Why is learning critical to your company’s success?

You can download a PDF of this article from Why is learning critical to your company’s success

 Why focus on learning?

In today’s rapidly changing world, knowledge, experience, and skills quickly become obsolete.  Your decisions and actions must be based on the current situation, not on what existed five years ago.  What’s even worse is if your decisions are based on hopes, dreams, unvalidated assumptions, and missing or incorrect facts.

Ongoing learning is critical for long-term success.

The inability to learn is the root cause of many companies failing. “The assumptions on which the organization has been built and is being run no longer fit reality.”1  The approach of “don’t fix it if it isn’t broken” inevitably leads to “It’s too late to fix”.

Whether you are a Board Chair, CEO, or startup founder you need to constantly increase your value.  This value increase requires constant learning.

Your success depends upon continuous understanding of evolving:

  • Customer problems and needs. (Who are the customers and why should they deal with your rather than the competition?)
  • Employee needs. (Why should someone work for you? Why should someone stay?)
  • Competitors capabilities. (Why are customers dealing with them rather than you?)
  • Investor needs. (Who are the investors, what are their overall goals,and why should they invest in you rather than others?)
  • Needs of suppliers, the government, regulators and the general public.
  • Needs, actions, and capabilities of other members of your ecosystem.

What is learning?

“Learning is about acquiring diverse, rare, and valuable chunks of knowledge through people, information, and experiences.”2 Learning must result in value.  Knowing what everyone else knows is not enough – you need to know something that others do not.  A changing world requires some diversity of learning.  What you are focused on learning will change over time.  The end result of learning is your company’s unique insights.

There are other types of learning, such as acquiring the skills to execute tasks.

What is the greatest challenge to learning?

Knowing the key questions to ask at any point in time.  McKinsey states that the first step in strategy is asking “What are the right questions?”3  The right questions depend upon your current situation and the range of your potential futures.

What are the critical questions to ask?4

Both you and your company must ask similar questions:

  • What does the world need? What is your purpose? Larry Fink, in his 2018 letter to CEOs, said “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate…..Without a sense of purpose, no company, either public or private, can achieve its full potential…..And ultimately, that company will provide subpar returns to the investors.”5
  • What is your company good at doing? What do others believe it is good at? This can be very different from what your company thinks.
  • What will people pay your company for? What is the value that others perceive that they may achieve you’re your company? This value may vary enormously.
  • What do the Board, CEO, management, and staff love to do and are passionate about?

How do you learn?

The critical part about learning is writing down learnings.  This forces you to think about what are the key learnings, and why these learnings are valuable.

  • You learn about people by meeting them, talking with them, hearing them present, and reading about them. The implication is that you need a broad network of relationships.
  • You gain knowledge through reading, courses, and seminars.
  • Your experiences include new experiences on the job, courses, and volunteer work.

Answering the right questions requires facts and assumptions.  Do the people in your company have a common understanding of the key facts and assumptions? Is this part of the new board director or employee orientation process?  Are changes to facts and assumptions communicated to everyone who needs to know?

Learning is focused on gaining facts and validating or invalidating assumptions.  You’ll initially make assumptions as to what the right questions are and what needs to be done to answer those questions.  Over time, as you learn,  you’ll revised the questions and the sets of supporting facts and assumptions.

Learning should be built into your company’s board and management processes.  On a regular basis, or if an unexpected major event occurs, assess the current validity of:

  • The key strategic questions.
  • The facts and assumptions. This requires research and monitoring of your ecosystem, as well as asking questions of your stakeholders, and listening to them.
  • The decision-making process, which is designed to both reduce biases and reduce reliance on obsolete knowledge, facts, and insights.
  • The people involved with making key decisions, especially how current their knowledge, experience, skills, network, values, morals, and ethics are. How do you ensure that people remain current and are not getting obsolete.

Your coaches, mentors, and advisors should have a diverse background – learning requires diversity.

My observations:

I have met many struggling companies and executives.  Why are they in trouble?  A combination of not believing they need to learn, and lacking the skills to learn.


