Six Ways to Determine If a New Strategic Business Plan Is Necessary
For many companies in the construction industry, strategy updates happen like clockwork on a set schedule. In fact, 64 percent of architecture, engineering and construction (AEC) firms that have more than 250 people engage in some form of formalized strategic planning an average of every 3.5 years, according to data compiled from ParCons’ State of Strategy in the AEC Industry study. While such a disciplined approach to strategy may sound admirable, it may actually create an adverse effect on a business.
The study indicates the ability of construction leaders to articulate a clear and compelling need for a new strategy is a key factor in the long-term success of delivering desired results. Updating a business strategy simply because it’s “time” does little to garner the buy-in of key leaders and employees who are ultimately responsible for carrying out the strategy.
Given the cost, time and energy a well-developed strategic plan requires, determining whether a new strategy is actually necessary is an important decision to make before investing the time and resources to develop and implement a new strategy. Following are six questions to help contractors determine if it is time to update their strategic business plan.
1. HAS THE ORGANIZATION EXPERIENCED SIGNIFICANT CHANGES IN LEADERSHIP OR OWNERSHIP?
When an organization undergoes important shifts in top management or ownership, especially if key players come from outside the firm, there is often a need to re-evaluate the strategy. Business owners should ask themselves: Does the strategy reflect the priorities and goals of the new leaders? Are there fresh ideas, goals or different priorities that new leaders want to contribute to the strategy?
Changes in leadership often mean a shift in direction. If the current strategy doesn’t lead to the goals the new leadership wants to accomplish, it may be time for a refresh.
2. IS THE EXTERNAL ENVIRONMENT DIFFERENT THAN WHAT WAS EXPECTED?
We live in a world in which massive change on a global and local scale is increasingly commonplace. If an unexpected shift threatens to undermine key assumptions in the strategy, it’s time for a refresh or—if severe enough—a complete strategic reset regardless of the existing strategy timeline. This kind of shift, be it technological, financial, competitive or client-oriented, can represent the single greatest threat or opportunity the firm will face. Recognizing the shift and responding quickly is often the difference between success and failure.
3. ARE THERE MANDATED CHANGES OR NEW REGULATIONS THAT WEREN’T CONSIDERED IN THE ORIGINAL STRATEGY?
Mandates that lie outside a business owners control can make developing a new strategy imperative. New government regulations may accelerate the need for an updated strategy. Previously unknown risks or liabilities may arise that need to be addressed. Demands from the board or owners also may dictate changes in strategy. If faced with mandated changes, business owners should use caution trying to address them in the context of the existing plan—shortcuts fail all too often.
4. HAS THE STRATEGY ACCOMPLISHED THE ORIGINALLY ESTABLISHED GOALS?
Strategic plans are often developed with specific time frames and objectives in mind. If the ambitions outlined in the strategy have been achieved, then it’s time the organization set a new and compelling vision and plan to keep it moving forward. If there’s still work to do, avoid the pitfall of disrupting a strategy that is progressing simply because “strategy refresh” season has popped up on the calendar. By nature, good strategies are long-horizon efforts focused on overcoming organizational inertia and aligning the firm with a unified goal. Constant changes of strategic direction confuse people and frequently slow an organization’s overall progress.
5. IS THE CURRENT STRATEGY TRANSLATING INTO MEANINGFUL AND MEASURABLE RESULTS?
When you see your organization dividing itself too thinly among too many competing projects and initiatives or struggling to make meaningful progress on critical priorities, it’s an indicator you need to step back and reconsider what’s really important based on a broader perspective. When people are working hard but “jogging in place,” strategy creates perspective and gets things moving. Monitoring progress and measuring results helps leaders honestly assess whether the strategy is really making a difference. On the other hand, if your strategy is generating the results you expected and appears well positioned to continue doing so, it may be smart to simply continue doing what you are doing.
6. ARE THERE SIGNS YOUR STRATEGY ISN’T WORKING?
No matter how hard leaders try or how thorough the planning process is, a strategy sometimes just proves to be wrong. If the organization has done everything possible to implement, evaluate and tune the existing strategy and it still isn’t working, then it’s time for a new strategy—no matter where the business might be in its original implementation timeline or planning cycle.
Before embarking on the next strategic planning effort, take the time to discuss and fully consider whether there is a compelling reason to make the investment. If there is, then proceed with confidence and without delay. If there isn’t, then step back and consider some alternatives before making a major commitment of resources and time.