Not Snarky, Just True: Most Business Plans Fall Short of Goals

(Bloomberg) -- Here's one for the B-school case files: Nine out of 10 corporate strategic plans fail to meet their stated goals.

Not only does almost every business plan fail to live up to its promise, more than half of companies say they struggle to fix the problem and lose business to a competitor as a result, according to a survey of 500 executives by the Economist Intelligence Unit.

“There's serious money at risk,” said Mark Langley, CEO of the Project Management Institute, which participated in the study. Typically around 10 percent of companies' budgets gets lost because firms can't put their strategic plans into practice; sometimes failure eats up as much as one-third, the study found. “Those who design the strategy don't connect with the people who deliver it.”

There are plenty of examples. As of 2010, Cisco Systems Inc.'s strategic plan included 50 separate priorities, from emerging markets to data needs in health care and real estate, said Hilton Romanski, the networking giant's chief strategy officer since 2015. Now Cisco has four areas of focus, he said.

“You can't have 50 priorities,” Romanski said in an interview. "You need to have something on the order of what you can count on one hand, otherwise you don't focus the right time and attention on it.” The company is trying to shift from a reliance on revenue from high-cost proprietary equipment -- which some customers are turning away from -- to software and services.

Only 10 percent of the 500 executives surveyed said that they reached all of their goals. Another 36 percent said they missed between 21 percent and 60 percent, according to the research, which looked at companies with revenue of $1 billion or more in June and July of this year. The study is part of the so-called Brightline Initiative of corporate program managers, which is focused on the gap between plans and implementation.

“Companies are looking for the silver bullet,” said Langley from PMI. “They hear about the latest trend, the latest book to come out and say ‘If we only do this one thing, we're going to be more successful.' Change in organizations involves people, and people are hard.”

To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net.

To contact the editors responsible for this story: Janet Paskin at jpaskin@bloomberg.net, Jonathan Roeder