1 Perter F. Drucker, “The Theory of the Business,” HBR.org, Harvard Business Review,1994 September-October issue, https://hbr.org/1994/09/the-theory-of-the-business

2 Michael Simmons, “The No. 1 Lifelong Habit of Warren Buffett: The 5-Hour Rule”

3 Chris Bradley, Angus Dawson, and Antoine Montart, “Mastering the building blocks of strategy”,McKinsey.com, McKinsey & Company, October 2013 ariclehttps://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/mastering-the-building-blocks-of-strategy

4 Jacqueline Brassey, Katei Coates, and Nick van Darn, “Seven essential elements of a lifelong-learning mindset,” McKinsey.com, McKinsey & Company, https://www.mckinsey.com/business-functions/organization/our-insights/seven-essential-elements-of-a-lifelong-learning-mind-set

5 Larry Fink’s 2018 letter to CEOs – a sense of purpose


If you are in survival mode, should you still consider the long-term?

Few companies survive. Avoiding survival mode and getting out of survival mode requires the talent which can develop and execute a competitively differentiated business plan.  The foundation for survival is competitively differentiated talent on the board and in the C-Suite. The core reason few companies survive is because there is a shortage of talent.


  • Few companies survive.
  • How can you tell if you are in survival mode?
  • You may not realize you are in survival mode.
  • You might be in survival model from day one.
  • You might enter survival mode at some point.
  • How do you get out of and stay out of survival mode?

The purpose of this article (supported by a one-page slide) is to provide a framework, process, and facts to enable discussion and action planning among owners/shareholders, boards of directors, CEOs, and advisory boards. There is no one-size-fits-all answer.  The approach and action plan will be unique to the specific situation of each company.

Few companies survive.

Three quarters of venture capital backed firms in the United States do not return all of the investors capital.1

Half of the S&P 500 will be replaced in the next 10 years.2

 How can you tell if you are in survival mode?

Each day is a firefight (get a customer, get some capital, etc.) in order to stay in business. If the current profit trends continue, the business will fail. If current external trends continue, the business will fail. There is no time to think about the future. You may be losing market share, have declining customer satisfaction scores, or be close to breeching financial covenants. Cashflow is declining and may even be negative. You feel you have no time for planning.

You may not realize you are in survival mode.

  • You are hoping things will change. What are the facts?  Are the facts showing that you’re are in survival mode?
  • You’re not tracking your achievements relative to the milestones in your business plan, or you don’t have milestones.
  • You have not validated the assumptions in your business plan. You have little or no customer confirmation of your assumptions.
  • You don’t know what is happening or the trends in your ecosystem e.g. is the market growing or shrinking? What is the competition doing and how are they changing their companies? How are customer needs changing?
  • You have not updated your business plan, or may lack a plan.

You might be in survival model from day one.

  • You lack a business plan and the management talent needed for your business.
  • Your strategy reflects hopes and dreams rather than a range of scenarios. As a result, future events surprise you or you say that you they are black swan events.
  • Your business plan is not achievable. But you don’t realize this.
  • You lack the quality and quantity of resources (talent, processes, technology and capital). But you don’t realize this.

You might enter survival mode at some point.

  • Unanticipated changes to your ecosystem.
  • Unanticipated changes to: customers, their needs, or the competition.
  • Your business plan becomes outdated.
  • You discover internal issues with resources (talent, processes, technology, capital).

How do you get out of and stay out of survival mode?

  • Have a documented business plan, which includes an easy to understand picture of what future success looks like. Peter Jensen, Olympic athlete coach, writes “People can’t do things they can’t imagine.”3 Your business plan must be clear on how your company will create value in the future.
  • The plan has actual results for the past three years, the current year, plus forecasts for the next three years.
  • The world is rapidly changing, with regular surprises (No-one can accurately predict the future 100% of the time). Every month revisit your business plan required improvements.
  • Regularly assess and revise if necessary your board, C-Suite, and advisory board talent.
  • The plan must answer 6 sets of questions
  • Who are the target customers and what are their needs? Do the customers know they have a problem? Why are the characteristics of an customer?  What are the characteristics of inappropriate customers?
  • How will you meet their needs? Why will the customer buy from you?  How does the customer perceive your competitively differentiated value proposition?  What will be the customer experience as you’re meeting their needs?  Who are your competitors?  How are your competitors better than you?  How are you better than your competitors?  Why have past customers bought from you?  What does analysis of past customers reveal?
  • How will you sell to your customers? Are the customers seeking a solution or will you have to find customers?  Will the customers buy from you via a mobile device or direct face-to-face sales calls?  Do you have a range of sales prices e.g. freemium?  What are your distribution channels and who are your partners?
  • What are the key metrics? Net promoter score?4  Customer acquisition costs?  Customer support costs?  Lifetime customer value?  What are you revenue and cost drivers? Margins?  Free cash flow forecast?
  • What are the trends in your ecosystem and the implications for your business plan?
  • What is the board, C-Suite, and advisory board talent needed to achieve the above? Do you have the talent to create a business plan and successfully execute .

