Corporate Strategy Development: Tips from the Experts
Many of our clients are in various stages of financial planning for 2008 and beyond. At Smith & Howard, we know that a strategic roadmap is critical to the success of any financial plan –and any organization, for that matter. Among those that advise in strategy direction are management consultants such as The North Highland Company, which focuses on assisting in the creation and implementation of strategy for companies of any size.
Recently, Erin Wolf, Principal and office lead for the Strategy Services area of Atlanta-based North Highland, provided her thoughts on the importance of strategy development for middle market companies. Her article follows.
Corporate Strategy: For Companies of Any Size
Asking a Few Key Questions
All companies, regardless of size, are alike in various ways. However, sometimes the differences between mid-market and very large companies seem greater than the similarities. Large companies have reached a higher level of maturity and are now dealing with macro issues such as market leadership retention, vertical or lateral integration, new product introductions, mature product patent expirations, policy and process standardization, and stock price optimization. Middle market companies, at a different stage in the “business lifecycle,” are generally dealing with micro issues. These companies find themselves asking the following questions:
- As we grow, what new products, channels, customers or geographic areas should we be targeting?
- How can we reach the “next level
- How can we be successful in hiring top talent
- How do we execute succession planning
- How do we establish relationships with other players in the supply chain?
If these questions resonate with you or your executive team, you are probably wondering how your organization can get to the right answer. The path to the solution lies in the development of a strategic plan.
Why is a Strategic Plan Important
- Without a roadmap for responding to change, we are more vulnerable.
- Without knowing
- we want to be (strategy), it’s impossible to determine
- to get there (operations).
- Without a clear strategy, our plans and allocation of resources will not be aligned.
Early in a company’s life cycle, its primary (and sometimes exclusive) focus is on revenue generation. Management must build a strong customer base and get revenue flowing in order to attract capital and maintain operations. Whether the business is owned by a venture firm or looking to IPO, increased revenue is the first indication of financial strength. Management may not feel it needs an updated strategic plan because often a business plan was created when the company was founded. Executives already stretched with current priorities do not have the time to go through a rigorous strategic planning process. The need for a complex or long-term strategic plan seems less acute because the short-term is all-encompassing. Understandably, the organization’s strategy often consists of one goal: to sell more products and more services faster.
As a company begins to produce healthy revenues, it must migrate from being focused solely on sales to other aspects of its business. Does it want to expand its products or services and if so how? Should it expand its geographic focus or look to additional customer segments? Will the current delivery channels serve its future needs? Will its current competitors be its future competitors? Should the organization team with, merge with or buy other companies to reach its objectives faster? With growth comes complexity of decisions.
At some point in the company’s development, management also realizes the need to attract additional talent – top talent. Executives often have to consider succession planning: as a company grows, the leadership that got it to its current level may not be the best leadership to move it forward. Top executives may want to retire or move on to their next venture. The organization may need new skill sets or more specialized / dedicated teams to serve certain functions and may want to build a pipeline of talent.
Middle market companies that struggle with these issues require a strategic plan to provide a blueprint for future decisions and direction of the company. A strategic plan is not only an internal necessity but a strong signal to an external audience as well. It demonstrates that the organization’s leadership team is aligned in their goals and objectives, both in the near and long terms. Unfortunately, the perceived time, effort and financial resources required for strategic planning keep many middle market companies from embarking on
For businesses which cannot afford to engage in lengthy planning efforts that might encompass six months and $1MM or more in fees, there are alternatives. North Highland advises these companies to engage a consultant that provides a corporate strategy offering for organizations of any size. An initiative tailored specifically to a middle market company will involve a shorter duration and significantly lower fees, depending on the level of detail.
When engaging a Corporate Strategy proposal, deliverables should include:
- An environmental analysis of current and future internal and external factors affecting the company as well as a SWOT analysis.
- Creation or revisiting of mission, vision, values, and market differentiators.
- Corporate objectives that describe what the company wants to “look like” 3-5 years in the future.
- High level strategic initiatives to achieve corporate objectives.
- Identification of Key Performance Measures to ensure successful implementation of the plan.
Using this approach, a strategic plan becomes affordable from a financial as well as a time perspective for most organizations. So whether your company is challenged with market decisions or choosing a new CEO, developing and updating your strategic roadmap can greatly help guide your decisions.
ABOUT THE AUTHOR : Erin L. Wolf.
Ms. Wolf has over 20 years of experience in strategy formulation and implementation for a variety of organizations. Specific areas of expertise include corporate strategy formulation and execution, competitor analysis and research/business intelligence. Ms. Wolf has led and completed strategy engagements on behalf of CEO’s, founders, entrepreneurs, Boards of Trustees and sales and operations executives. She is Managing Partner of Suite Track. Other experience includes Bain & Company, Accenture and Goldman Sachs. Ms. Wolf earned her Masters in Business Administration from Harvard University.