie all of your operations back to your overall business Vision and Strategy.

If you need assistance with moving from the Busyness Execution model to the Structured Execution one, please contact us so we can show you how to use this concept to take your business where you want it to go.

Fountainhead Consulting Group, Inc. is an Innovation and Business Planning firm. During the past 17 years we have shown over 1,200 companies how to achieve the goals for their business by using our unique, comprehensive and systematic business planning and growth methodology, the Structure of Success™ so they can Work Less, Make More and most importantly Have Fun in Their Business. Using our Structure of Success™ methodology each month we examine one of 12 areas of a business or organization.

Office phone: (770) 642-4220

www.FountainheadConsultingGroup.com

George.Horrigan@FountainheadConsultingGroup.com

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