Abstract
What strategic challenges do ventures face as they scale? Prior work emphasizes the challenges executives face in formulating strategy, but we argue that ventures also encounter bottlenecks when employees are unaware of the strategy and fail to apply it. We investigate these strategy implementation frictions through two field experiments and follow-up interviews with nearly 600 employees and executives in 24 growth-oriented ventures across 14 countries. We find that employees' awareness of their company's strategy is far from given. Only about half of employees accurately identify their firm's strategy, and interviews reveal that founders avoid communicating strategy because they underestimate these frictions, lack managerial attention, or want to preserve flexibility. Application is also uneven. When executives communicate the strategy, employees generate ideas that are more differentiated and specific in comparison to employees at other firms, but that are not necessarily more aligned with the focal firm’s strategic direction. This alignment gap is especially salient among employees without prior strategic experience and who are responding to a revised strategy, suggesting that strategy communication can prompt updating without ensuring that employees can translate the new strategy into recommendations that advance it. Together, these findings suggest that awareness and application frictions can prevent ventures from capturing the returns to a well-formulated strategy as they scale.