Failure from top management can cost a company billions and lower morale. These are the top 5 reasons why executives fail.

Failure at any level costs companies.  Those that occur at the executive management level can be fatal.  A military general fighting a war with a flawed strategy has already lost before the fighting begins. Knowing what can be done to prevent management pitfalls is the most important tasks for executives.

Here are the most common failures of executive management:

1. Long-Term Vision

If you don’t know where you are going, how will you get there?  Many companies do a great job creating products and business plans but fail to create a future vision and goal.

This shouldn’t be a nebulous goal such as “to grow” or “get revenue to xxx” or even to get acquired.  This should be a tangible goal such as serving x% of the total population of our customers nationwide or capturing 20% of the top 100 customers by size.

Quantifiable goals are best so you can establish a roadmap with benchmarks to check your progress.  And this needs to be communicated through the entire company.  Your people cannot help you get there if they don’t know where they are going.  And you will definitely need their help.

2. Decision Making

Too many times all key decisions are made at the executive management level.  This occurs in meetings or in boardrooms by people behind the scenes that usually are not interacting with customers.

The people that have the greatest insights as to what needs to be done to better serve customers are the people currently serving those customers.

Even better, establish steering committees to better understand problems and potential solutions and include them.  The main benefit of group thinking is the varied perspectives of the individuals.  And this doesn’t happen when key decisions are made behind closed doors.

3. Creating an Accountable Environment

In my blog “Disengaged Employees are Killing You” unmotivated employees are costing US businesses over $450 billion dollars in lost productivity annually.

Too often employees are allowed to “mail it in” and are not accountable to improve their processes, become more efficient and better serve their individual customers.  Managers fail employees and their companies by not providing constant feedback and holding them accountable.

I prefer to lay out standards of work and responsibilities up front and let employees know that part of their job is to take the ball and run with it.  If employees are doing the same job for 3-4 months they should be better at it and I expect them to be able to take on additional responsibilities.

You can create an environment of accountability by providing immediate feedback, both positive and negative.  Even a small increase in productivity can be a tremendous boost.  In my experience, virtually every employee wants to do a great job and succeed.  Why not provide constant feedback to help coach them to be the best they can be?

4. Constantly Reinventing the Business

Your company is profitable and growing and things look great.  There is no need to worry, right?  Maybe not -it is, after all, always calmest before a storm.

Too many times, executive management gets caught up in the moment and fails to see changes in the competitive landscape.  This could be new technologies, competitors or just changing needs of your customers.  In my blog “Disruptor Danger” I identified a new era of businesses that have destroyed industries and will continue to do so going forward.

The most classic examples of companies failing to reinvent themselves are the US auto manufacturers who did not see the Japanese automakers as true competitors.   And it cost them big in market share.  In 1975 GM and Ford had a combined US car market share of 69%, while Toyota, Honda and Nissan had 7%.  By 2019 both groups had 32% of the US market.

There needs to be constant focus on serving the needs of your customers and you need to keep your head up to see what your competition is doing.  In early 2000’s I read a consumer reports article on auto reliability in which they rank manufacturers based on car reliability. While the Japanese auto manufacturers are usually at the very top, this year GM and Ford both had a big jump in reliability with Ford making it to number 10.   Unbelievably (and before the PR guys got to him), when asked about the big quality jump a Ford engineer stated that in the past they would strictly look at the prior model to arrive at changes to the new model.  Now they are considering the competition.  This comment says it all!

The very best companies arrive at innovative solutions before their customers know they need it or ask for it.  They are proactively shaping the industry – like Apple or IBM.  Similarly, the best employees provide insights and innovation before their employers asking for it.

5. Key Role Succession Planning

Few companies do a great job establishing a formal succession plan for key employees.   Perhaps they do not consider this or don’t want to “rock the boat” by training to replace a key person.

This puts the companies at great risk when a key employee leaves or cannot work for an extended period of time such as a medical emergency. These people are key employees because they are delivering for the company and they need to train a successor to mitigate their key person risk.  Even if nothing happens to the key employee the company benefits from additional resources that mimics the importance of what they do.

The costs are tremendous when you consider the knowledge and skillset lost when a key person leaves.  Protect your company and establish a formal succession plan.  You will need to identify those employees and who are potential successors.  If none is found, then you need to add them.

Executives need to consider many facets of their role, market and employees to be successful.  By being aware of these five points and acting upon them you can avoid becoming a casualty and become a more effective leader and executive.

Sources:

https://www.archerybusiness.com/understanding-high-cost-unmotivated-employees

https://knoema.com/floslle/top-vehicle-manufacturers-in-the-us-market-1961-2016