Ratish Pandey | 23 Jul, 2021
SMEs account for being the largest business sector in every
economy across the world. Thus, subsidies and growth stimulation packages for
this sector are a part of every Government's national development plan. Not
only do they dominate in terms of numbers, but, are also the key drivers of
economic expansion and employment.
Despite their contributions, SMEs are a victim of high failure
and poor performance.
Why is that so?
Given the importance of this sector, it is critical to
understand why only some succeed and many fail.
What could be that one underlining element that could tip the
scale to more successes and fewer failures?!!
The answer is STRATEGIC PLANNING.
In-depth studies on SME's by experts reveal that businesses that
engage in strategic planning are more likely to succeed. The findings of these
studies suggest that the absence or presence of strategic planning is the
crucial driver of corporate success.
The importance of strategic planning, rather, flexible strategic planning, is exemplified by the increasing competitive
& volatile markets, that threaten the existence &long term viability of
What is strategic planning?
Strategic planning, in simple terms, is creating the roadmap to
reach that the organization's goals. For alignment & buy-in, all key
stakeholders of the company should be part of this activity.
It involves monitoring the environment, formulating the mission,
vision, and devising strategies to optimise the organisational effectiveness
and improve the market competitiveness.
What does Strategic Planning do for a business?
Strategic planning cushions SMEs from volatile business
situations. It enables SMEs to be proactive and vigilant when wading through
challenges. It helps the business to factor in elements required for
sustainability in a dynamic environment.
Strategic planning is crucial for getting alignment across the
organization. It helps articulate goals that all see from the same lens and
hence can channel their energies in the right direction.
It helps the management identify the skills and kind of people
they want in the organization - so helps them recruit right.
Clarity of direction enables you to define crisp KRA's,
effective prioritizations, effective teamwork, clearer communication and last
but not the least, makes you agile and responsive to market conditions.
All this results in an organization, that is focused, highly
productive & agile... if that be the case, the only destination is SUCCESS.
Never has Strategic Planning been more critical than it is today
for a business. As business environments are growing exceedingly complex and
uncertain, strategic planning methods enables the business to comprehend the
current position, map it against where they wish to be, and define how to reach
there. It integrates the company's mission, vision, targets, aspirations,
strategic decisions, and resources.
A flexible Strategic Plan can play a pivotal role in defining how
a business and its employees engage with opportunities and obstacles
Let’s take a look at some tried-and-tested strategic planning
Scouting the environment
Volatility and turmoil and a highly competitive market mandate
the firms to monitor the environment closely. Keeping a tab on the changing
industry trends helps create strategies that enable a company to respond
effectively to the ever-evolving market demands.
Vision and Mission
Employees come from various walks of life each bringing a
different set of values. To achieve the business goals one needs all to file in
to achieve those goals.
Inclusion of vision, mission and value definition helps provide
employees with the framework of where to head and how to conduct themselves
along the journey. The organisational principles serve as a general guideline
for issue diagnosis and resolution. It also guarantees that the company is
forward-thinking and customer-focused.
Establishing a time frame
It is critical to have defined Time frames, which is medium and
long-term planning. The majority of SMEs have stated that they employ three to
four-year strategic plans, implying that their owners/managers have a
medium-term outlook for their firms. They have found it successful. Setting a
time frame keeps the employees and managers on their toes, with a reminder to
accomplish pre-set goals.
Create the right environment with the right people
Business owners are often hesitant to disclose information for
fear of it falling into the wrong hands. As a result, to keep cards close to
the chest they hold strategic decisions with a small closed group.
The challenge here is that the people closest to the clients
have the best insight from the Client perspective but have no voice on the
table making decisions. To be a customer-oriented organization, and in line
with the market trends, ways and means need to be devised to allow everyone to
voice their learning and concerns. Initiatives such as these, not only bring
forth different perspectives but often offer solutions. More importantly,
increases employee ownership and garners a higher commitment, improving the
employee satisfaction score.
Profit-sharing, bonuses and non-monetary incentives
Employees are motivated by a healthy mix of monetary & non-monetary
For enforcing strategy implementation across the organization,
monetary benefits in the form of profit-sharing and performance bonuses can be
explored. On the other hand, non-monetary incentives as rewards &
recognitions also need to be factored in.
The employee motivation programs demonstrate and reiterate the
Company's commitment to its strategy and its accomplishment. Performance
stimulating rewards encourages employees to align their work & deliverables
to the Company's larger goals. Hence, this is a vital prerequisite for
businesses to implement effective strategies. Outcomes are positive when one
Evaluation and monitoring i.e. Keeping Tabs
One needs to conduct regular progress evaluations and periodic reviews.
Communication channels to solicit feedback from team members and give them
feedback need to be established. To maintain a competitive edge, regulating
operations on a routine basis is a must. The underlying principle of the
assessment and management strategy execution is to determine whether strategies
and objectives are in sync.
This close analysis allows for a business to evaluate,
deviations if any, from the predefined standards and identify corrective
A balanced scorecard is a method for evaluating a Company's
Typically, stakeholder demands and aspirations are of utmost
importance at the executive level (i.e., financiers, customers, owners, etc.).
Subsequently, objectives, operations, and internal processes are defined to
fulfil these demands.
How does one keep
track of the progress?
A strategy map provides the answer.
Strategy maps illustrate how different goals are connected and
provide paths for attaining them.
Consider strategic planning to be a process rather than an
Companies go through a myriad of cycles.
Strategic Planning is a repeatable process (strategy, budget,
scorecard, performance management, action plan). An exercise that one needs to
undertake every year.
Leaders have to inspire with their vision. Business men need to
avoid the trap of getting stuck working IN the business. They have to work ON
the business and keep an eye on the bigger picture. Take time every day,
reinforce the Organization Goal across the company, till every employee
recognizes it as one of his own.