Strategy is a critical component to the success of an organization. Despite the importance of a sound strategic plan, so many companies simply get it all wrong (Reeves, 2014). Many organizations fail to plan appropriately and are plagued with pitfalls or setbacks. Some pitfalls are due to inadequate agility and/or too much rigidity in the strategic plan; strategic plans can be simply too vague; and lastly, some companies attempt to duplicate a working formula without accounting for all the variables that contribute to the success of the proven formula (Clark and Kentz, 2006). While most successful companies have a strategy, what many organizations lack, is a strategy for the actual strategy (Reeves, 2014). It is important for a company to understand how to plan in order to properly formulate a strategy.
Too many organizations plan a three- or five-year strategic plan with hard deadlines and systematic models; such a plan is often too rigid and not agile enough. Known as traditional planning, the focus is often on lengthy studies delegated by a designated planning staff, with the goal of reducing ambiguity and risk (Grenier and Cummings, 2009). Such a process is too slow and not flexible enough in the modern economy as the world changes rapidly. According to Grenier and Cummings (2009), global markets, hyper competition, and better-informed customers are a large reason why the traditional planning model often fails in 2019.
Some companies have taken notice of the modern high velocity market (Grenier and Cummings, 2009) and create plans with agility in mind. Agility is how flexible and quick a company can shift course when change is needed (Auster and Hillenbrand, 2016). Despite being created with agility in mind, plans that are too vague do not provide clear enough direction. According to Clark and Krentz (2006), it is important for a strategic plan to contain specificity, with targetable and measurable metrics. An example of a vague strategic goal for a college would be to increase student enrollment. While that is a great goal, that goal is not measurable and there are no targets to reach for. A better strategic goal for a college would be to increase enrollment by 5% in 2020. Creating targetable, measurable statistics allows for an organization to better plan and initiate based on the measurable data. The target is also flexible enough in that a college can quickly change course if unforeseen circumstance arises and enrollment dramatically increases or decreases.
Another major pitfall is failed duplication. An organization can make the decision to duplicate a major process that dramatically changes the current operations of the company looking to adopt. Too many companies fail to account for all of the variables when attempting duplication. Simply adopting a policy without a deep understanding of why a policy is successful, can cause the entire operation to backfire (Clark and Krentz, 2006). If a fictitious organization is a market leader in customer service, and another fictitious company wishes to adopt the process of the market leader, it is imperative that the duplicating company look at all the aspects that contribute to such high success rates. If the market-leading organization places a heavy emphasis and budget towards company culture, but the duplicating company does not, the culture dynamic could be so different that adoption could lead to failure without first addressing the culture differences (Clark and Krentz, 2006).
It is better to plan for the future then to try and predict the future. While plans are great for helping with alignment, plans also hurt a company if the company cannot adapt and be agile enough to cope with change. Plans can also be extremely time-consuming. It is entirely possible for a company to spend countless hours on a plan, only to have the plan be obsolete within three months of rollout (Reeves, 2014). Even a perfect, well-executed plan can fall victim to circumstance such as a natural disaster or government destabilization and escalating tensions or sanctions. The United States and China are currently in a trade war. Chinese cellphone maker Huawei was recently banned from the United States, and Google in return, ended business with Huawei, locking the company out of Android updates and Google services. Huawei currently makes phones but essentially had the Android operating system revoked by Google as a result of the trade war between the United States and China. This will place significant stress on Huawei moving forward. What a company needs today in 2019 is a strategy for the strategy. According to Reeves (2014), it is best to adopt a strategy based on the circumstance of the company and market. Reeves (2014) goes on further to state that the best strategy approaches come in four different styles: adaptation; market defining/shaping; classical planning; and visionary planning. Each strategy process is highly contingent on the market, ecosphere, and product/service of the organization.
While strategy is critically important to an organization, because of shifting trends and the high velocity market of 2019, organizations often get the planning process wrong and fail because of many pitfalls the organizations do not account for. Rigidness and lacking agility, vagueness, and failed duplication efforts are very common pitfalls (Clark and Kentz, 2006). A company must best come up with a strategy for the actual strategy in order to more effectively plan, as understanding how to plan appropriately is just as critical as the actual strategic plan. In conclusion, not having an effecting planning method for a strategic plan can be what makes or breaks a company.
References
Clark, C. S., & Krentz, S. E. (2006). Avoiding the pitfalls of strategic planning. Healthcare Financial Management: Journal of The Healthcare Financial Management Association, 60(11), 62–67. Retrieved from https://search-ebscohost-com.goodwin.idm.oclc.org/login.aspx?direct=true&db=mnh&AN=17094278&site=eds-live&scope=site
Greiner, L., & Cummings, T. (2009). Dynamic Strategy Making: Real Time Approach for the 21st Century Leader. San Francisco, CA: Jossey-Bass.
Porter, M. (2015, November 27). What is strategy? Michael Porter explains common misunderstandings [Video file]. Retrieved from https://youtu.be/3Hd88eBgkw0
Reeves, M. (2014, December 22). Your strategy needs a strategy. [Video file]. Retrieved from https://www.ted.com/talks/martin_reeves_your_strategy_needs_a_strategy