Every for profit and nonprofit organization, no matter how big or small, needs a strategic plan. A strategic plan provides direction for an organization, as well as outlines measurable goals. John M. Bryson, author of Strategic Planning for Public and Nonprofit Organizations, defines strategic planning as “a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization (or other entity) is, what it does, and why it does it.” Is there an organization that would not benefit from having a tool (strategic plan) to help them guide day-to-day decisions, evaluating progress, and pivoting? I cannot think of one organization who would not benefit from such a tool.
Arguably, every organization has a strategic plan, but not all strategic plans are created equal. Have you ever heard a business owner say, “I have a strategic plan. It’s all in my head. It’s just not on paper.” This scares me. An organization needs forward thinking. An organization needs to know where they want to be in a year, five years, 10 years, and so on. To get to where you want to go, you must reverse engineer your path to success by mapping out all the tasks and goals that must be achieved (milestones, SMART goals, KPIs, etc.) to get there.
To best understand why every organization should have a strategic plan, let’s explore what can happen when an organization does not have a strategic plan.
If the strategic plan lives in the business owner’s head alone, how does the company have a clear vision for the future? Each employee needs to know the company’s goals and objectives, as well as how to accomplish them.
If there is a lack of a coherent written strategic plan, it is difficult to create budgets for special projects and understand the personnel and funding resources needed to launch new products and grow the company. Without a written strategic plan, decisions are made “on the fly”, which potentially gambles the company’s future. A company becomes reactive rather than proactive.
By having a clear outline as to who is responsible for what, an environment is created where each employee knows their specific responsibilities and it fosters accountability. Without a strategic plan, the company structure is not defined, thereby leaving the company and employees without focus.
Without a strategy there is no formal structure for communication and important information will get lost. Without clear and consistent communications, each employee focuses on what they perceive to be important, which may or may not be important to the organization.
The business owner or C-Suite executives may assume that everyone understands the organization’s purpose because they feel as though they have discussed it many times. However, the purpose needs to be clearly written so everyone can understand. Everyone must understand “the why” for the organization.
Markets evolve, i.e., the economy changes, technological advances, there is a global pandemic. Without a strategic plan, the organization does not have direction as to how pivot or adjust course. Without a plan, an organization tends to react swiftly or freeze, thereby not allowing the organization to pivot in such a manner that aligns with their mission.
Let’s evaluate real-world examples of companies that failed to enact a strong strategic plan.
How was Kmart’s strategy so poor that it led to failure? Let’s examine the three vision statements of the top three discount retailers.
Target: “Offer cheap-chic clothing styles”
Walmart: “Always set the lowest prices”
Kmart: “To thrive as a mass merchandising company that offers customers quality products through a portfolio of exclusive brands and labels.”
Do you see the issue? Kmart’s vision is broad and uninspiring. Vague moves no people. Employees don’t understand what is expected of them, and the customers don’t understand why they should come to Kmart as opposed to Target or Walmart. (USP anyone?)
One of the most important reasons to create a strategic plan is to define your organization’s identity. Kmart did not have clear identity, so how could they compete with Target and Walmart?
(Yes. McDonald’s. They have made mistakes, too.)
In 2005, McDonalds felt the pressure to offer some healthier options. Remember the range of healthy salads that got introduced? McDonalds believed that they could capitalize on the rising trend of eating healthy. However, the salads didn’t sell well. Do you know why? McDonalds did not focus on its core competencies, which the burgers and fries loved by their customers. The other issue was that it started to solve one problem, the public perception that McDonalds offers unhealth food causing obesity, but then they focused on trying to increase revenue by selling salads, not their core competency.
A strategic plan should map out three key areas: where your organization currently is; where you want your organization to be; and how you get your organization to achieve its vision. By mapping out these three key areas, leaders and managers can then think, learn, and act strategically. All organizations, big and small, for-profit and nonprofit, face numerous and difficult challenges. Change is inevitable, and organizations will experience the roller coaster ride of facing relative stability followed by periods of dramatic and oftentimes rapid change. A strategic plan helps guide leaders and managers to make decisions that shape and guide what an organization is, what it does, and why it does it. During the most unstable times, a strategic plan can serve as the north star during the most tumultuous times.
In essence, learn from McDonalds. Don’t just react to a trend but make decisions and focus on the elements that are in alignment with your organizational mission, vision, values, and goals. Perhaps, McDonalds should have just cut out some of the fat and made their foods a little less unhealthy. Wait…I think they did by removing artificial preservatives from their chicken nuggets and announcing that their burgers are free of artificial preservatives, artificial flavors, and added colors from artificial sources. Perhaps they learned from their mistake.