What do you if you are a SME (Small Medium Enterprise)5

The availability of talent may be the greatest challenge faced by a SME.  Create an advisory board with the talent to challenge your thinking, and provide insights from their experience, skills, and networks.  An advisory board is not feasible until you have: a strategy, strategic plan, financial plan, and management team.


Few companies survive. Avoiding survival mode and getting out of survival mode requires the talent which can develop and execute a competitively differentiated business plan.  The foundation for survival is competitively differentiated talent on the board and in the C-Suite. The core reason few companies survive is because there is a shortage of talent.

Your next steps

To enable discussion with your board of directors, C-Suite, and advisory board, download the following one-page slide.

If you are in survival mode, should you still consider the long-term?


1 Deborah Gage, “The venture capital secret: 3 out of 4 start-ups fail”, Wall Street Journal,  https://www.wsj.com/articles/SB10000872396390443720204578004980476429190, September 19, 2012

2 Scott D. Anthony, S. Patrick Viguerie, Evan I. Schwartz and John Van Landeghem “2018 Longevity Report” by Innosight Consulting, 2018 page ,  https://www.innosight.com/insight/creative-destruction/

3 Peter Jensen, Igniting the third factor, Toronto, Performance Coaching Inc., 2008, page 105

4 The Net Promoter Score concept was initially developed by Bain.  The following is a link to the Bain website homepage for Net Promoter Score, which contains several short articles.


The following is a quick overview of using Net Promoter Scores.


5 Industry Canada definitions (2018 May 9): Small business: < $5 million in revenue, < 100 employees; Medium business: between $5 million and $20 million in revenue, 100 to 499 employees.

Further reading

BDC (Business Development Bank of Canada) has a business plan toolbox with samples and templates you may download.  You must customize the business plan to your specific situation and ensure it has the answers to the questions from the above section “How do you get out of and stay out survival mode?”  https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/pages/business-plan-template.aspx

Why will your company fail?


  • Most start-ups will fail.
  • Leadership is the underlying cause of start-up failure.
  • Most companies will not survive.
  • The board of directors is weak.
  • Corporate leadership decisions and actions are not fact-based.
  • Corporate leadership has poor decision-making behaviours.
  • Values, morals and ethics are not understood or agreed up.
  • The corporate leader selection and development processes are flawed.
  • Two sets of leaders are critical for success.

Most venture-backed start-ups will fail.1

  • Three quarters of venture backed firms in the U.S. don’t return investors capital.
  • 30-40% of high potential start-ups lose all of the investors money.

Many start-ups do not have any venture-backing.  The overall start-up failure rate is very high.

Leadership is the underlying cause of start-up failure.

The top nine reasons for start-up failures were identified by CB Insights. 2 I’ve shown below my point-of-view as to why leaders and leadership were the root cause.

  • 42% no market need – not obtaining facts as to customers and their needs.
  • 29% ran out of cash – poor management of cash flow and poor reputations with investors.
  • 23% not the right team – unable or unwilling to assemble the right team.
  • 19% get outcompeted – not aware of the competition and customer needs.
  • 18% pricing/cost issues – not aware of customer needs and the competition.
  • 17% poor product – poor ability to design and build a product meeting customer needs.
  • 17% need/lack business model – not understanding that a business model is needed or unable to define one.
  • 14% poor marketing – poor marketing skills.
  • 14% ignore customers – fatal flaw.

