The Cost of Not Doing Strategic Planning

By Tom Davidson

An executive recently told me that his leadership team needed to do some strategic planning, get on the same page about their mission and vision, and invest some time in sorting out their direction, getting on the same page, and identifying their focus areas for the next few years. 

Naturally, a number of his team members were questioning the value of such a step. After all, anytime you pull people together for a meeting, diligent managers should be concerned about the direct costs and the opportunity costs of pulling people away from their regular duties.

My advice to him — and to you — is to weigh all the benefits and costs of such meetings, both the cost of doing them and the cost of not doing them.

Like driving a car without direction or a dashboard
The root of dysfunction in most organizations often stems from the lack of cohesion at the top, a shared vision for the future, and focused plan of attack for getting from Point A (your current situation) to Point B (your desired situation). Other critical factors include technologies, production capacities, marketing, human expertise, clear roles and goals, efficient processes, well-understood procedures, and teamwork.

But the one factor that drives the rest of them is a clear picture of where the team or organization is going, why and how it’s going to get there.

Trying to run your team or business without a well-developed strategic plan is like driving your car without direction or a dashboard. You might get someplace, but it’s not likely to be where you want to go. And you’re likely to waste a lot of time, run out of gas, and spend even more resources on traveling the wrong roads!

The high cost of inaction
To calculate the cost of inaction, consider the following, and compare these to the more obvious direct costs of the strategic planning process:

  1. What is it costing your organization to have leaders and departments competing for scarce resources instead of prioritizing them together?
  2. What is it costing you and others in terms of time, distraction, picking up the pieces, and massaging wounded egos as people pursue competing own agendas?
  3. What is it costing the organization in terms of lost opportunity, lost funding, lost membership, and lost impact?
  4. What is it costing you and your organization in terms of morale, teamwork, attrition, and discretionary effort that people would otherwise be giving rather than withholding?
  5. What is it costing you in terms of success in the marketplace, whatever that is for your enterprise? While your people are working against one another, wasting valuable resources and time, what is your competition doing to edge you out?

These costs of inaction are rarely or fairly considered because well-meaning people don’t stop to think about them and because they are hard to quantify. But even conservative estimates should improve your decision about how and when to invest in strategic planning, for yourself, your team and your organization.

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