In business schools, lectures, and books, young entrepreneurs are taught to make a strategic plan. They are instructed to outline an overarching mission statement, plan several strategies to attain that mission, and then lay out the resources needed for various initiatives. On the surface, this seems like a logical template for strategic planning, but there are several flaws that most executives don’t see until the plan fails to deliver the anticipated results.
Unfortunately, traditional strategic planning has become a way for executives to mitigate failure, rather than to set and meet bold business goals. In fact, many organizations abandon their strategic plans or change them dramatically from year to year, even if they have five or ten-year plans in place.
Traditional strategic plans often focus on problem-solving. But true strategy is about identifying opportunities and finding ways to take advantage of those opportunities in a way that minimizes risk. Strategic plans should give leaders the structure to make the right decisions in the face of a threatening change in the market or the business itself.
One item that’s important to remember: Planning and strategizing are not the same thing, so they need to be looked at differently. Think about your plan as the rules of the game. These are the rules under which you and the market will operate. Strategy, on the other hand, is how you’ve decided you will play the game under these rules. Strategy should give you broad guidance, but it’s not set in stone because you must constantly adapt to market conditions and other factors.
Most strategic plans only focus on “deliberate” strategies, which are the decisions you expect to make as part of your plan. But these plans don’t account for emergency situations that pop up and need immediate attention (see Henry Mintzberg’s The Rise and Fall of Strategic Planning for a detailed explanation of deliberate and emergency strategies).
So, how do you avoid these pitfalls and create a strategic plan that works? First, you need to simplify your plan. You don’t need to outline five-year goals or detail impressive revenue projections. You need a tactical plan to make it to the next step, keeping revenue projections conservative and cost planning flexible. Second, you need to realize that strategic planning isn’t about perfection. Your plan should be a map of the territory and guidelines on how to navigate it, not explicit directions on how to get from point A to point B. The more comfortable you are with unpredictability, the better off you’ll be making the best choices for your business.
Have you had trouble with strategic planning for your company in the past? Talk to Tucker/Hall for more insights, or send us a message on what your experiences have taught you.