 Founders are often the cause of start-up failures3

65% of the failures of high-potential start-ups are due to people problems: relationships, roles and decision-making, and splitting the income. More than 50% of founders are replaced as CEO by the third round of financing.  In 73% of these founder replacements, the CEO is fired rather than voluntarily stepping down. The founder’s passion, confidence and attachment to the start-up is initially a great strength. Founders often refuse to revise their strategy4 and business model underestimate and misjudge the need for additional skills, and make decisions that don’t reflect the current situation.

Narrow focus and too much funding can lead to start-up failure5

“Start-ups often fail because founders and investors neglect to look before they leap, surging forward with plans without taking the time to realize that the base assumption of the business plan is wrong.  They believe they can predict the future, rather than try to create the future with their customer.  Entrepreneurs tend to be single-minded with their strategies – wanting the venture to be all about the technology or all about the sales, without taking time to form a balanced plan.”

“The predominant cause of big failures versus small failures is too much funding. What funding does is cover up all the problems a company has. ….it enables the company and management to focus on things that aren’t important to the company’s success and ignore the things that are important.”

Lack of an advisory board

The above points illustrate the need for an independent advisory board to challenge the thinking of both the CEO and board of directors. Many founders are not willing or able to create and work with a group of challenging advisors.

Most public companies have a short lifespan

Most public companies will not survive.6

  • A Fortune 500 company will survive an average of 16 years.
  • The typical half-life of a North American public company is 10 years.
  • Global public companies with $250 million+ market cap have a typical half-life of 10 years.
  • 50% of all U.S. companies survive for 5 years.

Companies do not recover from crisis.7

  • 20% of companies grow from insurgency to incumbency, but then two-thirds of them stall out and less than 1 in 7 stall-outs recover.
  • At any given moment, 5%-7% of companies are in free fall or about to tip into it. Only10%-15% of companies pull out of free fall.
  • 94% of large company executives site internal dysfunctions as their key barrier to continued profitable growth.

The board of directors is weak.

The board of directors lack the knowledge to make decisions.8 A McKinsey survey of 772 directors revealed a lack of comprehension of their companies. Only 16% said directors strongly understood the dynamics of their industries; 22% said directors were aware of how their firms created value; and 34% said directors fully comprehended their companies’ strategies.

The board of directors lack the background and experience to make strategic decisions. I’ll use a car analogy.

  • People learn to drive cars. People join companies and learn to use processes.
  • People have a problem with the car and go to the mechanic. Management runs into problems and brings in consultants/advisor to fix the problems.
  • A small group of people design cars and figure out how to build cars. People join the board with no experience in designing or figuring out how to build a company, yet make decisions regarding who the CEO should be and what strategy to adopt.

Corporate leadership9 decisions and actions are not fact-based.

  • Corporate leadership does not talk about reality.10
  • Leadership cannot learn from other organizations.
  • Leadership is focused on internal vision and metrics rather than customer needs and external benchmarks.
  • There is no questioning of strategies and plans.
  • There is no personal accountability.
  • Crisis decisions are driven by liability lawyers and public relations experts.

Corporate leadership does not have three critical sets of facts, and does not believe they need these facts:

  • Who are the target customers?
  • What are the target customers needs?
  • Why are the target customers buying from the company rather than the competition?

Without facts on the current situation and external trends, corporate leadership cannot define a fact-based strategy.

  • Who will be the target customers?
  • What will be target customers needs?
  • Why will the target customers buy from your company rather than the competition?

Corporate leadership does not understand the difference between risk and uncertainty.11

  • Risk-based decisions are determined by probability determined from analysis of historical facts.
  • With uncertainty, there are no historical facts from which to derive a probability.

The confusion between risk and uncertainty results in leadership believing they are making fact- based analytical decisions when the decisions are actually based on guesses and hopes.

Corporate leadership has poor decision-making behaviours.

Good analysis done by good managers with good judgement produces poor strategic decisions.12

Only 28% of executives thought good strategic decisions were frequently made.  53% of business improvement is due to the quality of the decision-making process, only 8% is due to the quality and detail of the analysis. The strategic decision-making process is much different form the normal day-to-day decision-making process.

