Avoid These Common Business Strategy Pitfalls

After tripping and falling down the stairs, a businessman lays in a heap of folders and papers — Source: Shutterstock

Published on: August 14, 2025 at 4:15 pm

Business leaders often make common strategic-planning mistakes that make it more difficult to achieve their organization’s objectives.

Academy of Management Scholar Donald Hambrick of Pennsylvania State University, who published an article in Academy of Management Perspectives on this topic, said business leaders typically face several pitfalls in strategic planning, including mistaking goals for strategy.

“One is the problem of assuming that a goal is a strategy, for instance, maximizing shareholder returns or improving market share or having a return on investment that’s higher than our competitors,” Hambrick said. “Those are goals, and they beg the question of ‘How?’—how is the strategy, and the five elements of the diamond that give you your answer to the ‘How?’ question.

“Another mistake is thinking that strategy has one important facet, for instance, ‘We’re going to aggressively go global’—well, that’s strategic, but that’s not a whole strategy,” he said. “Or ‘We’re going to compete by having superior customer service’—that’s strategic, but it isn’t a whole strategy.

“The diamond framework allows you to go beyond these piecemeal approaches to thinking about where and how you’re going to compete and how are you going to get there.”

Hambrick’s diamond model of the five major elements of strategy—arenas, vehicles, differentiators, staging, and economic logic—does not get into strategy implementation, which is entirely different.

“Strategy implementation is a different bailiwick, a different kettle of fish, but the diamond model does guide you to a level of granularity and specificity that you typically wouldn’t get to without it,” Hambrick said.

“For instance, I like to think of strategy as something that can be conveyed in five brief paragraphs on one page, or even on the diamond picture itself with three or four bullet points under each of the five elements of the diamond, but not just one bullet point—not a single slogan for what it is we’re trying to do,” he said.

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A sample of Hambrick’s AOM research findings:

Author

Daniel Butcher

Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications’s InvestmentNews and Crain’s Wealth, eFinancialCareers, and Arizent’s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor’s degree from the University of Colorado Boulder and his master’s degree from New York University. You can reach him at [email protected] or via LinkedIn.

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