As a blueprint is to a building, so is a strategy to a business. However, where buildings are constructed to be rigid and static, strategy and strategic planning need to be flexible to accommodate the volatile, uncertain, complex and ambiguous business environment.
Have you ever been asked what your “5-year plan is” or “where you see yourself in the next 5-years”? This line of questioning stems from the approach that many individuals and organisations have towards strategic planning.
Strategic plans have been seen as rigid processes that are used to predict the possible fate of the business over a specified period. Yearly reviews can sometimes augment this planning method; however, assessments are only conducted at the end of the entire strategic period in some organisations.
While this process is arguably still suitable and previously produced some results, recent global happenings, including advances in science and technology, have highlighted the need for redefined strategic planning and development approaches.
According to a survey conducted by Constant Contact, a leading global company, 63% of small business owners indicated that they find it more effective to plan for shorter periods, which could even be less than a year. This shows that more and more executives and organisations, especially small businesses, are moving away from long-term strategic plans to short and medium-term plans that support a long-term vision.
Strategic Planning is an all-encompassing process that charts the course an organisation should follow to achieve its goal. Strategic Planning involves evaluating a business to create a relationship between its goals & objectives, actions, and resources required to achieve them. It is a systematic approach used to answer critical questions and enable management to make informed decisions.
“Strategic planning creates a single vision that binds every member of the organisation together.”
Benefits of Strategic Planning
Strategy development and planning are essential to an organisation as it helps:
1. Create a vision and unified direction for the organisation: strategic planning creates a single vision that binds every organisation member with its strategic goals and objectives. Developing a strategic plan cascaded through the organisation creates a sense of ownership within teams and ensures all decisions are aligned with the organisation’s goals.
2. Eliminates Bias: Every human is wired with a unique inherent bias based on their level of knowledge and exposure. When left unchecked, these biases could hinder a business from maximising its potential as it would only be assessing the market from one perspective. Engaging in a strategic planning process that involves brainstorming and rubbing of minds helps eliminate bias and allows for cross-pollination of ideas by forcing you to examine decisions and their effects on the business closely.
3. Monitoring and Evaluation: A documented strategic plan allows an organisation to track its progress toward achieving its goals. Well-articulated objectives, initiatives, and key performance indicators (KPIs) serve as an easy guide to follow and measure success.
4. Risk Mitigation: A good strategic plan articulates the firm’s goals and considers possible risks and events that may affect the organisation and impact the achievement of these goals. The strategic planning process enables the management of an organisation to plan for uncertainty and develop a flexible strategic response that allows them to pivot as required.
“only 15 % of executives spend up to an hour discussing their strategy and direction.”
Why Strategy Fails
Despite the role strategic planning plays in organisational success, a research article by Harvard Business Review shows that in a month, only 15% of executives spend up to an hour discussing their strategy and direction, with 50% spending no time at all on planning. According to the research, this explains why only 10 % of businesses meet their strategic goals. This lack of attention to strategic plans and activities is a major reason strategies fail to adapt to market changes.
Other reasons why strategies fail include:
1. Unclear Objectives and Plans: It is easy to come up with ideas, but developing a structured plan that clearly articulates the objective of these ideas and steps to achieve it is a much more tasking activity. Research has shown that, for many failed strategies, the organisation could not connect ideas and their objectives with its vision and mission. As such, organisations must ensure that initiatives are linked to the organisation’s vision and are tied to clearly defined actionable tasks with clear responsibilities and reporting lines.
2. Poor Communication: It is one thing to have a plan, but another thing to have a team running with the plan. This can be achieved by cascading the organisation’s strategic plan to all members of the organisation. It involves ensuring that all team members understand and can clearly articulate the goals and objectives of the organisation.
3. Over Optimism: A strategic plan looks at best-case scenarios and outcomes based on projections and deliberations. However, building castles in the sky without considering current business realities would set the business up for failure as it is not adequately equipped to navigate the environment.
4. Reaction over Proactivity: A common mistake in strategy development is planning for the future without making plans for the present, thinking of where you want to be in 5 years without considering where you are now and how to get to your desired future. This flaw in strategic design has led many firms to be reactive rather than proactive when faced with changes and challenges.
5. Lack of Stakeholder Buy-in: It takes an army to win a war. In the same vein, lack of stakeholder buy-in is another major reason for strategy failure. Although a strategy may consider all relevant factors and be well communicated, implementation depends on stakeholder acceptance and buy-in. A common mistake is limiting stakeholders to the executive management and board, overlooking team members on the shop floor.
As We Step-in to the Future
Given how important strategy is to the continuity of an organisation, organisations must keep abreast of leading practice recommendations that can improve their planning approach. This includes:
1. Implementing initiatives that allow for hybrid feedback collation will give the management more tailored strategic approaches and a holistic view of the company. Creating a platform to engage all team members also promotes a sense of ownership and encourages buy-in.
2. Conduct a proper business mapping to identify key areas in the business and explore all strategic elements as they may affect them. These include opportunities, strengths, weaknesses and threats to the business.
3. Ensure that all goals, objectives, and initiatives align with the organisation’s strategic vision, mission, and themes.
4. Create stakeholder buy-in by engaging all relevant parties and building a sense of ownership and trust. Understanding the needs and desires of your stakeholders goes a long way to achieving proper engagement.
5. It is said that implementation is where strategy goes to die. Therefore, organisations must develop an actionable and measurable implementation plan that breaks down tasks and has detailed KPIs to avoid failure.
6. Nothing is more permanent in life than change. Thus, organisations must develop a flexible strategy that will allow for adaptability and agile responses in times of uncertainty.
7. Monitoring and evaluating initiatives and tasks are a good way for the organisation to assess its strategy and level of achievement. As such, an organisation must set clear timelines for evaluating its initiatives and review its strategy.
“Strategy development is not limited to the 2-day session held in a board room or at a resort.”
According to Clayton Christensen, a professor at Harvard Business School, “most people think of strategy as an event, but that’s not the way the world works.” Strategy development is not limited to the 2-day session held in a board room or at a resort; it is a fluid process that involves reviews, checks, disruptions and amendments.
At pcl., we understand the importance of strategy development to every business and have built expertise in planning and executing a business strategy. We support clients from established companies, Government agencies, and start-ups with our strategy services to help them build tailored strategic plans that allow them to progress and weather the storm.
Our business strategy experts work with you to transform your business using our unique tailored model to guide you through every step from strategic planning and implementation. We work with clients to define, discover, decide and deliver a strategy that achieves a lasting impact.
Contact us today at firstname.lastname@example.org to begin your journey of strategic agility.