Reasons Why Firms Skip Strategic Planning

Owners and managers of small and medium-sized businesses may be inclined to think that strategic management is unnecessary for their particular niche due to their relative position, customers served, and market share. However, this mindset may be the very reason they are currently limited in terms of overall success, growth, or expansion. Strategic planning is not simply the prerogative of Fortune 500 firms, but can yield tangible results for any sized organization that seeks to improve its competitive advantages. Because market forces have dictated more rapid rates of introduction of novel elements into processes and designs, the pressures to adapt and its challenges are prevalent and inexorably tied to the issues arising from strategic approaches for innovation, change, and imitation in order to implement progressive policies. Let us review seven reasons why firms may be reluctant to engage in strategic planning.

1) Prior bad experience – When plans are utilized to innovate, the failure rates are relatively high, and the visibility of the failure tends to be high as well. Therefore, it is not uncommon for managers who have felt the sting of poor formulation, implementation, or execution, being hesitant to expose themselves to potentially similar results. 2) Waste of time and money – Because there may be variability in time lines and budgets allocated for planning, as well as actual results, the process is often viewed as difficult and ambiguous. 3) Content with success – The disruptions caused to organizational norms could be threatening to senior managers who have achieved a certain level of success under the old order. 4) Fear of the unknown and suspicion -Management may believe that employee morale could suffer due to low self-efficacy regarding new roles or structures due to a lack of trust from previous layoffs or cutbacks. 5) Firefighting – The firm could be spending such an inordinate amount of time juggling crises that the potential for unintended consequences arising from strategic planning could cause it to be considered a low priority. 6) Laziness – The principle in physics that objects in rest tend to stay at rest and objects in motion tend to stay in motion could also be applied to leaders who are not willing to expend the personal energy needed to spearhead new initiatives. 7) Poor reward structures – When a company provides bonuses to those who deliver in the short-term and not those in the long-term, and additionally punishes those that fail in the long-term, the motivation is naturally lacking to undertake the laborious responsibility of a holistic analysis of operations and the environment.

To offset these excuses, it is vital that senior management embrace a team-oriented approach that evenly distributes risk and reward, while providing a broad knowledge base to participants in the process. Team members should be adequately trained and have sufficient experience, with a reasonable track record of success. The leaders and outside expert consultants of the team must be held accountable for setting and sticking to schedules, operating within budgets, acquiring necessary resources, coordinating with staff, and keeping meticulous records of activities. A sense of confidence must be imparted as a consequence of disciplined and orderly procedures, not blind faith. The gains from success should be based on a meritocracy so that both supervisors and individual contributors obtain their fair share of credit. Last but not least, the firm must be imbued with a culture of continuous learning that encourages not only the exploration of new prescriptions for attaining goals, but also support and encouragement in order to promote aggressive selection, implementation, and successful execution of plans.

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