First appeared: NNBW 9/9/02
“There are three kinds of companies – those that make things happen, those that watch things happen, and those who wonder what happened.” – Anonymous Do you know where your company is going? What will your business be like in three years? Will you be a few steps closer to realizing your vision? No one can predict the future. But if you don’t change anything, will the future be any different than the past? Probably not. But one sure-fire way to impact your company’s future (and profitability) is to dust off an old tool – the Strategic Business Plan.
A company’s strategic plan is the “game plan” management has for positioning the company in its chosen market arena, competing successfully, satisfying customers, and achieving good business performance. Most business owners and executives have a myriad of excuses for not having a formal strategic plan. I’ve heard everything from “We’re too new,” “We’re not big enough,” to “We’ve never had one, why start now?”
If these excuses sound familiar, here are a few interesting facts: Studies indicate that 50 percent of new businesses fail within the first 18 months due to a lack of direction and roughly 90 percent of all businesses lack a strategic plan.
If you are part of the 90 percent, ask yourself: Could your company be more focused? Could you be more effective? Could your employees be more efficient? And most of all, could your company be more successful? Most of us would probably answer “yes” to all of the above. Here’s how each part of a strategic plan will change how you answer these questions.
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Vision: It Brings Focus You get what you focus on. Everyone knows this, but most of companies are busy tending daily urgent problems, and not focusing on long-term important aspects. Unless your staff can focus on a common vision, the company will go nowhere. A strategic plan helps direct energy and guide staff toward a shared goal in an ever-changing world. Orit Gadiesh, chairman, Bain & Co., sums up the importance of focus, “In the current environment, companies can’t afford not to have a set of guiding principles — a vision that communicates ‘true north’ to the entire organization.”
Mission, Goals and Objectives: They Empower Employees Vision is useless unless it can be channeled in a way to empower your employees. The mission statement, goals and objectives are the roadmap in a strategic plan to do this. A long way from being just a paragraph on the wall and bullet points in a memo; these are the primary guidelines for leading the organization to higher levels of performance. They provide the framework for independent decisions and actions initiated by – departments, managers, and employees – into a coordinated, company-wide game plan.
Strategy: It Saves Time and Energy Once the mission, goals and objectives are clear you can establish how you are going to achieve them. A strategy provides the vehicle and answers the question “How are we going to get there with the available resources?” Strategy focuses on how to achieve performance targets, how to out-perform your competition, how to achieve sustainable competitive advantage, how to grow, how to satisfy customers, and how to respond to changing market conditions. Basically, strategies keep your whole company acting together while strengthening the company’s long-term competitive position in the marketplace.
Execution and Evaluation: It Ensures Success All the best missions and strategies in the world are a waste of time if they are not implemented. To be truly successful, the plan cannot gather dust on the bookshelf. Know what your end result looks like and where your milestones should be. Plan your near term actions and evaluate every quarter. Are you where you thought you’d be if you had been on target? Or, if you’re off target, by how much? The course correction to put you back on track becomes your next action plan.
If done correctly, a strategic plan is a living, dynamic document. Strategic planning becomes a process that is ongoing and never-ending, changing as the market and your environment changes. A strategic plan drives your business and must be integrated into every fiber of an organization, so every employee is helping to move the company in the same direction.
When your company has a clear plan and takes appropriate action, you get “traction” to take you from where you are, to where you want to go!
For a deep dive on Mission Statements, check out our post on all things mission.