Strategic Planning Works
Aug 02, 2018 03:09PM ● Published by Emily Stevenson
The other day a friend asked me why I was a believer in strategic plans. She’s the owner and founder of a five-year-old dynamic technology company. I told her that she should first know I’m “old school.” That means I am one of those university professors that believes Peter Drucker truly was the Father of Management. Planning, organization, and control was his mantra.
Her reply was, “I understand planning, organization, and control when we discuss business plans. I discussed the importance of writing business plans at length with Dean Kress, director of the Faber Center (Entrepreneurship Center) at USC’s Darla Moore School of Business. He convinced me six years ago that a business plan for our company would not guarantee success, but would increase the odds of our success. Now, five years after starting our company, I can testify that he was right. That said, I’m not starting a company. I’m trying to take my company to the next level. I’m not familiar with a strategic plan. Why should I waste my time and my staff’s time with a strategic plan?”
My response was that a strategic plan helps the CEO and team deal effectively with everything that affects the growth and profitability of a firm. Executives develop and execute plans that they believe will position the company optimally in its competitive environment by maximizing the anticipation of environmental changes and unexpected internal and competitive demands. Those thoughts were expressed by Drs. John Pearce and Richard Robinson, authors of “Strategic Management: Planning for Domestic and Global Competition.”
I served as the director of the USC Technology Incubator for 12 years. A company that was part of the incubator was required to have a written business plan and could only stay in the incubator for three years. Most of those companies that started in the Incubator were successful, but they all struggled when they tried to go from a start-up company run by one or a few entrepreneurs to a management-led company. Entrepreneurs have a problem being on the same page with their management, let alone on the same page with the employees of the company.
Does your company have this problem? If so, strategic planning is something you should consider. Let’s identify the parts of a Strategic Plan: Mission, Vision, Internal Analysis, External Analysis, Long-Term Objectives and Strategies, Strategy Implementation, and Strategic Control. In this column, I’m only going to discuss the first three.
The mission of a company is the unique purpose that sets the company apart from other companies of its type and identifies the scope of its operations. In short, the company mission describes the product, market, and technological areas of emphasis. A mission statement once used by Nicor offers an excellent example:
Preamble: We, the management of Nicor, Inc. set forth our belief as to the purpose for which the company is established and the principles under which it should operate.
Basic Purpose: The basic purpose of Nicor Inc., is to perpetuate an investor-owned company engaging in various phases of the energy business.
What We Do: The principal business of the company, through its utility subsidiary, is providing energy through a pipe system to meet the needs of ultimate customers.
Where We Do It: The company’s operations will be primarily in the United States, but will engage in such activities in any location where, after careful review, it has been decided that the new activity will be in the best interests of its stockholders.
These are outstanding vision statements:
General Electric: We bring good things to life.
AMD: A connected global population.
Cutco: To become the largest, most respected and widely recognized cutlery company in the world.
This analysis will be the hardest part of the plan. Remember the company is trying to make more money. Employees must be truthful with their answers. To make more money, those conducting the interviews are looking for the absolute truth from the employees. But speaking the truth is difficult when an employee has to give information about other employees that might be their friend and that friend does not do a good job. Good facilitators of a Strategic Planning Process will handle these types of issues in your internal analysis phase with utmost care.
If you would like to know more about External Analysis, Long-Term Objectives and Strategies, Strategy Implementation, and Strategic Control, please email me at firstname.lastname@example.org.
Joel Stevenson is an entrepreneur and former executive director of the University of South Carolina Technology Incubator. He retired from the incubator in 2011 and became a full-time Professor of Entrepreneurship and Strategic Management at USC’s Darla Moore School of Business. He is the recipient of the Moore School of Business “Outstanding Elective Professor” for the Professional Master of Business Administration Class of 2009/2011.