Building Business Strategy

Without a carefully crafted business strategy, you are essentially flying blind. With a business strategy for your firm, you can guide your way through uncharted business waters. A well thought out strategy enables you to properly allocate resources, communicate direction to employees, customers and other stakeholders.

Former U.S. President and military commander once said "a finished plan is generally worthless, but careful planning is absolutely essential." In other words, while a given plan may change based on what happens with your business, taking the time to thoroughly examine where your firm is now and where it is headed gives you the information to make course changes intelligently, against the backdrop of a clear business strategy.

But just having a plan, or even doing the business strategy, is not enough. The real key is implementation. Research in the last several years has pinpointed many reasons why business plans fail. Most of the reasons have to do with "operator error" and include the following:

1. Poorly understood strategy -- most organizations have a strategy but most people in most organizations don’t know what that strategy is. One study revealed that leadership teams spend less than one hour each month discussing strategy.

2. Weak strategy execution -- Studies show that up to 90% of strategies fail due to execution.

3. Entropy is an inverse measure of a closed system’s capacity for change. The more entropy, the less the system has capacity to change. Businesses are systems and, as such, are susceptible to entropy. Once a business makes plans, the chaos of everything changing around it gradually erodes those plans. An organization must have a systematic way to offset these forces or it eventually will become ineffective.

4. Lack of a systematic approach – When an organization reaches a certain size, different people or departments handle different functions. Lack of alignment is a possible consequence, that is, sales, marketing, accounting and other vital functions are not working together.

5. Impractical implementation methods – One way this can happen is to employ outside consultants who do not work regularly with small business. They may want to impose expensive solutions that are fine for a big company, but can’t produce the ROI a smaller business requires.

6. People are not engaged – An engaged worker is one who is personally committed to the goals of the company. Unfortunately, 90% of the time what passes for commitment is compliance. If you cannot get people engaged, no improvement will last.

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