Which of these strategic mistakes will you make in 2024?
ILLUSTRATION BY RUTH MACAPAGAL
When my team and I advise companies worldwide on their corporate strategy, we repeatedly see that most companies do not know how to plan correctly. As a result, they miss high-profit growth opportunities, lose valuable market share to their competitors and spend vast amounts on unnecessary expenses.
Here are six of the most common strategic planning mistakes we have seen and how to avoid them:
Mistake No.1: Hope is not a strategy!
In our decades of experience, we have seen that most companies start their year with what is supposed to look like corporate strategic plans but can instead be described as “hope.” Most companies go through some form of regular strategic corporate planning exercise at least once a year, but their plans are still flawed at best and, most of the time, resemble “hope” more than strategy. No wonder most companies stay behind their growth targets and then blame it on some “external” factors, like “the economy” or market forces they say they could not predict.
You have no control over the economy, not even over your competitors, but you do have 100-percent control over your company’s productivity. Rigorous, correct planning is fundamental for achieving long-term corporate success. I have never met any self-made billionaire from any industry or country who did not understand the importance of having a clear long-term vision for their business and the right plans to achieve it.
Remember: a small hole can sink an entire ship. A small mistake in planning can cause your entire year to go off the rails.
Mistake No.2: The WFWS virus
While most companies content themselves with being “busy,” they fall into the trap of thinking that “being busy” automatically translates into “being successful.” Nothing could be further from the truth. I have said it before and it bears repeating: Design precedes execution. Remember this vital principle to guard yourself against the “work for work’s sake” (WFWS) virus before it spreads throughout your organization.
I recall a conversation with the president and owner of a large family business conglomerate reaching hundreds of millions of consumers across many countries. He told me in confidence that they have whole departments doing reports that no one ever reads, that all top executives are regularly stuck in meetings with 30 people or more where only three ever get to speak, and that the whole organization was reeking of inefficiency.
How did it come to this? They fell prey to the “more is better” syndrome: more meetings, people and reports. This happens when people stop to plan correctly and rigorously.
Mistake No.3: No clear long-term vision
Planning long-term is crucial, particularly for family businesses and business owners committed to their ventures for an extended period. This approach is also beneficial for any organization. Having a clear, long-range vision and road map is essential, as it enhances the quality and effectiveness of short-term plans. Every action should align with the company’s long-term strategy, objectives and goals. This forms the foundation of successful enterprises.
Flexibility and adapting plans are necessary, but these adjustments can only be effective with a well-defined long-term vision and objectives. The definition of “long-term” varies depending on the business type and industry.
For instance, one of our clients, an American 50-year-old family business, realized the need to shift its strategy and direction after my team and I developed a 10-year vision and strategic road map with them. As a result, we discovered more profitable opportunities. They would have missed this insight without the new long-term vision we developed with them. Our long-term plan also included a trend analysis, which revealed an impending challenge that could have significantly impacted their profits. This foresight was possible only because of our extended planning horizon.
Mistake No.4: Plans are not detailed enough
Many businesses need to pay more attention to the importance of thorough planning. Consider a plan akin to a tree’s roots; the deeper and more robust the roots, the more resilient and mighty the tree becomes, capable of withstanding any storm.
In principle, this concept is widely understood, yet in reality, most companies allocate disproportionately less time to planning than execution. They tend to focus excessively on being occupied with tasks and engaging in activities to be active. Instead, they would profit more from first laying down comprehensive, well-thought-out plans. Many fail to achieve their highest capabilities and are easily caught off guard by this lack of strategic preparation.
Mistake No.5: Lack of principles and assumptions behind plans
Often, the underlying assumptions of your plans, rather than the plans themselves, hold the most importance. This means that for every significant decision you make, especially in strategy, it’s vital to clearly articulate and record the thought process that guides your choices.
This approach is critical. It allows you to revisit and critically assess your assumptions later, pinpointing missteps. This reflection is invaluable for identifying areas where your understanding may be lacking and where expert guidance could be beneficial. In the end, such a method can drastically refine your decision-making skills.
Mistake No.6: Not obsessing about trends
As a business leader, CEO or business owner, you should have two obsessions: your customers and trends.
The topic of “trends” is a personal favorite of mine in planning, mainly because it’s so often neglected in most corporate strategic planning sessions. Many companies need to dedicate more time to foresee and interpret trends accurately. This oversight includes understanding how these trends impact their businesses, the opportunities they present for growth and expansion and how to capitalize on them.
Moreover, these businesses frequently overlook the potential risks associated with these trends, such as the emergence of unexpected competitors that might threaten their market position.
A few years ago, we developed a strategic road map for a company that has since become one of the most prominent and successful corporations worldwide in their industry. Through this process, the company’s leadership realized they needed to prepare for shifts in consumer behavior. They hadn’t considered the likelihood or the favorable trends that might lead to such changes.
However, after our thorough analysis of trends, they recognized the need to alter their strategies to address these unanticipated challenges, which could erode their market share if unaddressed. Consequently, they revised their approach, which not only allowed them to maintain their leadership position in existing markets, but also allowed them to dominate in many countries around the world and become one of the industry leaders globally.
Ensure you avoid the six mistakes above, and you will already have a head start in 2024 and rise above your competition! INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email [email protected].
