Benchmark Employer Advice, advice-centre
Is it really so important to have defined vision in order to take your business forward? Or should you just go with the flow? Nick Green looks at the vital role of strategy in uncertain figures.
To quote John Lennon 'Life is what happens to you while you're busy making other plans.' To anyone doing business throughout the past few years this predicament will sound very familiar. When the economy is fragile or in recession, few are ready to contemplate formulating any kind of plan or strategy. To most it seems not only practically impossible (there's no time to spare as you try to keep the business trading) but futile. After all, if you don't even know what tomorrow will bring, then how can you possibly map out the two or three years ahead?
However, this stance is a risky one. The business that believes it cannot operate strategically is forced by default into a reactive position, steered by little more than the whims of its market. Of course, such as business can still grab opportunities that arise, and indeed may consider itself better placed to do so, being unencumbered by long-term plans, but what looks like agility can quickly turn into instability, especially when the market takes a downturn. Without a clear direction, a business can find itself all at sea.
Keeping the faith
Any director can try this simple experiment: stand up at the AGM and say, 'Actually, we don't really have a strategy.' Everyone involved in a business, from the management to the employees to the shareholders, instinctively recognises the importance of strategy, even if they do not openly say so. Directors must be able to explain, both to employees and stakeholders, what the business is trying to achieve and the actions required. If they cannot, confidence in the business can be eroded at entry level.
Without a clear, communicated idea of what they are working towards, employees may start to feel irrelevant, undervalued, or insecure. Then they begin to drift away. Management can become frustrated if their only remit it 'Make as much money as possible.' And the different parts of the business can become increasingly isolated, each working well in its own way but no longer communicating, because no-one in the business really knows what they are trying to achieve. At best, this leads to general malaise. At worst, it makes the business brittle and vulnerable to the first stroke of misfortune.
By contrast, a business that knows where it is going can take a certain amount of hardship in its stride. Downturns in trading, or the overall economy, can be absorbed to some extent by the strategy. For example, a director might explain, 'We need to take a step backwards now, in order to move three forward next year.' In this way the confidence of the workforce and the shareholders is maintained throughout the tough times, where it otherwise might have been lost.
Working towards a strategy
So, you sit down and set out to design your strategy. And you hit an immediate problem - you can't do it. Which is to say, a director can decide upon goals and a long-term vision, and consider the actions and results needed to achieve this - that part is relatively simple. But what is not so easy is devising a strategy that actually works. What one often finds is that there are too many variables and just as many unknowns. Without a crystal ball, what is a director to do?
Businesses are complex entities, subject to countless influences both internal and external. Internal factors may be the recruitment and training of people, rewards and incentives, your business structure, the facilities you will need, your IT and financial systems, and your corporate culture - to name but a few. External pressures are even harder to quantify, for they include challenges and threats, opportunities and chance events - all the more prevalent in recent times. In this context setting out alone to define your strategy can feel like building castles in the air. It is no wonder that some businesses throw up their hands and adopt a reactive position.
Just setting out your strategy is clearly not the answer. For a strategy to have any basis in reality - that is, for it to be practical and achievable for the business in question - it needs to be not so much designed as 'grown'. Ideally it will involve several stages and layers of development, drawing on past performance and lessons learned, the present position of the business, and the aspirations of everyone (not just the director!) for the future. This is perhaps the most surprising aspect of strategy, and yet a very important one: strategy creation is not a solo performance but a team effort. The best strategies are, by definition, the ones that work - and they stand more chance of working if they are grown organically from the contributions, insights, knowledge and aspirations of those who will be involved in executing it.
Unity of vision
It can help to take a time-out from your business, to stand back and get a fresh perspective on it. You may already have everything you need to grow your strategy, but it needs to be given the space to come out. A strategy workshop can therefore prove very useful. A workshop can bring together all the members of a management team, away from the daily pressures of work, to draw upon their combined knowledge, vision and creativity.
When PKF hosts a strategy workshop, we ask those taking part to think in advance about the key areas of the business, or their particular department, and ask themselves where these areas are now, and where they would like to be in, say, five years' time. There assessments and visions form the basis of discussions in which everyone is encouraged to participate. The discussions allow for 'blue sky' thinking while nonetheless being steered by a PKF arbitrator in order to remain focused on the issue of strategy. At the end of what is typically half or full day session, the management team can go away with clearly defined action plan, one that is based on facts and genuine agreement between them. We find too that such sessions, by their very nature, are highly effective at bonding teams and bringing individuals' hidden strengths to the fore.
Growing your strategic plan is essentially about asking three questions: 'Where is the business now?', 'Where do we want it to be?' and 'How are we going to get there?' But without a proper sense of perspective, all three can be hard to answer. Conversely, a management team that takes a step back from the business and works together in an open and frank but guided fashion, can achieve the kind of clear vision that turns aspirations into measurable success. To find out more about PKF's Strategy Workshops, please contact Martyn Potter on 0113 228 4108 or email firstname.lastname@example.org
PKF (UK) LLP are a leading national firm of accountants and business advisers who specialise in advising growing and entrepreneurial business, AIM and fully listed companies, and public and not-for-profit organisations. We have local offices in Sheffield, Leeds, Manchester and Nottingham. For more information please see our website http://www.pkf.co.uk