Strategic Inertia

In theory, effective business strategy is straightforwardly simple.  The building blocks are strategic clarity and alignment:

• develop products and services that deliver a compelling value proposition in terms that can be clearly articulated to consumers, employees and stakeholders (clarity); and
• build capabilities which create a competitive advantage in your ability to deliver a superior value proposition (alignment).
  
  

So if it's that simple, why is it that ~90% of new product launches fail to meet their business targets or that more than three-fourths of mergers and acquisitions fail to create shareholder value or that fewer than 15% of Fortune 500 enterprises are able to sustain above market growth over multiple decades??  In short, why do so many strategies fail to sustain long term profitable growth?

A sage piece of investment advice is relevant in answering this question for established businesses.
It has been suggested that when deciding whether to hold or sell a stock, it's useful to ask oneself: "would I buy the stock now if I didn't own it?"  If the answer is yes, hold. If no, sell.
What guidance does this  advice provide to business managers about  strategy?  In a similar vein, managers should periodically ask themselves two questions:

1. If I didn't have my current products on the market, are these the "clean sheet" designs I'd want to be launching today?
2. If I were starting from scratch, is this the organization and skills I'd want in my company?
   
   

If the answer to either of these questions is no, your current strategy is not positioned to succeed and your primary focus must be on retooling your products, your organization or both.

But in fact, most companies trapped with outdated products and/or organizational capabilities fight to defend their losing hand, with predictably poor results. In short, too many executives are guilty of strategic inertia.

Take the book publishing industry for example. Long after the Amazon Kindle had launched, when it was inescapably obvious that ebooks were going to be a major force in the industry,  book publishing CEO's should have been asking themselves what new skills they needed to cultivate in their organizations and what new, enhanced products they needed to succeed in the post-digital industry.

Instead, too many publishing execs took out their frustration with the growth of ebooks -- which they viewed as threatening their value proposition and price realization -- on consumers!
How?  First by selectively delaying the release of popular frontlist books in digital form and then engaging in a nasty, allegedly collusive price fixing fight with Amazon to impose a significant increase in ebook consumer prices.
Early adopters of ebooks were amongst the most avid readers in the country -- the very customers book publishers should most want to serve.  And yet, one Big Six publishing CEO, commenting on her company's decision to start delaying the release of best sellers in ebook form (which had been standard industry practice at the time) noted: "with new electronic readers coming and sales booming, we need to do this now, before the installed base of ebook reading devices gets to a size where doing it would be impossible."
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Unless your company is committed to continuously update your capabilities to deliver what consumers value, your strategy will not succeed in the long term. The proof that this is easier said than done is that so few companies succeed in sustaining long term profitable gro