The concept of sustainability has become imperative for businesses of all sizes in every industry. CEOs are now tasked with the critical responsibility of ensuring not only short-term profits, but also the long-term viability and success of their companies. A lack of planning by CEOs can significantly affect the future success and resilience of their companies in an increasingly competitive market.
In this article, Work It DAILY experts from Vistage discuss how failing to plan for risk can miss opportunities for growth and innovation, fail to mitigate potential risks, and jeopardize a company’s future. Read on to learn about the importance of planning for business sustainability and how to start a long-term plan for your organization today.
Our world moves so fast. The business opportunities are almost endless. Your company can survive without planning, but it will likely never become sustainable. There is nothing wrong with a volatile business. I know many CEOs who have these types of businesses that are run by their sheer tenacity. They provide a decent living and pride of ownership.
However, if you want to break out of this and create a sustainable business that grows continuously, planning is a must. At first, the planning may be all in your head. But as the number of employees increases, your thoughts and plans must be put on paper.
Owners are bombarded with threats and opportunities every day. Without plans, decisions can and will be haphazard. Making wrong decisions is not sustainable. As you grow, your employees will face problems that they need to solve in real time. an unhappy customer, a quality control issue, or on the interesting side, a sales prospect. Written plans, which employees are closely familiar with, allow them to make a decision and know that the decision is in line with the company’s goals, company plans.
The most important and long-term planning starts with your core values. These should be the only basis for planning that rarely, if ever, change. Core values define behavior, behavior that is aspired to and sometimes not attainable. For example, my company’s core values were integrity, home/life balance, and relentless improvement. Honesty is one of those values that in its purest sense is aspirational and unattainable, but that’s no excuse to stop striving to be 100%.
The next level of planning is the more traditional concept of long-term goals. These goals can range from five years to 20 years or even up to 100 years. These goals help the CEO avoid shiny object syndrome. Visionary CEOs see opportunities as often as they wake up in the morning. Long-term goals are especially effective in providing bumpers and guidelines for new initiatives.
Core values and long-term goals help keep you focused and help keep the team focused. Focus happens when you know when to say yes and, more importantly, when to say no. With focus comes stability. Stability is good.
Mark Feckler is a retired CEO and currently chairs the Vistage CEO Group, of which he was a member from 1991-2002. He is passionate about generating great ROI for his member CEOs.
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Do you have a plan? Or do you have a strategy?
You need both. And you should know the difference.
All too often, companies and leaders relax in a large desk room with coffee and snacks, a whiteboard and Post-it notes… and engage in “strategic planning”.
I did it myself.
What I want to be clear about is this. Strategy is not a plan. A plan is not a strategy. And yet, you must develop both or your company is doomed.
You control the plan. The plan is secure. The plan is about your resources, your people and your costs. Are you building a building? You train, hire and fire. Are you launching a new product?
You don’t control the strategy. It’s a series of interconnected decisions that you make.
You have what they call a “theory”. A hypothesis on how to WIN in your business.
You can’t show it on the balance sheet. But you BELIEVE that if you play on THAT playing field or in THAT sandbox, you will outperform your competition. It is in that area that you will “win”…revenue, market share or sales.
Conversely, a plan consists of tactics or a set of actions to put your resources into service of the strategy.
Where I have seen companies succeed and struggle are two main areas. First, how well can they distill the strategy down to each employee? Second, how often do they review the strategy and test their theory against relevant information?
“If you don’t know where you’re going, any road will get you there.” – Cheshire Cat, Alice in Wonderland.
Kirsten Jurich is the former CEO and current Vistage Chair. As a clinician, professor, author, and executive, she harnesses this unique blend and creates learning environments for managers to become better leaders, spouses, and parents.
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When thinking about why this is important for SMB owners, I’m reminded of a recent quote from Elon Musk:
A prime example of this is electric cars (GM, Ford, Toyota, Honda, etc.). Planning for this is difficult, but essential to their success.
Even for consumers, think about this. When you own a gas powered vehicle, you have a high level of confidence because the infrastructure and service model is simple, consistent and reliable. As we move toward electric vehicles, consumers must plan and must have a strategy, or they will be stuck in traffic. My brother experienced this recently on a road trip from Florida to Maine in his new Tesla.
Our business owners have a similar situation. their business credibility is not what it used to be and now is the time to stop and say. In the business world, the rear view mirror is always clearer than the front window.”
Scenario planning. Prepare for possibilities and probabilities. Learn to reduce the gap between success and failure and minimize risk, not eliminate it. SBA – 50% fail in first five years. The main reason is the lack of financial planning and management.
Be able to withstand economic ups and downs. investments in growth and safe capital are at risk. The National Center for the Middle Market found that there was a 32% drop in growth compared to those with a plan. Sustained success requires rigor and discipline around strategic planning.
Consider the following when working towards this: understand cost, growth and performance drivers, know mission/behaviour/consequences (right work/right roles/right people/right time) and assess the current playing field. Who is changing the landscape? What are we doing? What are we worried about? What are the major engines? How do we drive consumption and repeat business?
Mike Thorne is the former CEO and current Vistage Chair. He leads and facilitates a group of trusted consulting entrepreneurs and CEO partners in New Hampshire and Maine.
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