There are three primary problems commonly encountered in strategic management:
- Lack of strategic management as a governance system
- Absence of a strategy itself
- Lack of a strategy implementation mechanism
1. Lack of Strategic Management as a Governance System
Naturally, every company must make strategic decisions, regardless of whether it has a formal strategic management system or not. This is simply a requirement imposed by the external environment. However, how those strategic decisions are made—whether through a carefully considered strategy or in between putting out day-to-day fires—is something each company determines for itself.
Unfortunately, for many organizations, strategic management is still viewed as something abstract, distant from reality, and unrelated to practice. Some companies don’t even understand the terminology involved.
When I conducted a seminar on strategic management in a regional city with a population of about 600,000, one of the participants—her company’s CFO—shared an amusing story. Before heading to the seminar, her coworkers kept asking her what the seminar was about. She initially tried to explain that it was on strategic management, but the term meant little to most of them.
Eventually, she started telling them it was a seminar on business planning, and only then did they nod in understanding. This highlights a widespread unfamiliarity with the concept and language of strategy in many companies.
2. Absence of Strategy
Even after realizing the need to implement a strategic management system, a company may face a serious challenge: lack of a methodology for developing a strategy based on the results of strategic analysis.
Managers might start using various strategic analysis techniques, only to find out that applying all the right tools does not guarantee they will end up with the most effective strategy.
What’s needed is the ability to manually build a strategy based on the insights gained from analysis. This psychological barrier often hinders further implementation of strategic management. While managers are used to solving operational issues and are no longer intimidated by them, when it comes to strategy, there’s still a fear of the unknown. Thus, managers must learn how to make strategic decisions—and make them effectively.
In practice, making that next leap can be incredibly difficult. The transition from recognizing the importance of strategic management to actually developing a strategic plan requires overcoming a significant mental block. New things often feel difficult—or even impossible—to do.
Much depends on the willpower of the company’s top leader. The speed at which a company moves from awareness to action in strategic management often hinges on the determination and leadership of the CEO.
One CEO of a large company shared with me that they hadn’t yet passed this stage of development. He and his executive team spent most of their time on day-to-day operations. For example, the technical director was busy dealing with bolts—literally. Whenever material resource issues arose in production, most employees went directly to the chief engineer.
The CEO recognized how unhealthy this was, as he too was bogged down in minor operational matters. However, he feared that if he delegated more responsibilities, those tasks might simply go unaddressed.
So, although they understood the need to focus on strategic development, they struggled to free up the time and attention to do so. This leadership team found itself stuck in a vicious cycle they couldn’t break.
3. Lack of a Strategy Implementation Mechanism
Even companies that have overcome the first two challenges and actively embrace strategic management techniques quickly realize that a good strategy alone does not guarantee successful execution.
They discover that they also need to build a system or mechanism for implementation—a structure that enables the strategy to be carried out effectively.
So, in addition to recognizing the importance of strategic management and developing a sound strategy, the company must also overcome the third challenge: building a robust implementation framework.
If not addressed, these issues can lead to disillusionment among managers. They may become disappointed with strategic management without ever having experienced its true potential in action.
