12 horrible fates that await companies that don’t do effective strategic planning

Companies misdiagnose their problems all the time. They often 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.

It's easy to get caught up in the daily routine of doing what seems to make sense in the moment, following along with what you think should be done and what you see other people doing. The problem with this is that why you do things is more important than what you do. If your attention just goes from problem to problem, you may never get to the strategic issues that are causing all the problems.

And if you don't even recognize the flawed strategies at the root of your problems, then when your fate comes to be you 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.

Examples of how ineffective strategic planning can doom you to a horrible fate

When companies don't do effective strategic planning, they:

1. 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 often behave as if they are incentivized to bid everything they find. The reality is that they never reach their full potential because their experience, staffing, resources, and qualifications end up being a random collection that was chosen for them, instead of a strategically chosen collection that positions them for market dominance.
2. End up with no differentiators. What strategic planning does is define the differentiators the company should develop in order to achieve its market goals, and provide new business targets that will enable it to develop and reinforce those differentiators. When everybody is free to define the company’s identity to be whatever they think will win each new proposal, the result is that every bid carries a different message and the company's growth is directionless. By being everything to everybody, they end up being nothing special.
3. 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 in various circumstances and then applying that to their proposals. Another outcome when companies don't do this is that their messaging depends on who wrote the proposal.
4. 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 steal your customers and prevent your growth.
5. 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 that turned out to be the most competitive kind. Now you have no wins, and no budget to go after better leads. You end up having to go after new leads in panic while pinching pennies instead of being in an advantageous position to beat your competitors.
6. 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.
7. 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 margins. Opportunistic companies have more risk, lower win rates, and are less profitable than strategic companies as a result.
8. Become limited to competing on price. If you don’t have a competitive advantage or a strong value proposition, all you can do is compete on price. If you are Walmart, you can grow a business through high volume and low margins. If you are competing against Walmart, then good luck. However, your overhead is too high. You aren’t Walmart. 
9. 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.
10. Miss positive trends and end up stuck in negative ones. A key part of strategic planning is choosing where to go next. Opportunistic bidding is about ending up some place that looks comfortable (but never is). 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.
11. 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? And while you may think you're building qualifications for future bids, the reality is you're building a weak foundation that won't support what you want to build and are more likely to end up with a pile of rubble than a palace.
12. Occasionally get lucky, convince themselves that they’re smarter than they are, and never are 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 to convince themselves of how smart they are and to reinforce their bad habits. But they don’t prosper and they don’t have the strength to weather bad business cycles. When budgets are rising they can get by. When budgets are being reduced, they are the first to wither.

Realizing a better fate requires more than a quick fix

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.

When companies start to realize that they've grown like weeds and it's holding them back, they often try to implement better bid decisions. The problem is that better bid decisions aren't something you can just do. They are one of the the end products of strategic planning. You can't just wake up and start doing better. You have to rethink everything. Remember, it's not the things you do that matter, it's why you do them.

Unfortunately, by that point the problem won't be your ability to think strategically. The problem will be that all of your internal processes, the way your staff goes about doing their jobs, and even your corporate culture will all work against trying to do things strategically. 

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.