|
Plan as if Your Business Depends on It
-
Strategic
Planning Drives Sustainable Growth
Strategic planning is something
that many of us in both for profit and non-profit
organizations have heard about in our professional
careers. Some people practice it as a matter of course
in running their businesses, while others think of it as
an activity that is just for “big” businesses.
In its simplest form, strategic
planning asks the question “what is our business
today 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 long term growth.
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 putting the plan
in writing actually 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:
- What is happening in your
industry and market today?
- What are your competitors doing
about it?
- 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 of the business. 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. “This is the way we’ve always
done it” or “Our competitors are really minor.” Layer
that kind of thinking with the potential for insularity
in a family owned business, and the future becomes
severely limited by only what can be seen or predicted
from within.
The process of creating a plan is
demanding, arduous and worth every minute of the time
and effort 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 include both family
and non-family managers. Both 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 the well-known
management consulting firm McKinsey and Company,
concluded that there are fourteen basic components from
which a management system for any business can be
created, and are the responsibility every CEO and every
member of the management team. Key components include:
- setting objectives
- planning the organization
structure
- providing capital
- establishing management programs
and operational plans
- most importantly, activating
people
The exercise of strategic planning
is truly one of 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 and the management team.
Issues such as personal estate planning and management
succession are 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 company to
run in the future.
Of the components outlined above,
the most critical one, upon completion of the plan, is
activating the right people, in the right positions, to
implement 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 needs to
be communicated to both managers and staff. It needs to
be flexible enough to take new developments into
account. And finally, it needs to stretch your
company’s goals rather than to maintain
“business-as-usual.” Plan as if the future of your
business depends on it – because it does!
By Jeffrey Ross and Jay L. Fialkow
More Articles |
