Companies misdiagnose their problems all the time. They see a problem, they try to fix it, and end up struggling because they don't realize they are treating a symptom and not the underlying cause. Sometimes the real cause goes all the way back to their approach, or lack thereof, to strategic planning. And if they don't even recognize that there is a problem, when their fate comes to be they may have no reason why it turned out that way. To avoid these horrible fates, it's not enough to create a strategic plan once a year that sits on a shelf. It has to be an effective plan that people use like a tool.
When companies don't do effective strategic planning, they:
- Become the kind of company that bids anything. One of the things a strategic plan should do for you is provide the criteria that define what the company wants to bid. If you are bidding anything, it’s because there is nothing telling you not to. Or more accurately, nothing telling you what criteria an opportunity must fulfill, in order to be worth pursuing. Without specific criteria that are used like a filter, companies are usually incentivized to bid everything they find.
- End up with no differentiators. What strategic planning does is define what the company wants its differentiators to be and provide new business targets that will enable it to develop and reinforce its differentiators. When everybody is free to define the company’s identity and anything gets bid, the result is that every bid carries a different message that is intended to make the company into whatever it needs to be to win that bid. By being everything to everybody, they end up being nothing special.
- Can't come up with good themes for their proposals. Most proposal teams start from scratch trying to figure out their message, when they should be starting from a playbook called a strategic plan. They should be referring to the strategic plan for descriptions of how the company should be positioned and then applying that to the circumstances of the proposal. Another outcome when companies don't do this is that their message is completely different for each proposal or depending on which business unit wrote the proposal.
- Don’t create any barriers to entry for competitors. When you have a wide variety of customers and business lines, you end up with no real depth and no barriers to entry that would prevent other companies from competing with you. By strategically developing and reinforcing your differentiators, you increase the level of difficulty for other companies to compete with the same customers and for the same types of contracts.
- Run out of money chasing low quality leads. If you don’t strategically apply a filter to what you bid, then it’s easy to wake up and realize you have no budget left to pursue more leads, because you wasted it all chasing low-hanging fruit. Now you have no wins, and no budget to go after better leads. So now you have to go after those leads pinching pennies instead of to the best of your ability.
- Graduate their size standards without having a reason for companies to continue to team with them. Companies often realize that they need to be strategic when they are about to exceed their small business size standard. Once they cross that line, they need to have strong reasons for companies to team with them. But those reasons (customer relationships, technical capabilities, infrastructure, etc.) take time to develop and by then it’s usually too late.
- Get stuck with the work more strategic companies avoid. Strategic companies have higher win rates. Opportunistic companies usually lose when they compete with them. What this really means is that the bids the opportunistic companies usually win are the ones that the strategic companies didn’t want. This usually translates into high risk and low margin. Opportunistic companies have more risk and are less profitable than strategic companies as a result.
- Become limited to competing on price. If you don’t have a competitive advantage or a strong value proposition, then all you can do is compete against price. If you are Walmart, you can grow a business this way. If you are competing against Walmart, then good luck. You aren’t Walmart.
- Suffer from overhead rates that creep higher and higher. One of the things strategic planning does for you over time is create economies of scale that help to keep your overhead down. When you are spread out with lots of different customers, lots of different business lines, and no economies of scale, your overhead will creep up over time making it more and more difficult to compete on price.
- Miss positive trends and end up stuck in negative ones. Strategic planning is about choosing where to be. Opportunistic bidding is about ending up some place. Opportunistic bidding results in jumping on trends that are fading. A trend that is fading is a declining market. When you go from one to the next, it makes it even harder to break away from opportunistic bidding and become strategic.
- Let their contracts define them, instead of defining themselves to attract more contracts. Whatever contracts you win define the composition of your company's staff, its capabilities, and its references. Without a strategic plan, a few years down the road you'll have a random collection of projects. Who knows what company you will be, or whether those contracts will be the foundation you need to pursue more contracts?
- Occasionally get lucky, convince yourself that you’re smarter than you are, and never be able to repeat it. Sometimes an opportunistic company shows up when a customer is ready for a change and gets lucky. This makes it easy to convince themselves that what they are doing is working and that their insight is so good they don’t need formal strategic planning. They win just enough business to get by and reinforce their bad habits. But they don’t prosper and they don’t have the strength to weather a bad business cycle.
The biggest problem with the horrible fates that await companies that don't do effective strategic planning is that the only cure is to stop how you are bidding now and bid strategically. This can be very disruptive and it's hard to get your staff who have been trained into bad habits to go along with it. It can even result in a drop in business for a year or two while you make the investments needed to be a strategic company in the future. Failure to have the courage to face this pain only means that your fate will get worse. It's far better never to let yourself even get into that position.
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Carl is the Founder and President of CapturePlanning.com and PropLIBRARY.
The materials he has published have helped millions of people develop business and write better proposals. Carl is an expert at winning in writing. He is a prolific author, frequent speaker, trainer, and consultant.
Carl can be reached at firstname.lastname@example.org
To find out more about him, you can also connect with Carl on LinkedIn.
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