PwC’s Strategy& has conducted a survey of more than 6,000 executives from companies of various sizes, geographies, and industries.
In our survey, most executives said they did not feel their company’s strategy would lead to success, less than half said their company was very clear about how it added value to customers, and one in five admitted their company did not even have a list of strategic priorities to keep them focused. Overall, almost two in five companies were rated as “adrift.”
Executives are significantly concerned about both their company’s strategy and its ability to execute the strategy.
70% are concerned that their strategy is not clear enough about how they create value for their customers.
73% are concerned that their strategy is not meaningfully differentiated from their competitors’.
79% are concerned that their company does not allocate sufficient resources to implement the strategy.
74% are concerned that they have not translated the strategy into tangible actions. 74% are concerned that the strategy asks them to work on too many priorities.
Overall, only 35% of executives believe their strategy is going to lead their company to success.
In this volatile environment, leaders often believe that strategy is a luxury they can’t afford. In the face of disruption, many companies launch numerous initiatives and chase growth where they find it, without building long-term advantage. Others are reluctant to make big strategic bets that would allow them to differentiate. And some leaders avoid strategy altogether because they’re convinced it’s too abstract or bureaucratic.
The result? Many companies don’t have answers to the most important strategic questions: How do we add value to customers in ways that others do not? What few things allow us to do so better than anyone else?
In these turbulent times, companies need strategy locked down as never before. Companies need to make tough choices about how they’re going to compete and what allows them to win. They need to build a real advantage, rooted in the few things the company does better than anyone else. This requires leaders to make big decisions about where to invest and stick to those decisions over time.
Our survey, however, confirms that too many leaders feel pressure to respond fast. Many companies are just “existing” — launching initiative after initiative to seek growth where it can be found, or chasing quarterly targets.
Our research reveals that there’s a strong link between strategy and performance. Companies that invest time and effort in strategy — and that build their strategies the right way — tend to outcompete and outperform their peers.
Coherent companies are three times as likely to report above-average growth as incoherent companies.
Coherent companies are twice as likely to report above-average profits as incoherent companies.
Our research has shown that the way companies approach strategy fits one of six patterns: We call these the strategy archetypes. Each archetype is characterized by a set of challenges that companies of this archetype face when it comes to developing and executing a winning strategy.
The adrift lacks a clear direction that could guide it to success.
The untapped has had some success, but has not built the advantage to sustain it.
The stretched needs to tackle some fundamental issues that prevent it from realizing its aspirations.
The restless needs to focus and channel its energy. The contender is on the path to success and requires continuous focus and commitment to fully get there.
The supercompetitor is a customer favorite and a seemingly unstoppable force in the industry.