Strategy in Business
What is the best approach to strategic planning in business? Let's explore...
for the Board
There exist two long-held approaches to strategic planning in corporate America: relegate strategic planning to the CEO and upper-management team or shift strategic planning to be a primary duty of the Board of Directors.
Which is the right approach?
An often volatile economic environment and the heightened legal accountability of board members to corporate shareholders suggest that increased board involvement in the strategic planning process is sound governance.
Board members invested in strategy development are better positioned to understand, direct, and oversee plan implementation and management compliance. Integrating the board into the strategic planning process is vital to a cohesive advancement of corporate objectives.
Reasons to include Board Members in Strategic Planning
Board members should have a pulse on their company’s immediate objectives and long-term strategic vision. They should prioritize being informed about vital information and practices impacting the company’s strategic plan.
The best way to be informed is to be involved. Active participation in strategy development offers board members an improved understanding of company operations and organizational challenges.
Directors involved in strategy planning should exhibit good listening skills, open-mindedness, and sound judgment. They should offer diverse viewpoints, an inquisitive mindset, and a desire to work cooperatively with senior management.
In return, board members should bring value to the strategy by increasing ownership and accountability, providing informed oversight, and establishing synergy within the organization.
Defining the Board's Role in Strategic Development
When seeking to expand the participation of board members in strategy planning, it is essential to define the desired extent of their involvement clearly. Drawing distinction between strategic planning and strategic management is critical to ensuring a good working relationship between the board and corporate management.
The Hands-Off Approach
Many boards adopt strategic plans presented by CEOs and senior management teams without contributing to the development or implementation of the plan.
Under this scenario, strategy planning and execution are corporate management’s sole responsibilities. Board members operate from hind-sight, rewarding management performance or shoring up corporate liability based on revenue and earnings reports.
This hands-off, reactionary approach reflects a disconnect between the board members and executive management and ultimately between board members and their shareholders to whom they are responsible.
Boards shifting from a hands-off approach to a more active role in developing a strategic plan can easily overstep boundaries.
Board members must be cautioned against discounting or pushing aside senior management when assuming active participation in strategic planning and execution.
Failure to solicit input from a CEO and upper-management team during planning may create strife within the organization. At the same time, micromanagement may reflect a lack of confidence in the executive staff’s ability to deliver on vision.
Care should be taken to align corporate strategy, governance, performance, and culture through synergistic efforts of board members, the CEO, and senior management. Savvy board members rely on their CEO and senior executives’ input about internal operations and the organization’s position relative to competitors.
The Collaborative Approach
A successful corporate strategy most often results from a collaborative effort between the CEO, executive management team, and corporate board of directors. Each entity offers a unique perspective based on its knowledge, experience, and proximity to the company.
CEOs and upper-management are integral to strategy development because they are front-line operatives inside the company. They bring an intimate knowledge of daily operations to the strategy planning process. The executive staff should have a keen understanding of the company’s internal strengths and weaknesses that will either support or undermine growth and profitability. They should offer recommendations about how to surmount foreseeable challenges.
A board member’s business expertise, personal network, and industry knowledge offer more profound insight into strategic planning issues, including opportunities and risks impacting the marketplace. The board of directors should contribute a global perspective to strategy development. Through a “distance” lens, the board is well-positioned to assess the company's future potential against its current economic, environmental, and human resources.
Corporate management and its board of directors combine to create a system of checks and balances in the strategy planning process. Thorough collaborative planning, development, execution, and management, risks can be averted and opportunities maximized.
Incorporating the Board in Strategic Planning
Board members entering into the strategic planning process should lay a foundation of trust with their counterparts.
The board should endeavor to work cooperatively with their management team, not above their management team. The CEO and management team should interface willingly and provide any financials, market research, or other supporting material to aid in strategy development.
Board members may prefer to work with their executive team internally to formulate strategy. However, identifying and navigating everyone’s respective roles can be tricky. It may be helpful to retain an outside facilitator to ease the transition into collaborative strategy development.
Strategic Planning Services for the Board
Strategic planning services provide the benefit of an experienced, neutral facilitator to oversee the integration of board members into the strategic planning process. This is especially helpful when blurring the lines between board oversight and executive management function.
