While implementing strategic projects, we paid attention to one important factor which cannot be ignored in any development project. That is the current level of the company’s development. We face a challenge as on the one side, there is the business owner, a knowledgeable and advanced person who clearly understands the meaning and necessity of the strategy, and on the other side, there are the employees (whom the owner for some reason did not take for training) got stuck in their development around 1990s. Charging them with the developing the growth policy will be equivalent to transition from the third class of a secondary school in the tenth class at once. The strategy is the cherry on the cake, so it is necessary to be ready to it.
There are internationally recognized methods of an estimation of level of a maturity of a company. With their help, you can accurately assess the level at which your company currently is. But these methods are complex, and evaluation costs money. You can also use “home-based tools” to decide whether your company is ready to develop a growth policy.
We have developed our own scale. It does not purport to be a fair presentation, but we use it for internal needs. In addition, we need to consider the industry specifics. A factory and a law firm cannot be measured on the same scale.
As the “cave” level companies, we classify the companies that have no future planning, only financial accounting, most often bookkeeping. According to the derivative law, this type should be extinguished in the early 2000s, but it is still alive and wholesome.
As the beginning level companies, we classify the companies where there is only a budget from forward planning, most often the budget of income and expenditure, in Excel or 1C. Let us remind you just in case that a budget is by no means a plan, it is just a set of goals (targets). Targets for revenue and profit, and a mandate given in the form of the relevant and agreed cost items. There are no prescribed procedures and regulations, or they are very few. There can also be a “sales plan” (which is actually a target, but not a plan). Employees, even if they are trained, they are trained sporadically and haphazardly. The planning horizon is no longer than a year. Motivation of top-level managers depends on the financial result (most often profit), for a month and a quarter. Nobody has heard the word “marketing”.
As the average level companies, we classify the companies where in addition to the initial level, there are some signs of planning. Let me remind you that the plan differs from a set of targets by a certain list of milestones with deadlines. In such companies, planning is also short-term, within a year, but operational tasks are planned, and there is a system of their setting and control. Managers and employees have lists of tasks for at least a quarter ahead. Many processes are regulated. Employees are trained frequently, but without a common long-term program. A manager bonus there depends not only on a financial result, but also on other KPIs, including those non-financial. There is marketing, but it is used only for internal analytics and for proactive work on promotion. CRM and other IT management tools are implemented and really work, and used not only for accounting, but also for planning.
As am advanced level companies, we consider those companies which, in addition to all the above, also have project management. The planning horizon, at least financial, is already going beyond one year. Marketing is used for market analytics. Employees are trained under a single development program. Most processes are regulated, and results are standardized. Works are planned, there is a lot of IT-solutions for management that really work and bring benefits. The motivation of top management is dominated by annual performance indicators.
As the top-level companies, we consider the presence, in addition to this, of a complete growth policy, with a system of indicators that permeates the entire company. Marketing is first and foremost used to study the consumer behavior. Employees are trained according to a plan, and the top managers have individual development plans. The planning horizon is 3-5 years. Bonuses of top management depend on achieving growth policy goals. There are long-term bonuses (over a year).
Let me say once again this is our internal scale, we do not claim to be impartial. But we do like it. Moreover, there are undoubtedly mixed types of activities, some of which are at an advanced level, others at an average.
At once, a company can only take one step forward. One can’t jump over a step. It is impossible to implement a growth policy in a mid-level company, let alone a lower one. Growth strategy is a project, and ability to implement projects already should be in the company DNA. Without high-grade marketing, the strategy is nothing more than a fantasy. And if the company does not have operational planning, the strategic plans, even if they are developed, will not be implemented.
But this does not mean that medium and lower level companies do not need a strategy. A lightweight format, express strategy, would be fine for them. It is cheaper, easier and faster to implement. Most often, it’s an annual plan, not a plan for a three-years period. But once a company implements such a plan, it will be able to integrate the very culture of such planning into its DNA, and in a year, it will be able to take on a full-fledged strategy. If you are interested in this format, do not hesitate to write to us and we will let you know the details.