Corporate leadership has five biases resulting in poor decision-making.13

  • Insufficient thought before action.
  • Tendency towards inertia, if uncertain.
  • Misaligned incentives, misunderstanding of strategies and objectives, and emotional attachments to personal perspectives.
  • Preference for harmony over conflict, leading to group think.
  • Recognizing patterns that do not exist.

Companies that have financial success develop behaviours leading to their decline.14

  • Success leads to entitlement and arrogance, believing success will occur no matter what happens.
  • Corporate leadership neglects focus, understanding, and renewal of the root causes of success.
  • “What” replaces “Why” (“We’re successful because we do these specific things.” replaces “We’re successful because we understand why we do these specific things and under what conditions they would not longer work”. Corporate leadership is no longer inquisitive and learning.
  • Corporate leadership believes success is entirely due to their superior capabilities, and that luck had no role.

VME (Values, morals, and ethics) are not understood or agreed upon.

  • VME guide corporate leadership decision-making, especially regarding the large number of conflicts of interest within corporate leadership, and with stakeholders15 and third parties.16
  • People do not understand or agree upon the VME, which results in misaligned decision-making.
  • Mergers and acquisitions often fail because the VME of the two organizations are different, with little effort to reconcile the differences. People often refer to this as “culture”, or “the way things are done here”.  Often the underlying reason for the way things are done are VME.

The Corporate Leadership selection and development processes are flawed.

Poor selection of corporate leaderships leads to company failures, as shown above.

Executive leadership development programs are also broken.  A survey of more than 500 global executives showed that only 11% strongly agreed their leadership development programs achieved results. What were the program flaws?17

  • Not specific to the companies’ strategic plans and drivers of business performance (e.g. turnaround, multiple M&As, organic growth, etc.).
  • Not organization-wide and not at all levels within the organization.
  • Not using digital learning embedded in day-to-day work flows (too much use of the old teacher and classroom model).
  • Leaders did not use social media (blogs, video messages, etc. to communicate with staff)
  • Senior leaders did not act as sponsors, mentors, and coaches.

I do not have facts regarding director development programs, but the degree of business failures would indicate director development programs also have issues.

Two sets of leaders are critical for success.

  • In a successful start-up, the founder creates and leads teams (internal and external) with the right sets of skills, experiences, values, morals, and ethics. As the company grows, teams will change and often the founder is not the long-term CEO.
  • In a public company the CEO and board chair create and lead teams with the right sets of skills, experience, values, morals, and ethics. The facts show this is very hard to do.  I believe the board director selection process is often fundamentally flawed.

In both cases, a founder or CEO should have the self-confidence and learning ability to create an advisory board to challenge and coach the CEO.

What do you do if you are a SME (Small Medium Enterprise)18

All of the points made above apply. A SME will have fewer internal resources and funds to engage external resources.  It is critical to create an advisory board to assist the CEO.


Most start-ups and established companies fail or do not survive.

The CEOs and boards of directors have fatal flaws in terms of customer focus, creating and leading teams, skills, experience, values, morals, ethics, etc.

Competitively differentiated business success requires competitively differentiated corporate leadership, based on competitively differentiated selection, assessment, and development processes.

Your next steps

To enable discussion with your board of directors, CEO, and advisory board download the following one-page slide:

Why will your company fail?

What is your current situation?

  • If you do not have an advisory board, create one.
  • If your are a start-up, collect and analyze facts regarding the nine reasons start-up fail (described above)
  • If you are a public company, assess each individual on your board of directors regarding their knowledge of the company’s strategy, industry dynamics, and how value is created.
  • Appoint potential future directors as board observers for a period of time, and then assess them as to their suitability for nomination to the board.
  • Document and assess whether or not corporate leadership decisions are fact-based, and the decision-making behaviours appropriate.
  • Document and assess VME. (Go to Why are values, morals, and ethics important?)


1 “The venture capital secret : 3 out of 4 start-ups fail”, Deborah Gage, Wall Street Journal Small Business, September 19, 2012  discusses research by Shikhar Ghosh, Harvard Business School

2 “Top 20 reasons start-ups fail”, CB Insights, Oct 7, 2014

3 “The Founder’s Dilemmas”, by Noah Wasserman.

