The 10 common errors in many strategic plans

Many companies have strategic plan documents merely for showoffs. Some companies write strategic plans for compliance purposes. Others use the documents to get loans

Many companies have strategic plan documents merely for showoffs. Some companies write strategic plans for compliance purposes. Others use the documents to get loans or equity. For example, a business seeking loan financing may hire any advisor to write a strategy and business plan for purposes of obtaining a loan. Once the loan is got, the document is usually parked or put in the drawer.

In many companies, however, the strategic document is left to rot in the drawers because few people understand it. Many “strategic documents are written like research papers.” The documents are like literature reviews of business models like SWOT, Michael Porter’s Five Forces model, Balanced Scorecard, and the Product Life Cycle, to mention but five. Such strategic plans fail the “organic test” or contextual test – one can easily replace the company name and the document becomes for another company!

That is how generic such documents can be.

The common errors I find in many “strategic planning documents” are:

  1. There is no clear strategy articulated in the Strategic Plan document. What are the company’s strategic choices? What is the company’s business model? You will open page after page, and such information which critical in defining the strategy cannot easily be seen.
  2. Inconclusive stakeholder engagement is evidenced by a lack of measurable indicators of what winning means to the company’s stakeholders. I usually find weak linkage, if any, to the company’s defined stakeholders, SWOT analysis, balanced scorecard, and strategic pillars or key focus areas.
  3. The External Operating Environment analysis is often theoretical as has not been applied to the company’s strategic choices… When you pick a copy of the company’s strategy you will notice a detailed assessment of the external environment using mnemonics like PESTLED or slightly adjusted, either way, the analysis covers political, economic, social, technological, legal, environmental or ecological and demographic factors. These are often listed and explained. Usually, these are examined in isolation. Any other company can copy and paste them, and they fit into their strategic plan. That is one of the red flags of a research paper strategy document!
  4. The ‘balanced scorecard’ is usually not properly aligned to the four Balance Scorecard (BSC) perspectives of FLIC – financial, learning and growth, internal business processes, and customer focus. The Financial Perspective, like other perspectives, are not usually when defined and articulated and are usually misleading.  Review your strategy for the scorecard and examine its completeness. Most of the time, the stated targets in each perspective are not measurable.
  5. The financing strategy of the plan is usually not appropriately defined and elaborated yet this is the critical component of the strategy. Even then, the financing is often not linked to the strategic pillars and balanced scorecard! You will come across strategic plans with planned projects for which there is no planned source of financing to implement them! The strategy is about finding ways to win within your limited capabilities. You strategize to find the right mix to optimize value given your resource constraints.
  6. Often, you will open each page in the ‘strategic plan document’ and fail to find where the desired future of the company is defined. What kind of strategic plan is that??
  7. The budget for the implementation of the Pillars/focus areas is usually not clearly defined. If there is no budget, the strategy is merely a research paper. It is for this reason; many strategic initiatives remain outstanding after the strategic planning period is over.
  8. Many times, the company’s strategic objectives or pillars identified are not linked to vision, mission, and structure for effective execution. This kind of mismatch creates dysfunction since without linking the strategic objectives to the vision, people lack the reason for doing what they do.
  9. Strategy to structure alignment for effective execution is not evident. It is common to find companies first conduct human resources review, and thereafter, embark on the strategy review or formulation exercise! Yet, the corporate structure must always be aligned to the corporate structure. That means, you start with crafting an organic strategy, and then re-drawing the structure to implement it.
  10. The contexts used in the draft strategy is often not elaborate enough to justify strategic choices specified. I could go on and on. Having read over 500 strategic plans of many businesses as a consultant, I know that some companies survive by accident. They are just in a good business for which entry is difficult due to legal restrictions and or huge capex. Otherwise, based on a sound strategy, such companies don’t operate at their full potential. Unfortunately, they continue to deliver mediocre results because generally, no one cares!

Taken together, strategic planning processes should be collaborative. In many cases, on the surface, the strategic plan may look neat, well-articulated, and covering all key ingredients. However, on a closer look, it is written like a research paper with theoretical text that one can copy and paste into another document and fit there. A clear strategy must be organic with specific choices for winning considering the internal and external environment.

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Copyright Mustapha B Mugisa, 2020. All rights reserved.

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