Many business people love blaming the bad economy for why their business may be tanking, but Rich Horwath thinks there may be another culprit for languishing revenues – lack of a strategic plan. According to a survey in the Harvard Business Review, nearly 50% of U.S. business failures result from flawed strategies – not poor execution, which is where most people place the blame.
Part of this phenomenon is that companies create strategies, write plans, and then let them languish in a desk drawer, according to Horwath, strategy consultant and author of “Deep Dive: The Proven Method for Building Strategy.”
“Many companies suffer from an organizational lobotomy: mindlessly doing the same things in the same ways as their competition year after year and expecting miraculous new growth,” Horwath says. “They act like zombie bumper cars, constantly spinning in different directions because they’re always being reactive, instead of proactive. The irony is that most of them wouldn’t dream of going a year or two without preventive maintenance on their cars, like changing the oil, checking the filters and rotating the tires. Yet those same people will go a year or more without a similar type of diagnostic or tune-up on their business.”
Horwath believes a simple, five-step process can unlock the potential of the strategic plan:
- Discovery – In this phase, you pull together everything you know about strategy, market intelligence, competitive intelligence, customer data and industry data to build a solid bank of information on which to base your primary business assumptions.
- Strategic thinking – Take the information from the discovery phase and then use tools and models to generate new insights and discover what’s going on in your business and how it is moving forward in the future.
- Strategic planning – This takes the insights from strategic thinking and channels them into an action plan to achieve your company’s goals and objectives.
- Strategy rollout – Many times, companies will create a strategic plan but leave out the communication step. This leaves employees responsible for implementing the plan in the dark about how to execute that plan. Research suggests 95% of company employees don’t understand company strategy, so how can they be expected to work the plan if they don’t know the plan?
- Strategy tune-up – As with your car, this step forces companies to look under the hood of their strategic plans to evaluate what’s different, what’s changed and what’s new since they created the plan. Companies can then adjust their tactics to fit the new conditions. It helps answer the ongoing question “Are we on the right path?”