It is often cited that 90% of businesses don't have any form of strategic plan, and 90% of those that do, don't actually follow it. That means that only one percent of businesses actually have some sort of strategic plan that guides the business. While these figures may be open to some debate, the general principle behind this is widely acknowledged.
What's more, it tends to be the larger companies, and those with governance structures or accountability requirements that tend to have such plans. But any size of company will benefit from some form of strategic plan; it doesn't need to be complicated, and even little strategic vision can go a long way.
Why should we bother with a strategic plan?
Strategic plans, where they exist and are followed, can vary hugely. At a fundamental level, they create a vision of the future of the company in the context of the market around it, and provide direction on how the company will achieve that vision. A well balanced strategic plan will be holistic in nature considering not only things like revenue and market share - the 'ends', but also people and culture, systems and infrastructure, and process - the 'means' by which the ends are achieved.
A company that is executing a well balanced and effective strategic plan will feel purposeful and energising to its staff as they connect to company goals and have some sense of ownership of the outcomes - this creates a great working culture which impacts motivation and performance. An external observer such as a shareholder or customer may see such a company as confident and focused, well organized with a clear sense of direction, that responds to customer expectations and market shifts, and is resilient and able to handle challenges with great agility.
Strong shared and well executed vision builds strong brand.
It is quite understandable that many smaller to medium sized companies don't have or follow a strategic plan.
Many companies operate at a more tactical, operational, and day-to-day level, and while they may aspire to a strategic plan to direct their growth, it often just doesn't make it to the top of the to-do list. And how do you actually go about creating an effective strategy that the whole company can follow anyway?
Even for companies that do have a strategic plan, it’s common that these documents sit unused after they are created. This is often because:
They are created as - and so seen as - static documents, often during some form of annual 'strategic planning' exercise. Consequently, they are not adapted as conditions change throughout the year, they quickly become out of date, and so seem to add little value.Day-to-day operational issues take precedence over strategic goals - as they always will - and people have a preference for making things happen and solving problems in the moment.There is poor alignment between the plan and actual business activities - many strategic plans are aspirational rather than built on a foundation of company and market reality - often the plan requires unavailable resources or people - an unrealistic plan is quickly discarded.There is poor integration and lack of commitment; a key element of a strategic plan has to be a shared vision that all key players buy-into that they can use to direct their activities and decision making.
The lack of a strategic plan, or the failure to implement one effectively, can have a range of negative impacts on a business. These effects tend to accumulate over time and can ultimately undermine growth, competitiveness, and even survival. Here are some key effects - do you recognise any?
A lack of clear direction results in the company reacting (firefighting) to a seemingly endless series of challenges, exacerbated by inconsistent decision making.Without of clear vision of longer term goals, opportunities for growth, innovation, or investment go unrecognised and so missed, this can further result in loss of competitive edge, as others do recognise and seize the opportunities.Lack of clarity about longer-term goals and supporting objectives can lead companies to make inefficient use of their resources, and over-emphasise short-term gains.Just as opportunities are missed, emerging or maturing threats (risks) tend to be more unexpected resulting in the company being less prepared than it could be, and so less able to resolve the issue effectively.A combined effect of these other impacts is a tendency towards stagnation as time and energy and resources are focused on dealing with the here and now, as opposed to building a foundation and path to the future.
The reality is that many of the 99% do in fact have some sort of strategic intent (usually confined to the head of the CEO or business owner); they are already trying to be strategic, even if they haven’t formalised a plan.
The process of creating effective strategy doesn't have to be complicated or arduous. Strategic planning is not about creating a rigid, unchanging document. It’s about equipping your company to move forward with confidence, clarity, and a sense of purpose. And the good news is that even a little strategic vision that is shared, can inspire and bring cohesion to a company. The best organisational strategy lives in the minds of the members of the organisation - although it can be helpful for it to be documented as something to refer to.
The most effective strategies are kept alive in the ongoing conversations, discussions, problem solving, and decision-making that constitute the day-to-day activities of the company. A vision of the future that you want to create for yourself, your company and staff, your clients, and the world around you, and a constant eye to that future as your go about running the business will get you a long way (literally). With a clear strategic vision, your company is better positioned to navigate challenges, seize new opportunities, and build lasting success.
As a company starts to accelerate, and needs to scale its operations in balance to market growth, then a more rigorous plan becomes more essential in order to stay focused, make best use of resources, maintain culture, attract the right people, and provide clarity to the new people about the direction they need to be pulling in. Potential investors might appreciate sight of such a plan too.
It doesn't need to be complicated; make being part of the 1% part of your strategy! We're here to help if you want to explore how.
Graham
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