Strategic planning is not an easy task. From strategy development to successful implementation, there are plenty of stumbling blocks which must be overcome. In this two-part blog post, we would like to introduce you to some of the most common strategy mistakes and show you how to avoid them.
Mistake #1: Thinking of strategic planning as an event, rather than a process
As the saying goes, nothing is permanent but change. In today’s fast-paced business environment, this old truism applies more than ever before. Thus, in order to be successful, strategic plans must be flexible. This means strategic planning should not be treated as an annual event, but rather as an ongoing process which is never complete. Once developed, a strategic plan needs to be reviewed and adapted to changes in the marketplace on a regular basis.
Mistake #2: Not involving employees
In many German companies, strategic decisions are made by a small group of executives. Employee engagement still remains the exception rather than the norm. This is unfortunate, as there are good reasons to collect staff input. First, the world has become so complex that it is impossible for one person or small group of senior managers to see all opportunities and challenges. Gaining staff input will provide you with valuable insights into every aspect of your business, thus enabling you to make sounder strategic decisions. Second, involving employees helps to win their buy-in which is crucial for strategy execution. Let your employees play an active role in strategy development, and you will see that they will feel more motivated and enthusiastic to implement the resultant strategies.
Mistake #3: Relying on incomplete or inaccurate information
It pretty much goes without saying: Decisions can be only as good as the information on which they are based. Thus, make sure to collect all relevant data and information on the internal and external business environment and take it sufficiently into account in your strategic planning. Besides hard financial key figures, you should also consider soft data, such as analyses of market trends or your own strengths and weaknesses. The involvement of staff, as already mentioned, plays an important role in this context. Try to bring together the strategic knowledge that exists in the heads and drawers of your employees and is spread across the entire organization. Strategic planning software, such as SOLYP3, can support you in this effort.
Mistake #4: Failure to narrow down strategic goals
Strategy teams often come up with long lists of strategic goals and measures that leave the employees feeling totally overwhelmed. In the worst case, they do nothing and the strategic plan ends up collecting dust on a shelf rather than being implemented. Thus, better limit yourself to a manageable number of critical goals, measures, and initiatives. Three to maximum five goals should do.
Mistake #5: Failure to develop strategies that focus on differentiation through innovation
Producing better and cheaper than the competition is a good thing, but in the long run there is no price to be won with such a strategy. What really matters is being unique in the marketplace. That’s one of the most important messages of strategy guru Michael E. Porter. And indeed: Examples taken from real business context show again and again that companies that focus on using innovation to create superior value to their customers are most successful in the long-term. So, follow Porter's advice and develop a strategy that will help you to clearly set yourself apart from your competitors.
Part two of this article will explore five more common planning mistakes to avoid during the phase of strategy implementation.