Avoid these six pitfalls as you create your organization’s strategic plan.
As you look at your organization’s strategy and your current strategic planning process, it’s critical to understand there are some really large pitfalls out there that you can fall into.
First, do you lack a clear direction? If your organization can’t clearly articulate, “Here’s where we’re going, here’s why we exist, and here’s what we look like three to five years from now,” you may lack direction.
Second, do you know how to say no? Or do you say yes to everything? Look at the latest set of initiatives you’ve pursued over the past year. How many of them have been failures? How many of them should you have walked away from? That’s an indicator that you’re not saying no.
The next pitfall is failure to prioritize. Go look at everything everybody’s working on right now in terms of major initiatives. Are they all properly resourced or are some of them lagging? If you have a bunch of projects that are stalled or are behind schedule, you probably haven’t resourced appropriately and your prioritization process may be broken.
Lacking diversification is another pitfall. When you look at your portfolio of initiatives, do you have excessive concentration either in a specific market or a specific product? Or are your bets spread out?
The next pitfall is starving the kids. Are all of your resources going to the one big core business that generates most of your profits, and all the great new ideas are never getting funded?
Finally, the last pitfall is not revisiting your strategy on a regular basis. You should be refreshing your strategic plan at least once a year. That doesn’t mean doing all of these exercises again, but it does mean sitting down, validating the market, and looking at your spot. Look at your core competencies, your vision, your mission, and ask, “Are these still valid and relevant?”
Let me make this real because these risks are huge. I know a consumer package goods company that failed on several of these dimensions. First, they lacked a clear direction. Everything looked interesting, and they were more than willing to pursue something as long as the financial returns looked attractive. Second, they weren’t very good at saying no. When something came along with a high enough rate of return, they would tend to pursue it. And third, they didn’t look at diversification risk. They were so concentrated on a specific set of new initiatives and new markets they wanted to get into that they took on excessive risk.
The way these failures manifested was that they made an acquisition for approximately $100 million in an entirely new market that they didn’t know a lot about. They made the acquisition based on the fact that the financial return seemed like they would be very attractive. Fast forward three years from that decision and every year they lost between $2 and $5 million. After three years, they realized they couldn’t run the business well. They didn’t understand the market. They wrote off the entire business and shut it down.
So these pitfalls are real. Do the diagnostics and ask yourself these questions as you look at your overarching strategy to make sure you’ve got a strategy that’s viable and will help you achieve your overall goals.
Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!
Did you enjoy this post? If so, I highly encourage you to take about 30 seconds to become a regular subscriber to this blog. It’s free, fun, practical, and only a few emails a week (I promise!). SIGN UP HERE to get the thoughtLEADERS blog conveniently delivered right to your inbox!