What do you need to start strategic planning?
By Dana Baldwin, Senior Consultant
Why do so many smaller companies have difficulty getting started with strategic planning? Over 90% of Fortune 500 companies do some form of strategic planning, but only about 25% of small companies do formal strategic planning. Many companies appear to get by without doing formal planning for some period of time, but in many instances, like some big change in the economy, or in the technology used in the product or service, or used to make the product or perform the service, the upset will derail the small company and can cause a downturn in the fortunes of the entity, possibly resulting in the closure of the business. Strategic Planning is key to being prepared to prosper in the future.
In many ways, not going through formal strategic planning is very short-sighted and limiting. Without planning, companies can be much more at the mercy of both their competitors and their customers’ whims and actions.
What is needed to actually do strategic planning?
- First is a concise, efficient process, like the Simplified Strategic Planning process.
- Second, most experts in strategic planning recommend an outside facilitator to lead the team through planning. The reasons for this are mostly obvious. A good facilitator will keep the team on track, provide critical leadership, and assure quality and focus.
- Third is a balanced team, representing sales and marketing, operations, finance/accounting and management. The team should number roughly from five to nine people if possible. Certainly, keep the number at no more than 12, for sake of efficiency and effectiveness.
By initiating strategic planning, companies can start to gain more control over their futures. By planning their course and direction, companies start to take advantage of their strengths, lessen the impacts of their weaknesses and to build on their strategic competency.
We define a strategic competency as a combination of skills, processes and knowledge, which must excel in three tests to a high degree.
- First test is: does this competency add value to customers?
- Second is: does this competency differentiate the company from competition?
- Third: is the competency difficult to copy?
To be a strategic competency, all three questions must each be true to a high degree. The reason this is so important is that the strategic competency is the major sustainable competitive advantage that allows the company to differentiate itself in the market place.
The team will analyze its markets and competitors, look at financial reports, analyze strengths and weaknesses, make assumptions about future trends, discuss potential new products and services, check threats and discuss strategic issues.
Then they will establish strategies for their core business segments, select what new opportunities to pursue and select objectives to be completed over the next twelve to eighteen months. They will develop action plans to assure that their objectives will be carried out on time and will set up budgets to track results. This step turns strategic into action. (alternatively, turns strategy into execution)
Execution is always a key to success, and having the discipline to monitor progress of your strategies and your action plans is the key to good execution. When strategies and action plans are executed in a planned, monitored manner, the success of the strategic plan is much more likely.
There is nothing in this process which should scare a small to mid-sized business away from starting to plan for its future. The biggest obstacle most often is simply inertia – failure to get started. Excuses are many, but realistically, not one of those reasons is truly acceptable. Tighten your belt, take a deep breath and get started. You can only gain from starting. Interested in learning about the Simplified Strategic planning process, a process that is designed for small to mid-sized companies? Please click on seminar and learn about our world-renowned seminar.
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. and can be reached at email@example.com.
© Copyright 2013 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.