On the Road to Disaster: Strategic Misalignments and Corporate Failure
Loizos Heracleous, Katrin Werres
Long Range Planning - August, 2016
Long Range Planning - August, 2016
"Gradually spreading organizational misalignments develop, which ultimately foster a large gap between the demands of the competitive environment and the organization's strategy and competencies, leading to failure"
Heracleous, L., & Werres, K. (2016). On the road to disaster: Strategic misalignments and corporate failure. Long Range Planning, 49(4):491.
A few words on the Article
Loizos Heracleous and Katrin Werres explore the connection between strategic misalignments and corporate failure in 'On the Road to Disaster: Strategic Misalignments and Corporate Failure'. The study wants to offer a novel contribution to existing scholarship by examining the specific processes that over time lead strategic misalignments to generate corporate failure.
By specifically focusing on two case studies of two major American firms, WorldCom and Nortel Networks, the article investigates the patterns and the different processes of strategic misalignments that, over a period of time, can result in harm for the company if not mitigated.
The sequence starts with ineffective leadership and poor corporate governance, progresses through risky strategic decisions, and is followed by substandard execution. This creates escalating organizational misalignments, resulting in considerable discrepancies between company strategy and competitive environment. With the widening of these gaps, the organization can find itself not able to cater to external demands, which can bring to failure, worsened by a harsh external environment.
The study enhances the ESCO strategic alignment model (Environment, Strategy, Core Competencies, and Organization) by emphasizing the role of leadership in guiding alignment and highlighting sustainable advantage as a critical outcome. With a longitudinal perspective, the cross-case study approach of the article enables the authors to develop a model, explicative of decline and failure, which is an essential asset to researchers and practitioners for its valuable vision on strategic alignment and the consequences of its mismanagement.
Loizos Heracleous and Katrin Werres explore the connection between strategic misalignments and corporate failure in 'On the Road to Disaster: Strategic Misalignments and Corporate Failure'. The study wants to offer a novel contribution to existing scholarship by examining the specific processes that over time lead strategic misalignments to generate corporate failure.
By specifically focusing on two case studies of two major American firms, WorldCom and Nortel Networks, the article investigates the patterns and the different processes of strategic misalignments that, over a period of time, can result in harm for the company if not mitigated.
The sequence starts with ineffective leadership and poor corporate governance, progresses through risky strategic decisions, and is followed by substandard execution. This creates escalating organizational misalignments, resulting in considerable discrepancies between company strategy and competitive environment. With the widening of these gaps, the organization can find itself not able to cater to external demands, which can bring to failure, worsened by a harsh external environment.
The study enhances the ESCO strategic alignment model (Environment, Strategy, Core Competencies, and Organization) by emphasizing the role of leadership in guiding alignment and highlighting sustainable advantage as a critical outcome. With a longitudinal perspective, the cross-case study approach of the article enables the authors to develop a model, explicative of decline and failure, which is an essential asset to researchers and practitioners for its valuable vision on strategic alignment and the consequences of its mismanagement.
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