It is hard to think and act strategically in the face of daily operational pressures, yet it is the daily actions of business leaders that sums to the results they must produce and the transformations they must lead. Acting strategically requires strategic muscle and business stamina. Businesses build strategic muscle by developing upon their strengths (increasing capability) and fortifying in their weak areas (increasing capacity) through strategic planning.
Strategic Planning Is An Imperative
Without a good plan to follow, businesses will experience mission drift and suffer a slow demise as a culmination of poor decisions and misguided actions exact their damage over long periods of time. The summation of this stream of mistakes can easily take a business down.
Strategic planning helps bring clarity to an otherwise cloudy business vision. The very process of strategic planning helps identify market trends and customer preferences, then attenuates strategy to programs that address those trends and preferences accordingly. It establishes the correct architecture for fiscally responsible growth, and – second only to superb execution – is the single most important determinant to organizational success. Success largely depends on an entity’s ability to build internal capacity and capability as a result of having planned for it to occur.
No Pain, No Gain
Strategic planning is rigorous work. Organizations new to the discipline find it difficult and can get discouraged early on; sometimes wondering if the effort they are expending will be worth the payoff. Of course, most of us already know that strategic planning is well worth the effort, but for the naysayers and doubters out there, let’s spell out the benefits.
Strategic planning does the following:
Forces consideration and planning for the future: It helps define strategies that further the mission of the organization with capacity to grow successfully. A thorough strategic planning process identifies potential growth markets that can be investment opportunities for the organization’s resources. Such markets can become the next generation of revenue sources and replace those that are becoming saturated, undergoing fundamental changes that pose risk to the business or may be experiencing decline.
Identifies the correct organizational priorities: Through structured analysis of initiatives, strategic planning forces alignment of spending with those ordered priorities promotes programs that further the execution of the organization’s strategy. More subtly though, strategic planning relates to hiring decisions. Hiring practices must address needed capacity to support strategic programs by supplying the business with talent that is delivered at the right time and with the right skills. The operational plans, within the strategic planning umbrella, spell out those requirements. Additionally, strategic planning yields the benefit of adding accountability into job performance and tying incentives to the completion of goal-related initiatives. Clarity regarding roles and responsibilities relative to plan goals requires people who have sufficient incentive and understanding to execute to that plan. Employees that understand what is being done, the reasons why, when to do what, and how they can contribute become empowered team players.
Provides structure and accountability: Almost everyone thrives on having structure in our lives, especially in our work. A strategic plan helps motivate management and employees by giving them structure and direction. It aligns thinking, action and values.
Stronger line-level managers and employees benefit the entire organization by improving upon the execution within the business operations while being a major part of the many strategic “goal-supporting” initiatives the business relies upon for fueling the future vision. Organizational performance indicators and metrics help provide the ability to control and manage, as they signal the need for evaluation and analysis early when corrections to implementation tactics can be made more easily with fewer cost implications.
With proper accountability established and management controls in place, those closest to the action in a business can respond quickly and appropriately when it is needed – always operating within predefined spheres of control and in concert with the strategic goals. This allows employees to embrace the business vision and fully participate in the tactical execution.
Strengthens Culture: Ultimately, strong strategic plans help strengthen culture. In practical terms the process of planning the execution of strategy means energizing and inspiring people to involve them emotionally in the success of the organization’s strategic changes.
To make sure this happens though, the CEO must serve as the strategy ambassador, getting everyone in the organization to fully believe that their actions are relevant to the accomplishment of the business’s mission and strategic objectives. This involvement includes all executive management, senior managers and employees; but it also extends to customers, vendors, partners, investors and even boards of directors.
Organizations that enjoy success from strategic planning communicate openly and honestly about their strategy in order to energize and motivate employees and to achieve buy-in to the company’s mission. In fact, a key aspect of the planning process is aligning communication with the business to ensure the strategy is executed. That unifies the organization behind a goal and subsequently the culture grows stronger and healthier.
The Cost Of Not Acting Strategically
Just as there are payoffs to diligently performing strategic planning, there are consequence for not doing so. Look at an example of a company that failed in this regard (a business we have mentioned before), Borders Books. Once a prominent brand, they no longer exist today…even vanishing from the online shopping world.
A visit to the Borders.com website redirects shoppers to the Barnes & Noble website with a welcome message to Borders customers.
Undoubtedly, Borders Books is a sad example of a business that failed to plan for their future correctly. As a result, in September 2011, Borders Books closed their doors forever. The company liquidated all of its assets and delivered pink slips to approximately 11,000 employees.
Meanwhile, as a result of smarter strategies that recognized and accounted for changing dynamics in their marketplace, competitors like Barnes & Noble have fared much better. How can two such similar bookstore giants end up on such divergent paths?
For starters, as early as the 1990‘s, Barnes & Nobles noted the growth and popularity of online book sales and e-books. The company adopted a strategy to become a player in online book sales and invested in programs to make it a major player in sales of books over the Internet. It paid off. Their early entrance into online sales arrived in time to capture market share and establish a beachhead. Likewise, Barnes & Noble developed the Nook to strategically position themselves with the market segment preferring to read e-books. Instead, Borders Books ignored the market trend, outsourcing its online sales to competitor Amazon. That turned out to be a big strategic blunder for Borders. They also pumped money into physical plant capacity to support distribution of physical books, despite the declining market, and updated their retail store across their large network.
In terms of a business operation, capacity refers to the actual or potential ability to perform, yield, or withstand. Likewise, in a business context, capability is the competence to perform actions. As it applies to business organizations, capability is the sum of expertise and capacity. Strategic planning helps systematically develop capability and capacity, but be warned. Strategic planning is rigorous work. Organizations new to the discipline often find it difficult
For business organizations to consistently demonstrate strategic behavior, the enterprise must have developed strategic muscle and business stamina. Businesses build strategic muscle by developing upon their strengths (increasing capability) and fortifying in their weak areas (increasing capacity) through strategic planning.
Without a good plan to follow, businesses languish in their current-state and fail to evolve into modern competitive enterprises.
Additional Planning Resources
Free Strategic Planning Article Compilations and PDFs:
- Strategic Planning Monthly: September 2012 Edition
- Free access to the Strategic Planning Monthly: Archive
- Free Online Strategic Planning Articles Library
- Free Strategic Planning PDF Downloads