Most people would agree that the primary goal of a business is to grow profits on a sustained basis. However, a Bain study showed that only 20% of companies were able to grow profits more than 5% a year over a 10 year period. On closer analysis, what set the sustained winners apart from the rest was their ability to develop a strategic plan and execute it, a practice referred to as strategic management.

Strategic management is a way of thinking, planning and acting where the organization stays focused on long term goals and means to achieve them. In other words, it’s how the best companies compete and win.

One need look no further than WalMart vs. K Mart, Walgreen vs. Eckerd, and Nike vs. Reebok to appreciate the impact of strategic management.

That said, very few companies are managed strategically. We know this from our years of consulting and from the literature. We see further evidence from the responses to our 2008 Summit Performance study where we examined the adoption rate of several core strategic planning and execution practices. Although most respondents (~90%) considered strategy communications and job alignment to be highly important, only a few (~40%) said these critical practices were present in their own organizations.

So why don’t more companies plan and act strategically? Certainly there are more than enough books about strategy and strategic planning, and plenty of consultants willing to help. In looking at the problem over the years we have identified three primary reasons. First, not all books and consultants explain the relevant concepts and processes in an accurate and practical way. As discussed below, good strategic planning and execution is difficult and there are many misconceptions about how best to do it. Although there are many good strategy experts, there are just as many that rehash old approaches and ignore much that has been added to the practice over recent years. Second, some companies begin the strategic planning and execution process at a place that is not appropriate to their stage of development and abilities. They might, for example, begin communicating the strategy and aligning budgets without properly defining their differentiated customer value proposition or the internal capabilities required to support it. Third, some companies may start at the right place but then try to achieve too much too quickly. Effective strategic planning and execution is a whole-company process involving an integrated set of activities, many of which are new to an organization. To persist, these new activities need to become part of the organization’s way of doing things i.e. its culture. Culture change is typically a slow process that can take years to implement. Efforts to hurry the process are usually counterproductive.

These three challenges are not insurmountable but unaddressed they can seriously undermine a strategic management implementation project.

As you think about your own strategic planning and execution process consider the following questions:

1. Have we identified the appropriate world class strategic management program and practices?
    
2. Are we beginning the upgrade process at a place that is in line with our current level of strategic management competency?
    
3. Are we attempting to upgrade the process at a pace that is appropriate to our organization’s capacity to change and grow?

If you answered no to any of these questions or are not sure how to answer them then consider asking other members of your management team to determine what the consensus is. And, since this is our specialty, we of course would be happy to meet with you to discuss the right program, place and pace to turn your business into a strategically focused and managed organization.