Many companies update their strategic plan once a year. Whatever planning approach you use, I find companies follow similar patterns that hold them back from creating a really effective business strategy.
Here are some common pitfalls we see.
1. Developing an Operational Plan, Not a Strategic Plan
I find companies often do not develop a strategic plan but rather an operational plan that identifies action plans to help reach immediate sales, profit, market or operational goals. This is certainly a valuable approach to setting a practical path to helping you achieve these goals. However, if you do not undertake a strategic review of your company, your customers and your industry you will not be able to see the big picture and identify what your company needs to do to make serious gains in the future. Companies that do not undertake a strategic review are often the ones that get nasty surprises when their world changes and they say “we didn’t see that coming!”
A strategic planning approach forces you to question a number of things including how best to use your capital, whether you have the right sets of products and services for your markets or whether you need to take a major redirection in your business. You need to conduct a dispassionate examination of how your company brings value to the market.
If your annual planning process is becoming stale and uninspiring and your key managers are saying “Oh no, not strategic planning again,” then you need to push the reset button and undertake a true strategic planning process that requires hard work and deep thinking to create a truly effective strategic plan. They will become more engaged and see the value in it and you will see the pay-off in results.
2. Not understanding what your competitive advantage is – or worse, not having one
Understanding your customers and how you fit into their buying decision is one of the essential building blocks of a good strategic plan. However, companies need to dig deeper and look beyond what their customers want. Companies need to understand the larger and more looming factors such as shifting customers mindsets, new products coming from domestic and foreign sources, industry transformations and new technologies. Companies often need to conduct focused evaluations of their markets, technology and the larger industry developments to provide this deeper level input to make a strategic plan powerful.
Against this backdrop, the core of an effective strategic plan is articulating what your competitive advantage is that will help drive your sales, profits and further innovation. Competitive advantage comes in many forms so defining it and assessing the strength of your competitive advantage is time well spent. Your competitive advantage must be relevant and of value to your markets to be meaningful.
With this in hand, you then need to develop business strategies that are bold enough to help you make significant gains in your performance goals.
3. Not communicating the plan to your employees
A good strategic plan requires careful analysis, creative thinking and effective strategies to help your organization succeed. Your new strategy needs to be effectively communicated to all employees and perhaps relevant elements shared with suppliers and customers.
Much like the boat in the photo above, a strategic plan serves as your company’s compass and allows you to point your company in the right direction. But your success in implementing the strategy requires that everyone in your company knows what their role is to keep on the correct course.
Your strategic plan should also be a living document to be adjusted as industry, market and competitive landscapes change. The death knell of a plan is that once the process is over, the binder goes on the shelf!
Hart & Associates Management Consultants leads clients through the strategic planning process and conducts detailed product, market and industry evaluations to help make powerful strategic plans. We also conduct feasibility studies, business plans and market assessments to help clients make informed decisions on new business investment and expansion, company acquisitions and improving their competitive position in domestic and export markets.
Our focus is helping you increase sales, profits and company value.