A Company’s Future Shouldn’t Just “Happen”-  Strategic Planning Drives Growth

Strategic planning is something that many of us in both for profit and non-profit companies have heard about in our professional careers.  Some people practice it as a matter of course in running their businesses and others think of it as an activity that is just for “big” businesses.  In its simplest form it asks the question “what is our business and what should it be in the future?”  Asking this question and pursuing the answer will lead to the setting of objectives, and the development of plans and strategies that will drive growth.  As said by Peter Drucker, “This will lead to the making of today’s decisions for tomorrow’s results.”

The fact of the matter is that every business should be doing a strategic plan.  A family business survey done in 1995 by Arthur Andersen and Mass Mutual Insurance found that more than 50% of the survey participants said they had a strategic plan.  But in1997 when an updated survey was performed, they were asked if they had a written strategic plan, which dropped the percentage to 30%.  (Scheiff Estess, Entrepreneur, Sept. 1997) Does this make a difference?  It does if you want everyone in your company to understand where the company is going and to all pull in the same direction.

There are three basic components that every manager in your company must clearly understand to be able to make the smart decisions that will ensure the future.  They are:  1.  What is happening in your industry and market today; 2. What are your competitors doing about it; and 3. How does your product and service mix map to both the industry and competitive landscape?  Simply put, everyone in your company needs as strong an “external” view as they have an “internal” view in order to do strategic planning that will have an impact.  Very often, the internal view is predominant, leading to decisions made that are not grounded in the external world that your company does business in.

The process of creating a plan is demanding, arduous and worth every minute of the time spent.  It must include your entire management team – top management as well as middle management – so that all feel that they have a part in it and take ownership of it. In the case of a family-owned enterprise – it should also include both family and non-family managers.  Operational perspective as well as non-family perspective will go a long way in making the plan real, and bringing focus to both the company’s strengths and weaknesses that must be addressed to drive growth.  This is definitely a case where multiple heads are better than one!

To that end, Marvin Bower, for several decades the managing director of McKinsey and Company, a well known managing consulting firm, concluded that there are fourteen basic components from which a management system for any business can be created and is the responsibility every CEO and every member of the management team.

 According to Bower these processes are:

1. Setting Objectives
2. Planning strategy
3. Establishing Goals
4. Developing a company philosophy
5. Establishing policies
6. Planning the organization structure
7. Providing personnel
8. Establishing procedures
9. Providing facilities
10. Providing capital
11. Setting Standards
12. Establishing management programs and operational plans
13. Providing control information
14. Activating people

This exercise is truly building a successful company for the future.  In a closely held or family business, the goals of the business are often tied to the personal goals of the owners/family members as well as the members of the management team.  Areas such as personal estate planning and management succession are areas of great importance to the owners.  But before figuring out “who” will be running the company in the future, a plan can address the “how”, “what” and “where” that will insure there is a future company to run. Of the components outlined above, the most important one, once the plan is completed, is item 14 - the activating of the right people, in the right positions and implementing the plan.  No matter how strong the written plan is, without these ingredients, it cannot be implemented properly and will never work. 

In closing, it is important to underscore that a strategic plan should be about action - making sure that both the external and internal views are integrated, and that the foundation of the plan is the present and the future, not the past.  It should be communicated to both managers and staff.  It should be flexible enough to be able to take new developments into account. And finally, it should stretch your company’s goals rather than to maintain business-as-usual.  What better way to “activate” your people and drive new business growth?

By. Jeffrey P. Ross

© 2003 RossFialkow Capital Partners, LLC

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