Consulting engineering firms have been creating plans for years based upon the strategic planning model. Although many people dress it up differently, the model basically is used to identify where your business is today, where you want it to be in the future, and what you have to do to get there. It is not much different than designing a road - except it is more about people and strategy than dirt and concrete. The process is basic, but many things can go wrong. Some of these problems only are minor annoyances, while others can prevent the strategic plan from succeeding. The following is a list of six common pitfalls that could plague firms as they undertake the strategic planning process.
Not having the right people at the table
Who should be on the strategic planning team? This is a common question at the beginning of the planning process, but there is not a definitive answer. It depends upon a firm's organizational and ownership structure, as well as the individual personalities involved. Ideally, the team would not be any larger than 10 to 12 people. Groups much larger than this impede the level of conversation that needs to occur during planning retreats. The senior decision-making group of the firm should be part of the team since they are the ones that are going to make the plan happen. In some organizations, this is the board of directors; in others, it may be the management committee. Other potential candidates include representatives from business units or geographical branches, shareholders that represent younger members of the firm, or key Â“up and comersÂ” in the organization.
Further, the room should not be filled with Â“yes menÂ” willing to agree with the CEO just because of his or her position. The idea is to have men and women seated around the table who can think positively about the future and see the potential for ideas as well as the negatives. Each seat should be viewed as valuable real estate, and the person filling that seat needs to be a contributor.
Not facing the issues
A basic element of a good strategic plan is an assessment of where your firm is today. There needs to be a candid dialogue about the problems that exist currently within the organization. Understanding and discussing these problems helps develop a better strategy and also improves the process since it demonstrates to the participants that management is willing to address these issues. If ignored, it indicates to those participating in the planning process that nothing is going to change. Participants know that some of the issues are so fundamental to the organization's success that they must be addressed if the firm is to excel in the future.
There is a broad range of issues that may be included in the list of key issues. Some of the common areas include the following:
1) Organizational structure - Frequently, a firm's organizational structure is not working to achieve the desired goals. Over time, a firm may have changed the way that it conducts business but failed to make the necessary changes in its organizational structure. Restructuring also may be required to fit changes in a client's needs.
2) Leadership - Getting the right people into the right jobs is one of a manager's primary responsibilities. If the wrong people are in key slots, then even the best-laid plans for the future will fail.
3) Governance - A common problem is the lack of well-defined roles and responsibilities of the board of directors. In addition, some of the broader problems with governance have to do with the role of shareholders in the decision-making process and management's accountability to the board.
4) Failed initiatives - Often, management loses credibility as a result of too many failed initiatives. When this happens, people become cynical of the Â“next program.Â” This can be a major barrier to future change initiatives.
5) Lack of accountability - Accountability is very basic: holding people responsible for completing all aspects of their job. More broadly, it could be defined as doing what you said you would do. It starts at the top of an organization and works down. The CEO is accountable to the board, and the business unit leaders/office managers usually are accountable to the CEO. If this group is not held responsible, you should not expect the next level down to feel accountable.
A heavy-handed process
There needs to be a sense around the planning table that every person's word carries the same weight. In reality, the people in the room may have varying ownership and leaders hip positions in a firm, however, the spirit of the team has to be one of unity. If the CEO is too dominant in the planning process, participants will wonder why he or she did not just develop the plan. Of course, most CEOs know that a plan developed alone seldom generates commitment from others. Therefore, they want to have broader participation. The challenge is for them to pull back a little, and to listen to the contributions of others.
This is more common in founder firms, where the CEO, currently or historically, owned the vast majority of the stock. A wise founder understands that involving others in the planning process enhances the perceived opportunities for employees. I have seen many founders successfully use the planning process to illustrate their commitment in Â“handing over the reinsÂ” to the next generation. On the other hand, I have witnessed a few that only have proven what many already suspected, Â“Hank is never going to give anyone else an opportunity to be part of the leadership in this firm.Â” In this case, the smart people start dusting off their resumes and looking for a firm with a brighter future.
To be successful, a strategic plan needs to have a clear focus. This is not to say that the strategy has to focus on a single market. However, it does imply that the plan cannot be all things to all people. Sometimes, plans become all-encompassing because no one wants to take a position that may upset someone else. Thus, the strategy becomes one that includes each person's wishes. This is a democratic process, yet it does not produce a clear, definitive idea. Rather, it creates a plan that is the path of least resistance. These schemes become difficult to implement because no one can really define the direction; it goes in multiple directions. Imagine sitting in a meeting hearing your CEO describing a new plan that was developed using this approach. How could you get excited about it?
Contrast this with a strategy developed based upon broad input, but is well defined because of the debate that occurred in its creation. These discussions should include not only what the firm will do in the future, but also what it will not do. This may mean eliminating a current business unit, perhaps one run by a major shareholder. A big part of strategic planning is learning to say no. These are sometimes difficult discussions to have; however, a focused plan evolves when these decisions are made during the planning process.
Failing to establish accountability
Typically, the final element of the strategic plan is a list of action items to achieve the vision. Too often, this list is vague or contains too many items to be accomplished reasonably. The list needs to be prioritized if the plan is to succeed. Once the short list is developed, establish responsibilities for each action item. Others can participate on action teams, but one person needs to be held accountable for the completion of each action item. A common downfall of this process is that everyone wishes to be involved but no leader is identified. Six months later, the tasks remain untouched because no one took responsibility for moving them forward.
And as time goes on, it is important for the CEO to keep track of the implementation of action items. Their progress should be a frequent agenda item for board meetings or management committee meetings. There should be an expectation on the part of the management team that implementing the action items is not optional. When this accountability breaks down, the likelihood for successful implementation of the plan diminishes.
Lacking follow through
When the strategic planning retreat is completed and everyone goes back to the office, the worse-case scenario is that the plan never is documented. The flipcharts that were so colorfully filled during the retreat sit rolled up in the CEO's office because everyone has Â“real work to do.Â” Even if the plan is documented, it doesn't mean anything if it is not shared. Make every effort to share the plan with every employee as soon as possible. This step significantly increases the accountability in the planning process. I once worked with a group that was hesitant of this disclosure to the staff. Their concern was that if the staff knew, they would expect action. Imagine that!
Strategic planning takes a great deal of time, money, and emotional energy to implement. Depending upon the number of people involved and the role of outside consultants, most firms spend between $30,000 and $75,000 on the creation of a full-blown strategic plan. And just as costly is the emotional energy committed to it. Therefore, it makes sense to maximize the benefits that can be realized. The list presented here includes potential pitfalls to watch out for as you consider your first (or next) strategy. Challenge yourself: What can you do to prevent these impediments from retarding your strategic plan?Doug Thompson is a strategic planning consultant who has served design firms since 1991. He can be reached at 713-465-2227, or via email at firstname.lastname@example.org.