Future Group diversified into numerous sectors like insurance, financial services, and real estate, expanding too quickly without a strong financial foundation in its core retail business. The rise of strong competitors like Reliance Retail and online platforms like Flipkart and Amazon put pressure on Future Group’s market share and revenue. Covid 19 lockdowns and store closures during the pandemic severely impacted operations and cash flow, forcing Future Group to default on its debts. This proved to be the final blow, as it left no path to recovery. The lesson to be learned is that a strategic, well-researched diversification plan is crucial for success, ensuring that new ventures offer profitability and are sustainable.
Strategies fail due to poor execution, which shoots from factors like lack of leadership commitment, poor communication, inadequate employee engagement, and a disconnect between strategy and operations. Designing a strategy is one thing but implementing and executing it is more important. Organizations fail strategically when they carry unrealistic goals, inadequate resources, a failure to adapt to changing circumstances, internal misalignment of processes, and a general lack of capability building to support the strategic objectives. Some of the reasons why strategies fail is as follows:
Execution Problems
The failure of strategy execution is a common and costly issue in organizations today. While there are many reasons why leaders struggle to translate strategy into action, common themes include a disconnect between strategy and operations, overemphasis on internal matters, lazy leading, and a lack of accountability. Kodak invented the first digital camera but failed to execute its strategy to transition fully to the digital market. The company refused to hold its digital strategy for fear of harming its existing, highly profitable film business. This led to a significant loss of market leadership to competitors who adapted to the new digital landscape. Kodak’s decision making delayed the execution, the firm kept on procrastinating its digital strategy.
Poor Implementation
This is the most common reason for failure; plans are often developed but not properly operationalized or tracked. Lack of timely implementation and misjudging market scenario are some of the reasons why strategies fail. Motorola largely “failed” by missing crucial innovations in the transition from early mobile phones to smartphones, including a slow adoption of 3G technology and the rise of touch-screen devices, leading to a loss of market share to competitors like Nokia, and later, Apple and Samsung. Other factors included internal issues like frequent management changes, a bureaucratic structure, and a failure to innovate beyond their successful Moto Razr line, which was followed by a period of declining product quality and market relevance before its acquisition by Google and later Lenovo, which marked a shift toward low-cost Android phones.
Lack of Alignment
This occurs when departments and employees don’t understand how their work contributes to the overall strategy, leading to wasted effort. eBay is an online auction site where companies and individuals bid on products. eBay represents another strategic planning failure example where a merger was the cause. In 2005, eBay decided to merge with Skype, thinking it would enhance their business. However, the values and systems of the two firms did not integrate well with each other. In 2009, eBay reversed the merger but already experienced significant decreases in stock.
Inadequate Resource Allocation
This can sabotage execution, as teams lack the necessary budget, staff, or technology to achieve their goals. Subhiksha, a prominent Indian retail chain, pursued an aggressive expansion strategy to quickly increase its market share and mark. The rapid expansion was not backed by adequate capital support or robust operational systems. The company expanded faster than its financial resources could sustain, leading to a collapse. This is a clear example of a strategy failing because the necessary financial resources and operational resources.
Leadership and Culture Issues
Insufficient Leadership Commitment is the biggest danger. Also focus on perks over vision can undermine strategy, sending a negative message throughout the organization. An example of how poor leadership can cause organizational strategy failure in India is Satyam Computer Services, where its founder, Ramalinga Raju, engaged in financial fraud and made unethical decisions that led to the company’s downfall and required a forced sale. In the case of Satyam, Ramalinga Raju’s decision-making and lack of ethics led to a massive financial fraud, undermining any articulate strategy the company might have had. Ramalinga Raju’s failure was the massive corporate fraud at Satyam Computer Services, where he, as founder and chairman, fabricated company accounts to inflate share prices and misappropriate money, leading to the company’s collapse and his imprisonment. The fraud, revealed by Raju’s confession in 2009, was discovered after the collapse of the Hyderabad property market exposed the company’s financial irregularities and ultimately resulted in the acquisition of Satyam by Tech Mahindra.
Poor Communication
This prevents employees from understanding and internalizing the strategy, making it difficult for them to act on it. Kingfisher Airlines, owned by liquor baron Vijay Mallya, was once a prominent Indian airline. However, the company faced a major crisis in 2012 when it suffered severe financial difficulties, leading to grounded flights, unpaid employees, and mounting debts. The company’s key stakeholders, including employees, customers, and regulators, did not engage during this crisis. Non-transparent and ineffective communication further damaged the brand’s reputation and contributed to the eventual downfall of the airline.
Toxic Organizational Culture
Can hinder strategic efforts, creating struggle to change and a lack of collaboration. A big example of a specific failed company due to toxic culture is elusive, reports highlight BYJU’S as an Indian company with a toxic, forced sales culture, contributing to widespread negative employee experiences and potentially contributing to its significant failures and downfall. Reports of a toxic organizational culture at Byju’s is cited as a reason for worker dissatisfaction and contributing to the company’s overall struggles, according to World Journal of Advanced Research and Reviews. The company has undergone significant restructuring, including mass layoffs and the closure of almost all its office spaces in India, to reduce costs and streamline operations.
Failure to Adapt
Adaption to surrounding and market is very important for organizational survival. Bisleri, a household name synonymous with bottled water in India, decided to tap into the booming carbonated beverage market in 2006 with the launch of Bisleri Pop. However, their established brand identity didn’t translate well to this new category. The branding of Birleri as clean drinking water had built its reputation on trust and purity. Consumers associated the brand with clean, healthy drinking water. Launching sugary sodas under the same brand name created confusion. Why would a company known for its commitment to pure water be making sugary drinks? Consumers remained hesitant to embrace Bisleri Pop. Consumers couldn’t adapt to Bisleri’s Pop sugary soda.
Conclusion
Brands often fail due to poor strategies. Some of them are failures to innovate, understand their target audience, adapt to market trends, and execute plans effectively. Examples like Kodak, which missed the digital photography revolution, and Kingfisher Airlines, undone by reckless expansion and poor finances, highlight how flawed strategic planning can lead to a brand’s downfall.