4 Strategy definition: What your successful company will look like in the future. What does future success look like to: customers, shareholders, other stakeholders, third parties, and society? What will be the future business model? What are your facts, assumptions, and scenarios?  An integral part of this strategy definition is: What will be the roles and capabilities of corporate leadership, i.e. board of directors, CEO, advisory board and C-Suite? The CEO and board chair each have a part of the strategy and must co-ordinate their integration.

5 “Why companies fail – and how their founders can bounce back”, Carmen Nobel, Harvard Business School, March 7, 2011

6 “Corporate Longevity”, Credit Suisse, February 7, 2017

7 “The founders mentality”, by Chris Zook and James Allen, 2016

8 “Corporate Boards need a facelift”, Eric Kutcher, (McKinsey Partner) McKinsey website, May 4, 2018

9 Corporate leadership definition: Board of directors, CEO, advisory board, and C-suite.

10 “Why smart executives fail”, by Sidney Finkelstein

11 Adapted from “20/20 foresight: Crafting strategy in uncertain times”, by Hugh Courtney

12 “The case for behavioural strategy”, McKinsey Quarterly, 2010 Number 2

13 “Think again: Why good leaders make bad decisions”, by Sidney Finkelstein, Jo Whitehead, and Andrew Campbell

14 “How the mighty fall”, by Jim Collins

15 Stakeholder definition: Stakeholders have an economic interest in the corporation: shareholders, non-equity capita, customers/ users, employees/unions, suppliers, partners

16 Third-party definition: politicians, regulators, third-party standard setters (e.g. proxy advisory firm, accountants, lawyers), society.

17 “What’s missing in leadership development?”, Claudio Feser, Nicolai Nielson, and Michael Rennie, McKinsey Quarterly, August 2017

18 SME Definition: Industry Canada definitions (2018 May 9): Small business: < $5 million in revenue, < 100 employees; Medium business: between $5 million and $20 million in revenue, 100 to 499 employees.

Further reading:

Principles, by Ray Dalio, 2017

“Your company will fail”, koorandassociates.org

“What is the value of a for-profit advisory board?”, koorandassociates.org

“Why are values, morals, and ethics important?”, koorandassociates.org

Your company will fail


Your company will fail.

  • Few major companies survive.
  • Few major companies have sustained value creation.
  • Many company directors do not understand: the strategy, how value is created, and industry dynamics.
  • Most HR and IT organizations are not aligned with the strategy. Most employees are not working to achieve the strategy.
  • Major business changes almost always fail.
  • Crisis results because the assumptions on which the company has been built and is being run no longer fit reality.

This document provides historical facts to challenge the thinking of: boards of directors, CEOs, and advisory boards. Any discussion should first start with facts.

This document does not provide a prescriptive solution as to what your company should do to survive and beat the competition.

Few major companies survive:

  • 16% of major companies in 1962 survived until 1998.1
  • Of the 500 companies in the S&P 500 in 1957, only 74 remained on the list in 1997. Only 12 of those 74 outperformed the 1957-1997 S&P index.  An investor who put money into the survivors would have done worse than someone who invested only in the index.1
  • 31% of Fortune 500 companies went bankrupt or were acquired from 1995 to 2004.2
  • 52% of Fortune 500 companies went bankrupt, were acquired, or disappeared between 2000-2015.3
  • 50% of the S&P 500 will not be on the list in 10 years’ time.4
  • 30%-40% of high potential U.S. venture capital backed start-ups result in investors losing most or all of their money.5

 How much time is your board of directors, CEO, and advisory board devoting to the future?

How much understanding do they have regarding causes of failure and of success?

What experience does each individual director have in driving long-term success during their career?

 Few major companies have sustained value creation:

  • Less than 13% of global companies had sustained value creation in the 1990s.6
  • 12% of public companies had sustained value creation from 2002 to 2012.7

 A story is starting to emerge.  The companies that do have sustained value creation either acquire poor performers or put them out of business.

Many company directors do not understand: the strategy; how value is created; and industry dynamics.

