What Gets In The Way Of Great Strategy?

Seven common pitfalls trip up leadership teams.

- Adrien Bron, Lars Dingemann, Josef Ming & Nicolas Bloch

Great companies manage to create more value than the sum of their parts. Yet most struggle to select the right assets and operate them in the right way. Bain & Company research shows that just one in 11 companies outperform their market over a 10year period. The rest are merely keeping up or falling behind.

What gets in the way? Obviously, there’s no easy answer. But in our work with leadership teams around the world, we’ve been able to identify seven common pitfalls that trip up leadership teams as they develop and execute strategy.

1. Tilting toward the assets you own versus those you should own. Leaders tend to hold on to their existing businesses for too long, rather than regularly asking themselves the “best owner” question. That’s because strategies are too often limited by the current business perimeter. They ignore opportunities to capitalise on adjacencies or build new, transformative profit engines. They aren’t attuned to threats from new players.

2. Leaning on today’s management routines. Managers tend to get locked into their existing reporting structures and routines, making it easy to define their business that way. They then fail to recognise the true boundaries and interdependencies among business units. They can achieve greater clarity by looking across the organisation to determine where units share customers, costs and capabilities. Leaders also tend to think about the potential of each of their businesses incrementally, relative to today’s results. That often leads to what we call “satisfactory underperformance” and discourages a fullpotential perspective aimed at accelerating away from today’s performance.