Identify And Explain The Three Basic Steps In Strategy Formulation The Challenge of Strategic Planning – Are You Ready?

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The Challenge of Strategic Planning – Are You Ready?

You may have decided that your business needs a comprehensive, formal strategic plan, but are you really up for the challenge? Just as important as your willingness to plan is your commitment to putting in the resources (time, creative energy, and money) needed to get it right. Proper planning always involves significant resources for implementation. You and your leadership team should be committed to getting everyone committed to the first planning meeting.

Kerry Capelli’s recent article in BusinessWeek, How Britain Jumpstarts Design (3 October 2007), describes a government-backed process to help small and medium-sized businesses revitalize their businesses through innovative design. The author describes several different case studies in which a company, with external help from the UK Design Council, identifies ways to innovate its products or differentiate its company brand from others. Several brilliant and highly profitable success stories have come out of the program.

One interesting thing about the process is that the Design Council grant is not just a gift from the government. Qualification for the program is quite competitive. All company applications to the program are reviewed by a committee of experts. No company will be admitted to the program unless they are both willing and able to invest significant resources in product or process design. In short, the council does not want to waste its resources on assisting the company in their design planning activities unless the management and owners can demonstrate in advance that they can implement the good ideas that emerge from the process.

The same philosophy should apply to your thinking as you consider launching your strategic planning process. A thorough business planning process will definitely help your team come up with many new ideas that will help you improve your organization. Bringing these ideas to life requires management time and creativity (at a minimum) and, in most cases, capital resources.

It is relatively easy to start strategic planning with intellectually enjoyable discussions about markets, customers, competitors, capabilities, etc. For the most part, it’s fun and exciting to begin the journey of exploring your business with the tools of good strategic planning. process. This can be very costly if you don’t want to end your journey with the resources you need to achieve your strategic vision.

One of my clients learned this lesson the hard way. After completing the first two steps of simplified strategic planning (business analysis and strategy formulation), management believed that their products and services were transformative parts of the market. They all agreed that they could triple the size of the company in the next two years. It was clear that the chosen commercial construction activity required capital. At the beginning of the third stage, implementation planning, the fiscally conservative owner informed the team that he did not intend to use significant debt or share ownership to implement these action plans. All growth would be self-financing from existing cash flow. It was clear to everyone on the team that their aggressive growth plans were starved of resources and would take at least twice as long to execute. This frustrated the management so much that two very talented members left the company within the next six months – a huge loss of leadership experience and industry knowledge!

This is just one example of the potential negative impact of a lack of commitment to strategic planning. There are many other stories of companies that developed a great strategy and then suffered from insufficient support for their plans. Before you start strategic planning, make sure you have the resources and determination to bring your great ideas to life.

Copyright 2007, Center for Simplified Strategic Planning, Inc., Ann Arbor, Michigan

permission to reprint is granted with full attribution

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