Why A Strategic Plan Is Important
As consultants, we work with a variety of businesses across a number of industries as well as non-profit entities. In reviewing the performance of these organizations, it is interesting to note that those businesses that perform at the highest levels usually have some sort of formalized strategic plan in place and are implementing it well.
On the other hand, those businesses that struggle usually have no plan in place and seem to flounder in their attempts to be successful. Arguably, the leading cause of business failure is not having a strategic plan in place that is implemented effectively. If a business has little idea where it is headed, it will wander aimlessly with priorities changing constantly and employees confused about the purpose of their jobs. And it could chase strategies that have little or no chance of success.
For a business to be successful, there needs to be a road map for success. Without that road map provided by a solid strategic plan, decisions are made in a vacuum and/or there is considerable confusion and inconsistency evident within the organization.
At a minimum, a well developed strategic plan:
- Establishes clear and specific goals, objectives, strategies, and tactics.
- Defines strategy that allows the organization to gain competitive advantages and enhance sales and profits.
- Removes uncertainty about where the organization is headed.
- Provides clear direction and focus for all employees.
- Points to specific results that are to be achieved.
- Allows the organization to align people, teams, departments, divisions, etc. to a common plan and focus......everyone can be working toward the same goals and objectives.
- Enhances productivity, morale, communication, efficiency,sales and profits.
- Defines specific action items and establishes an action plan for effective implementation.
- Creates a common understanding of what results are expected.
- Addresses important human capital strategies including hiring, training, and performance management.
From the perspective of a manager, owner, director, president, CEO, etc., their own personal success can often be significantly impacted by the implementation of a sound strategic plan. Why? Because their value to the organization is directly related to the performance of the business. If they fail to plan effectively and the business struggles, their value to the organization is marginalized.
As mentioned above, a strategic plan helps the various people and work units within an organization to align themselves with common goals. But perhaps most importantly, the strategic planning process provides managers, owners and entrepreneurs the necessary framework for developing sound business strategy.
Managers and business owners need a well developed strategic plan in order to effectively establish expectations for their employees. Without a plan, expectations are developed in a void and there is little or no alignment with common goals and strategies. A good strategic plan looks out 2 to 5 years and describes clearly what market, product/service, pricing, marketing and other strategies will be followed. In short, it defines how the business will grow and prosper over the defined planning horizon.
During tough economic times, the need for a solid strategic direction and plan is even more pronounced because the margin for error generally becomes much smaller for most businesses. When the economy turns down, the absence of a well designed and effectively implemented strategic plan will often be felt in a dramatic manner.
Because sound goals, objectives, strategies, and tactics have not been integral to the daily operations, the business will not be well positioned to withstand the hits delivered by a struggling economy. Conversely, organizations with solid plans that are being implemented effectively stand a far better chance of surviving tough economic times. Why? Because sound strategic direction provided by a strategic plan lays a strong foundation that will support a business during these economic downturns.
All employees need to understand the guiding principles of the business and what everyone should be aiming to achieve. A strategic plan that is well developed, properly communicated, and carefully implemented can launch struggling or underperforming businesses to new heights.
Take a look at your business. Are your critical business strategies well defined? Are they successful? Is the business as successful as it should be? Does there seem to be a lack of focus on where the company is headed? Does everyone clearly understand the goals for the business? Strategically, how will the business achieve those goals? Is your current planning horizon longer than one year? Are you developing annual business/operating plans without a strategic plan in place? Strategic plans should drive or at least help define operating plans and budgets.
Writing a strategic plan isn't as complicated as some would lead you to believe. Simplified strategic planning has been our focus for some time because too many organizations get caught up in the process and lose sight of what is important. We have found, without exception, that businesses which create and execute sound strategic plans are generally far more successful than those that do not. Remember that successful implementation of the plan is a must. If you write a plan and then allow it to gather dust on a shelf, you might as well have no plan. There must be a commitment to implementing the strategies and tactics detailed in the plan.
Many organizations that are successful in the implementation of their strategic plans use a simplified strategic planning process to get the plan written and implemented more quickly and efficiently. One of the things that caused some to proclaim that strategic planning had lost it luster was the tendency of some to drag out the process too long and to create more work than necessary. The simplified, rapid development approach has helped immensely in getting good strategic plans developed and implemented.
As mentioned, writing a strategic plan is not difficult and it does not have to be overly time consuming. The notion that strategic planning has to be a long arduous process to be successful is complete nonsense. In fact, our experience clearly points to a far more successful planning experience and better plans when the plan is completed without a lot of "bureaucracy" and extraneous analyses.
Strategic planning does not end once the plan is put on paper. Once developed, the key to making the plan work is a commitment to seeing it through coupled with sound implementation. Unfortunately some strategic plans end up on a shelf gathering dust without being even partially implemented. The commitment to not only creating a sound strategic plan, but to its full implementation must be made at the beginning of the planning process.
There are certain steps required in the strategic planning process in order to develop a solid and actionable plan. Using a strategic plan template is an effective method of getting a solid plan written and implemented. At the request of our clients, we have created such a template that includes instructions and examples of each step as well as worksheets that can be completed to effectively create your plan.
If you feel that such a template would benefit your planning process, visit mybusinessbooks.com. There you can order your copy of the widely used Strategic Planning Workbook which literally thousands of businesses and non-profit organizations have used to guide them through the development of their strategic plans. It is widely used by organizations of all sizes and types ranging from small start-up businesses to some of the largest and most respected companies in the world.
Or if you would like to read more articles on strategic planning, visit our archives on this site or read about simplified strategic planning and strategic planning steps at our Business Briefs website.