Often caught up in day-to-day operations, it's easy for management—especially management in small to mid-sized companies—to let strategic planning rest on a back burner, if it's addressed at all. Lack of strategic planning is often due to three factors:
1. time constraints.
2. limited knowledge of strategic planning and its process.
3. little or no understanding of the external marketplace.
Because strategic planning is your company's future, it's important to carve out time from the present to secure your business' place down the road.
Two years ago I was asked to participate in an evaluation of a assessment tool that would help a president of a firm strategically decide what might be the future of her company. At that time, the company was primarily founded on what was then a huge market of outplacement services. Her company offered everything from orientation of downsizing, resume building, executive placemen,t and personal network development. Candidly, the president noticed a new product with benefits stronger than others the market already possessed. The product by definition was contrary to her market niche, enabling and assisting companies in the hiring and retention process by up to 70%. By establishing a relationship with the developer, strategically the company was positioning itself for servicing both sides of the business puzzle—downsizing as well as hiring and retention. Little did she know that we would have such a shift in unemployment. Today, that same company has made the shift and the new product line is now a major focus of what they offer. A strategic analysis of the future opened markets and most likely will enhance its profitability in years to come.
Take another example—a company that ships over a thousand FedEx packages a day and a similar amount of UPS packages with 85% of their business being conducted outside of their own regional markets both wholesale and retail. The firm, based in the "electronics" age, focuses on the repair of most electronic components such as VCR's, camcorders, and TV's, in addition to electronics that are related to autos. With the advancement from electronics to computers, this company has only varied its strategic position by entering into another even more competitive, very "slim-margined" computer repair business. As companies, such as Best Buy, started to offer their own internal repairs, the repair business found that it was cherry picked on what items or problems to service. Undeniably, the referral company now would take the most profitable and easy work and outsource the more complicated items. More time and skill is needed for an even slimmer market.
This company is facing the dilemma of trying to imagine what their company will look like in years to come. It’ now easier and cheaper to throw out a 2- to 3-year-old VCR than to repair it. Camcorders and TV's are not much better as a repair item, and the same is true of most other electronic or even computerized items.
The first company made a proactive, calculated move that's paying off to at least open the door to what may arrive as new opportunities, whereas the second made a choice that is leaving the company less competitive and more reactive.
When looking at your company strategically, it might benefit management to evaluate core strengths and to question what opportunities may arrive. Follow and read trend publications and do not follow the herd. In the early 1900's, when transportation was changing, the train industry had the opportunity to purchase and control both air and auto industries. However, they saw themselves in the rail business instead of the transportation industry, and they regrettably lost out on one of the greatest business opportunities ever.