The facilitator’s role is to guide the process in a safe forum, allowing for open dialogue between strong, driven personalities. A good facilitator will create space for the team to operate outside of their titles and status. Leveling the playing field between board members and senior executives is a critical function of a skilled facilitator.
Achieving Strategic Planning Objectives with the Board’s Participation
A collaborative approach between the board and executive staff is critical to optimizing strategy.
Companies only fully benefit from board member involvement in the strategy planning process once trust is established. Board members and senior management must have confidence that they are working toward the same vision for the benefit of the organization.
Synergistic collaboration between a board of directors and corporate management will result in a strategy plan reflective of the company’s values and culture while promoting the advancement of its objectives.
Strategic Planning for Small Business
An estimated 50% of small businesses fail within the first five years of operation. Is this because they lack a viable idea, product, or consumer base? Likely not.
While many factors can contribute to the closure of small businesses, a key component is often the lack of strategic foresight and planning.
So, what is strategic planning for small businesses? Let’s take a look.
Small Business Strategy
Small business strategy planning involves deciding where you want your business to be in the long-term and what day-to-day efforts will move you toward your goal. Essentially, you are developing a roadmap to move your business forward toward your vision.
Your Strategic Plan is Not Your Business Plan
Chances are when you set out to open your small business, you put pen to paper and drafted a business plan.
Perhaps your business plan outlined what you would be selling or what services you would provide? Maybe it identified your customer base, local competitors, and prospective market share? Did it include a description of principal players and their responsibilities or outline short-term financials?
While a business plan might identify your position and assert your company’s viability in the marketplace, it’s often tied to the here and now and serves the purpose of getting the doors open.
A strategic plan, however, is rooted in concepts and fluidity, ever-evolving over time to support your small business’s far-reaching objectives and core values.
The essential component to your strategic plan is your vision for your company. Once identified, the vision serves as the apex beneath which all other actions are shaped.
A successful strategy is an action plan that relies on understanding your business’s internal environment. You must be able to identify strengths and weaknesses within your organization, and be willing to shift and adjust essential operations to help you reach your long-term goals.
Steps to Creating a Small Business Strategy
The strategic planning process can be broken down into a series of small, manageable strategic planning priorities.
Define Your Vision
Simply stated, your strategic vision is your ultimate expression of what direction you would like to take your company.
Where do you want to be?
Who do you want to serve?
Who do you need to help you?
What is your purpose?
Answering these questions provides a framework and identity for your small business. From here, you will be able to develop a plan for achievement, and you and your employees will be able to operate from a consistent platform toward your goals.
2. Establish Core Values to Support Your Strategic Vision
Core values determine the culture of your business. They instruct your customers and employees about what is acceptable behavior in your business environment. Aligning your core values with your pursuits will guide your progress toward achieving your goals.
3. Strengths and Weaknesses: Understand and Accept Where Your Business is Now
Is your product selling? Do you need to expand or narrow your products or services?
Who is your customer? Are your customers satisfied and referring business to you? How can you access more customers?
Are your financials trending upward? What are your margins? What is your profitability on specific products and services?
Is your business appropriately staffed? Are your employees knowledgeable and effective in their roles? Are your employees disgruntled or satisfied?
How are external factors impacting your business? Is your location working for you? Is your competition increasing?
4. Identify Risk and Opportunity
After assessing your company’s internal operations and footing in the marketplace, you should be able to identify risks to your long-term goals. You should also recognize opportunities for growth and advancement toward your vision.
For instance, disgruntled employees carry risk and offer opportunity. While no one wants a morale buster on the payroll, it’s wise to talk with the employee and get at the root of their frustration. They may shed light on operational failings, consumer complaints, or competitor pressures contributing to their dissatisfaction. Any information gained is an opportunity for improvement.
Be willing to look at the negatives in your business without fear, but from a position of strength. Risks can either be eliminated, navigated, or transformed into an opportunity for improvement.
Similarly, any positives should be expanded to accelerate progress towards your long-term objectives.
5. Focus on Your Strategic Vision and Weigh Your Actions
Every operational action should be rooted in your SWOT analysis and focused toward achieving your strategic vision. Pay attention to those pieces that intersect – strengths that directly support capturing opportunities (and that have few related weaknesses) are your growth priorities. Similarly, identify where you have weaknesses that when combined with a threat would severely impact your ability to succeed – these weaknesses are your survival priorities which must be addressed with equal focus as growth.
