Strategic planning pays off. It's clear: Organizations that engage in strategic planning and follow through on their plan are significantly more successful.
The lack of effective planning and the consequences are evident. Research suggests 80% of companies are dissatisfied with their planning and budgeting processes.1 Only 23% of companies use a formal strategic planning process to make important strategic decisions. In 52% of companies, these decisions are made by a small senior group.2 95% of the typical workforce doesn't understand the organization's strategy.3 86% of executive teams spend less than an hour a month discussing strategy.3 60% of organizations don't link strategy and budgeting.3 Of 26,000 start-up business failures, 67% had no written plan.4 More than 70% of companies with a strategic plan don't execute it.3 Only a third of Directors of 1,000 public companies say their company is achieving strategic success.5
Yet the payoff from planning is large. HIGHER PROFITS AND GREATER RETURN. Businesses using strategic plans are 12% more profitable.6 "...a strategic direction affecting resource allocation at the corporate level to growing businesses in which the firm is well positioned improves performance of firms that plan strategically by more than 1 percent return on capital."7 DOUBLED ODDS OF SURVIVAL. "Strategic planning at a point in time appears to double the likelihood of survival as a corporate entity."7
LESS RISK. Formal planning reduces risk (as measured by variability of earnings).7 ACHIEVEMENT OF GOALS. In companies surveyed using formal strategic planning processes, 64% of leaders say planning leads to strategic decisions that allow the company to meet its goals and challenges.2
REAL, MATERIAL BENEFITS. The top 10% of large companies experience real and material benefits from their planning processes - far beyond those of average companies. They’re enjoying improved control over costs, increased foresight, improved operational performance, increased transparency and insight into the business, a sense of shared purpose, and an increase in revenue of at least 1%.8
1. Accenture 2. McKinsey & Co. 3. Balanced Score Card Collective. 4. Terri Zwierzynski, www.Solo-E.com. 5. McKinsey & Company. 6. M3 Planning. 7. Noel Capon and James M. Hurlburt, Columbia University, and John U. Farley, University of Pennsylvania. 8. FEI Research Foundation and The Buttonwood Group LLP
Be sure to develop a compelling vision, a strategic plan with strategies and action steps to reach the vision...and then implement the strategies and action steps.