  • A McKinsey survey of board directors showed  that many had little understanding of their companies. Only 16 percent said directors strongly understood the dynamics of their industries, just 22 percent said they were aware of how their firms created value, and a mere 34 percent said they fully comprehended their companies’ strategies.8
  • A survey of board directors asked how many directors agreed that their members collective skills and backgrounds are appropriate for their organization’s needs: 54% of directors of high performing companies agreed, 40% of directors of low performing companies agreed.9

Three things for you to consider:

  • The above statistics were based on self-reporting. People sometime overestimate their own capabilities.
  • Does the board have a consensus approach to decision-making? A consensus approach often results in the decision being based on the views and capabilities of the least capable person.
  • You can start to see why large companies have problems with survival and value growth. Many directors with little or no company knowledge: set/approve strategies, appoint CEOs and approve major change such as M&A, etc.

 Most HR and IT organizations are not aligned with the strategy. Most employees are not working to achieve the strategy.

  • 67% of HR and IT organizations are not aligned with business unit and corporate strategies. 60% of organizations do not link their financial budgets to strategic priorities. Incentive compensation is not tied to achieving strategy (70% of middle managers, over 90% of front line staff). 95% of employees are not aware of, or do not understand the strategy.10

 How often have you seen standalone IT Strategies? Are all investment decisions, projects and initiatives going through the same process, from the board down, or is IT treated in a silo? How can frontline staff deliver a competitively differentiated customer experience if they do not know the strategy and are not compensated for achieving the strategy?

It’s is very hard for a company to succeed in the long-term if the employees are not working towards a strategy and IT is not aligned – especially in today’s world of technology disruption.

Major business changes almost always fail.

  • Major changes almost always fail. 12% of change programs succeed. 38% produced less than half the expected results. 50% diluted the value of the company.11

This should not be surprising.  Many directors are not qualified to make major decisions. Employees don’t know the strategy. IT may be in an unaligned silo. The board and CEO may not understand change management – without change management, major changes are guaranteed to fail.

74% of global CEOs say their company will be a disruptor.12

59% of CEOs say they will continue to exploit the success of their current business model; 23% say they are starting transformation or innovation; 18% are actually being disruptive.13

The statistics above remind me of the following parable. 5 frogs were on a log which was about to go over a waterfall and kill them. One of the frogs decided to jump to safety on shore.  How many frogs were left on the log going over the waterfall? 5 It’s easier to make a decision than it is to actually do something successfully.

Crisis results because “The assumptions on which the company has been built and is being run no longer fit reality.”14

  • Why do companies find themselves in crisis? “The assumptions on which the company has been built and is being run no longer fit reality.”14

An understanding of historical facts is key to ensuring that you don’t make the same mistakes. But avoiding past mistakes is not enough to succeed against current and future competitors.  Your board of directors, C-Suite, and advisory board must all be learning and changing continuously. Otherwise you’ll be focusing on yesterday’s customers, using yesterday’s solutions to win again yesterday’s competition.

You cannot predict the future.  Risk is probabilities based on historical fact. Uncertainty arises when there are no historical facts or historical facts are not an appropriate basis for forecasting the future.  Scenario planning is one way to address this issue.

What is the basis for your assumptions regarding your strategy and your strategic plan?  How much is fact vs risk vs uncertainty?

Strategy and strategic planning is an ongoing process, not a yearly event. Every board of directors meeting should start with a validation that the assumptions regarding the future are still valid.  The CEO’s executive committee should do this same validation monthly.


Why do most companies fail or underperform?  The issue is talent.

How is you board of directors competitively differentiated?  What makes you think your board will make better decisions than the competition?

How is your C-Suite competitively differentiated? What makes you think your C-suite will make better decisions than the competition?

How is your CEO’s advisory board competitively differentiated? What makes you think your advisory board will better at challenging and coaching the CEO than the competition?

I believe the two key aspects of talent are: the ability to change actions and behaviour by being able to learn, combined with values and ethics.

Your Next Steps

To enable discussion with your board of directors, CEO, and advisory board, download the following one-page slide:

Your company will fail

 How do you obtain facts regarding your specific company situation?

  • A third party collects information.
  • Survey directors regarding their opinion of: their personal knowledge, and the board’s collective knowledge of areas such as company strategy and how value is created.
  • Ask each individual director to describe: the company’s strategy, how the company creates value, etc.
  • Survey the C-Suite to obtain their opinion of the board’s knowledge of: strategy, how the company creates value, etc.
  • The third party then provides the collective information back, without identifying any individual names.
  • With this basis of fact, there can then be a discussion of implications, followed by an action plan.