Small businesses are often derailed when they fail to consider their strengths and weaknesses, how they interact with each other, and how their actions serve to advance or detract from the company’s vision. Every action must be weighed as an opportunity or threat to your strategic vision and prioritized accordingly.
Maintain your vision as the apex of your strategic plan. Organize every activity and effort to support progress toward your goal. Select strategies that serve your purpose and discard those that interrupt your forward momentum.
6. Implement and Manage Your Strategy
Articulate your vision and strategic priorities to your employees and others. All players must operate under a clear understanding of the company’s vision, mission, and values.
Management of your business strategy should include operational oversight and a periodic review of the plan against your company’s performance and progress. Every employee must be held accountable to meet the goals and objectives outlined in the strategic plan. A collaborative commitment to the tactics and strategies necessary to advance the vision is critical to your business plan.
Always remember, however, that your strategic plan is a living, breathing document that may be sorted and sifted as circumstances require. Be willing to review and reevaluate your strategic plan periodically, shifting your strategic objectives if necessary.
Adaptability is key to long-term strategic success.
The Value of Strategic Planning for Small Businesses
Some may think strategic planning is only for large corporations operating on a global scale. Not so.
The value of strategic planning for small business owners cannot be overstated. Strategic planning fosters a proactive approach to goal achievement and success within any organization.
Through organized intelligence gathering and the assimilation of data in relation to a far-reaching objective, strategic planning directs the paths of small businesses attempting to not only survive but thrive in competitive markets.
Following a strategic plan eliminates meaningless operational tasks and efficiently funnels activities and resources toward fulfilling the company’s vision, mission, and values.
In an uncertain business climate, a strategic roadmap is invaluable to your small business’s prolonged viability.
Nonprofit organizations exist to work towards a purpose other than driving profit for private or financial gain. It focuses its profits on some form of public interest.
Though it differs in purpose from a traditional business, a nonprofit organization still requires similar strategic planning. The foundation of your plan will determine the success of this entity.
Read on to learn important parts of the nonprofit strategic planning process.
Create a Vision
Flesh out the big picture of what you hope to achieve for your organization. This drives everything else and should be regularly revisited.
Who do you hope to help?
Pinpoint your demographics here by deciding whether you want to help humans, pets, sea life, etc.
How broadly will you reach?
Do you want to help this group within your local area or does your vision cover the entire globe?
What tools do you want to use to help that group?
Define the basic approach that you will take to help your focus group.
Once you create a vision for your organization, you can start talking about smaller details. This will say who you are as an organization moving forward and what you do to help. This will help people determine whether or not they wish to get involved with donating time, money, and/or other resources.
Develop a Mission
You need both a mission and vision to move forward with a successful nonprofit. Your mission will state actions that you will take to achieve the vision you are currently working towards.
Create clear goals with specific methods to achieve them. Even the best intentions will fall flat if you do not come up with solid and feasible ways to achieve your goals.
Check On Core Values
Keep your ethics in check! All businesses should operate ethically, but especially nonprofits who ask others to support a greater good with them. Double-check that your vision and mission fit your core values before moving forward.
Assess Your Risks
All businesses come with risks, even non-profits. Identify, assess, and prioritize all risks including internal, external, financial, regulatory, and operational.
You should complete risk assessments about once a year, or any time you make big changes within the organization. Even little changes can carry new risks that need a risk management plan.
Come up with ways to avoid big risks that could take down your organization. Minimize risks that cannot be voided but can be managed.
Even with the best of efforts, certain risks may get the best of you. Keep a plan in place with methods to deal with any risks you may face. Make sure everybody knows how to handle the situation to move forward.
Your Nonprofit Strategic Planning Process
All planning looks a little different depending on your business model. But, your nonprofit strategic planning process will play a big role in determining the success of your organization. Continuous planning and reshaping will help you navigate changing needs and new perspectives.
Use this guide to draft a strategy and then reach out for help! We make it our business to help your business plan run smoothly. Contact us today for help with improving your strategic performance.