Strategic Plans: Bad for Your Business?By Andrew J. Birol, President, Birol Growth Consulting, Inc.
After helping over 100 mid and small sized firms grow their businesses, I am ever the more convinced that formal strategic and business plans distract companies as often as they help them focus. Instead of serving as a guiding light for a firm's future, the annual strategic plan too often becomes an annual burden. In fact, after writing dozens myself during my years in corporate America, the very exercise of writing strategic plans somewhat reminds me of the folly of pursuing sex without love. In both:
- The expectation is unreasonable.
- The pursuit is unjustifiable.
- The consequences are either undesirable or unnoticed.
Now that I have your attention, let me explain. When most firms embrace the strategic planning process, it means putting their daily activities on hold and investing scarce time, money, and effort to build consensus around a clear course of action. Perhaps large businesses can afford endless management meetings, and maybe startup firms must provide investors with Pulitzer prize-winning business plans, but most firms should proceed with extreme caution. While every firm should take some time planning its work, it needs to spend much more time working its plan.
What is a strategic or business plan? Most include the following:
- Overview and Management Summary
- SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats)
- Target Market Description and Competitive Analysis
- Vision and Mission Statement
- Strategy and Objectives
- Tactics and Action Plans
- Financials (Forecast, P & L and Budget)
- Action Steps and Timeline
- Tracking and Analysis
When many smaller companies try to develop consensus and action using the above outline, they often fail. Here is why and how to avoid the strategic planning trap.
- The overview and summary of a strategic plan is only a means to an end. Effective ones passionately help move a firm from ambivalence and develop the conviction and commitment needed to grow a firm ASAP.
- A SWOT analysis is a great unifying activity. Most firms and staff truly enjoy this opportunity to step back and quickly review where the business stands.
- The next step, analyzing market share, will waste the time of any small business unless it already owns a big slice of the available business. Firms should better understand what share of their customers needs they could be meeting. Here is an article to help you do this: Think buyer share, not market share: Determining the strength of your company in the marketplace is not as simple as defining your market share. Consider weighing your buyer share instead.
- Understanding the competition is not the biggest challenge for smaller companies, providing value is. Know your customers and prospects before investigating your rivals. Rather than worry how they are doing, know what you need to do well and get better at it.
- If your mission and vision statement describes simply what you do, who you do it for and why they need it, quit while you can. If you and your staff know where you want to be in two years and why, you are way ahead of the game.
- When it comes to tactics and action steps, keep it simple. Even with effective management, most firms can only execute two to three things well. More than five concurrent tactics will confuse and dilute a firm's energies.
- Few employees of smaller firms really embrace a formal planning process because of how alien it really is to day-to-day activities. Those with MBAs or corporate experience often fail to reconcile their views with those of their street-smart peers. This means keep the tracking and analysis as simple as possible.
Since planning is critical, how can a smaller business create a simple, workable plan? Here are five key steps:
- Define and focus on your best and highest use by understanding what your company likes doing and is good at doing.
- Validate your best and highest use by having an outsider ask your existing customers why they buy from you.
- Fortify your firms internal activities that deliver on and increase your customers definition of your best and highest use.
- Develop a single sheet of 3-5 action steps with deadlines, key steps, staff, and resources needed to get the work done.
- Lead by your actions to demonstrate your conviction and bias for action.
Strategic planning should not be an annual burden but rather a continuous checklist that you are on track to providing more value and serving more customers ever more profitably. Start with this in mind and keep the effort as real as possible. In thinking back over all of the strategic plans I have developed or read, I wonder how many of them are collecting dust on the bookshelves of the executives who demanded them. Whether or not you have a strategic plan, ask yourself, "Will my business grow more with a strategic plan or with my conviction to do what I know I need to?"
Remember, what you believe in most, you are most likely to do. Now go do it!
Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:
© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080, by email at firstname.lastname@example.org, or on the web at www.andybirol.com.