Why doesn’t every company have a strategy?

Over the course of my career, I’ve had the honor of providing strategic guidance to small companies as well as to many of the more recognized corporations in the United States. In many cases, the smaller companies (less than $100 million in sales) do not have a formalized written strategy.

Logically speaking, it would seem that every organization would want to have a strategy and a tactical plan defined and shared throughout the organization. Truth is though, many middle market firms don’t, and in many larger firms, if a strategy is in place, it is not shared.

The first question to ask then is why don’t all organizations prepare a strategic plan?

The second is why isn’t leadership comfortable with delivering and sharing their strategic and tactical plans with their own people?

I’ve concluded that the primary reason that many companies do not create a strategic plan is not because leadership does not want to have this map but rather it is not versed in how to create one. In short, leadership would create a strategy if it could – it just may not know how.

This is because most companies evolve from a good idea executed and promoted effectively at the right time and place. As entrepreneurs, we are not taught about alignment between strategies and tactical plans or how to build a tactical plan that supports a strategy.

Instead, we build something or offer a service for a particular client. It is received well and we think someone else in a same or in a related industry might value it as well. More often than not, that is how a new business is born.

There isn’t a formal discussion about trends in the industry, where competition fits, what the compensation plan should reward or how the company should react to various scenarios or changes in the business environment. It is simply about doing something well and then adding another feature or tweaking the existing product or service – if another client wants a slightly different kind of solution.

As to why strategies aren’t shared even when they are created, I think that there are a lot of reasons for that.

To begin, I think every leader relies on his or her own credibility to effectively lead. If a strategy proves to be ineffective – and sometimes the strategy can be correct but the wrong people are in place to implement it – the leader feels that it diminishes his or her stature and therefore the capability to lead. (Surprisingly, even if the strategy does not “work” out of the box, having one improves the leader’s stature – more on that in my next post.)

In some cases, there is a paralyzing fear, that someone will share the strategy with a competitor. That’s a real concern but not only can that risk be mitigated,  it is also a risk that must be taken.

In either case, however, the leaders of these organizations are not fulfilling one of their primary responsibilities: developing the next generation of leaders. They are, therefore, putting their companies at risk.

Questions to Ponder:

  1. Why do you think some companies don’t have a formal written strategy, and for those that do have one and don’t share it with their employees, why do you think that is so?
  2. How would you address those concerns?
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