 1 “Creative Destruction – why companies that are built to last, underperform the market”, by Richard Foster & Sarah Kaplan

2 “Unstoppable” by Chris Zook, 2007, page 7

3 Accenture 2016

4 “2018 Longevity Report” by Innosight Consulting

5 “Why Companies Fail”, Shikhar Ghosh, Harvard Business School, 2011 March 07, his study of 2,000 high potential venture capital backed companies receiving at least $1 million in funding from 2004 to 2010.

6 “Profit from the Core” by Chris Zook. 1,800 companies in seven countries with sales in excess of $500 million analyzed.  Criteria were: 5.5% after inflation sales growth; 5.5% real earnings growth; total shareholder returns exceed cost of capital.

7 Christoph Loos, CEO Hilti Group, Swiss AmCham Luncheon, September 1, 2015.  Analysis based on about 2,000 public companies in 2002 with revenues greater than $500 million.  Sustainable value creation defined as: real revenue growth exceeding 5.5% per year, real profit growth exceeding 5.5% per year, and earning cost of capital.

8” Improving Board Governance”, McKinsey Quarterly, 2013 August

9 “A time for boards to act” McKinsey Survey 2018 March

10 “Creating the Office of Strategy Management”, Harvard Business School; paper 05-701, by Robert Kaplan and David Norton

11 “It’s 8-to-1 against Your Change Program”, Bain website, Managing Change Blog, 2017 June 23

12 2017 Global CEO Outlook – KPMG

13 “How can you be both the disruptor and the disrupted?” Ernst & Young 2017

14 Peter Drucker, Harvard Business Review, November 2009, Page 90


Will your company be successful in the future?

Strategic plans often focus on the short-term actions to move your company towards the future.

To validate your thinking, take a different perspective: picture yourself in the future, looking back in time.  Can you tell the story describing what your company will look like in 5 years time and why it will have been successful?

There are 5 areas to the story.

#1 Will your company have capable board directors and C-suite leaders?

  • What new and different competencies, skills and experience were added to the board?
  • How did character, ethics, and value play a role in success?
  • How committed were the directors to the company and success?
  • What role did the directors’ judgement play?

The above questions help you describe a board which will be competitively differentiated in growing and preserving the company’s value.

#2 Will your company have a strong strategic position?

  • Will your company be a market share leader or in the top three?
  • Why will your market position be defensible? g. Intellectual property? Strong brand?
  • Will there be steady market demand fundamentals, or will your products and services be a “fad” or “fashion”?
  • Will you have had a history of strong, recurring cashflows?
  • Why will your margins have been sustainable? Why was no competitor able to reduce your market share via lower pricing?

#3 Will your company be competitively differentiated?

  • Who will be your target customers?
  • What will be the problems or needs of your target customers? Are their needs so urgent they will seek out a solution and seek out your company?
  • How will you solve their problems or needs?
  • How will you be marketing and selling to your target customers?
  • In the hearts and minds of your target customers, how will your company be competitively differentiated? In other words: why will customers buy from you rather than the competition?
  • How will your delivery model
  • (business model) be competitively differentiated, and what will be your benchmark scores?
  • How will your management and staff be competitively differentiated?

With all of the above, describe how over time things changed: the customers, suppliers, partners, and the ecosystem.

#4 What will be your potential for further growth?

  • What will be the growth potential? Or will growth flatten out?
  • What will be the room for performance improvements? Or will you have reached limits such as technology?
  • What is the potential to further improve the capabilities of your board and C-suite? These sorts of changes can not only take more than 5 years but may be ongoing.

#5 Have you sustained growth and performance?

  • Have you had continuous improvements, year-after-year, in products, services, and costs? Or were there a few major one-time events?
  • Have you been regularly developing new products and services, and entering new markets?
  • How did your respond to unexpected problems and crises? Some companies are destroyed by unexpected problems and crises. Others not only survive but continue to grow.
  • How did you monitor emerging external developments and respond to them?

To enable discussion with your board and management, download the following one-page slide:

Will your company be successful in the future?