Yogi Berra once said that "if you don't know where you are going, you will likely end up somewhere else." The same is true in business. Unless you have a thought about crafted enterprise strategy, you are essentially flying blind.
Former U.S. President and military commander, Dwight D. Eisenhower, remarked that "a fulfilled, plan is ordinarily worthless, but truthful planning is indeed essential." In other words, while a given plan may change based on what happens with your business, taking the time to wholly peruse where your firm is now and where it is headed gives you the information to make procedure changes intelligently, against the backdrop of a clear enterprise strategy.
Kmart, a leader in the allowance retailing manufactures in the late 70's, had close to 1900 stores and mean revenues of well over million per store. Wal-Mart, on the other hand, was a much smaller retailer with just over 200 stores and mean revenues per store only half those of Kmart. But just ten years later, Wal-Mart had become the largest and highest profit retailer in the country with an annual growth rate at 25% per year with a 32% return on equity.
What happened? Kmart's response to enterprise challenges was to try to seal off and defend its markets, a coarse tactic years ago when the manufactures was characterized by defined markets, stable customer needs and clearly defined competitors. Wal-Mart found competing benefit by realizing that success would not come from capturing and retention a market but by being nimble and responsive to changing market conditions. It built enterprise processes and core competencies in such areas as communication and information sharing which allowed it to retort to rapidly changing conditions and move inventory quickly to serve store-by-store customer demand.
Kmart's inability to retort to changing market conditions and to continue to ride a dead strategy eventually led to its reorganization under episode 11. It's a fact that those organizations that adapt to changing conditions thrive and grow. Those that remain unaware or misjudge these challenges and opportunities and fail to compose a new enterprise strategy eventually die.
Why Build a Strategic Plan? In a word, the retort to this demand is focus. Strategy creates context for operating decisions. It establishes the playing field and provides advice for decision-making about the types of caress and skills needed by employees, how marketing and advertising should be positioned, the priority of initiatives, how to structure the organization, and a host of other issues. A plan is vital to guide decision-making, channel resources and define direction. Because of that, construction a strategic plan should be well worth the time it will take to compose it, moot it and regain agreement on its direction.
Strategy is the way in which an assosication meets the challenges and opportunities of its environment. It is often an overused and misunderstood concept. Strategic reasoning does not necessarily imply long term. In some industries, long term is less than one year. It is not tactics, though strategy needs to be supported straight through tactics. It doesn't necessarily imply something big. The decision to move across town may have more human impact than the decision to do enterprise in someone else city.
Strategy is a set of choices that defines the nature, direction and value system of an organization. It is not a document. It is a mindset which should be understood by every someone in the assosication and used to guide all decision-making within the organization. In developing strategy, leaders make conscious and informed choices about who they are and what they stand for:
* What are our core values and beliefs?
* What markets and customer groups will we serve?
* What products or services will, or will we not, deliver?
* What competing advantages will cause us to succeed?
* What core competencies must we have to fuel our growth?
* What infrastructure, core processes and resources must we have to succeed?
* What financial results will we achieve?
* What should be our planning horizon?
* What is the quality-of-life gift we want to make to our customers, our employees or the places in which we operate?
Next, and the hardest part, is plan implementation. In the United States, the mean firm only achieves about 63% of its strategic plan. Studies also show that 90% of strategies that fail do so because of lack of execution. Research in the last several years has pinpointed many reasons why enterprise plans fail, along with the following:
1. Poorly understood strategy -- most organizations have a strategy but, according to one study, fewer than 5% of their employees know what the strategy is.
2. Weak strategy doing -- Studies show that up to 90% of strategies fail due to execution.
3. Inability to adapt to change -- Once a enterprise makes plans, the chaos of all things changing colse to it may gently erodes those plans unless the assosication can adapt. Many cannot.
4. Lack of a systematic approach - When an assosication reaches a positive size, lack of alignment between dissimilar population or departments who cope dissimilar functions may hamper success.
5. population are not engaged - An engaged laborer is one who is personally committed to the goals of the company. Unfortunately, 90% of the time what passes for commitment is compliance. If you cannot get population engaged, no revising will last.
6. A gap between knowing what to do, and doing it. Many things can get in the way along with substituting talk for action, laborer fear or mistrust of management, using the firm's history instead of sound judgment to dictate action, and badly designed or involved measures.
In the end, a solid enterprise strategy and implementation plan may not solve all of your problems but those firms that do plan enjoy a much brighter track record. Plan well and beware of the pitfalls in implementation and you can enjoy your best year yet.
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