Why Some Firms Do Not Do Strategic Planning

Many firms do not engage in strategic planning and some firms do strategic planning that is poor and ill conceived. Some of the reasons for this sorry state of affairs in these firms are listed below:

  1. The first and foremost reason for poor strategy is the lack of experience in strategic management which is due to the paucity of managers and executives with experience and the presence of those who do not understand strategic management.

  2. The next reason has to do with the poor reward structure in place where success goes unrewarded and failures are punished. Because of this “double whammy” of no recognition when things have gone right and blame game when things go wrong, managers are reluctant to engage in strategic management.

  3. Because an organization is always firefighting which means that is so embroiled in its internal problems, the top management does not have the time or the energy to engage in strategic management. This is often the case with many firms where the lack of coherence and control in organizational processes means that most of the time is spent on tackling problems rather than preempting problems or solving problems.

  4. Some firms view strategic planning and strategic management as a waste of time since they are under the impression that they can handle the longer-term imperatives by doing things that they have always done in a particular manner. This is the case with firms that have been in business for generations where the new leaders often think that “if it is not broke, do not fix it”. This mindset precludes them from approaching the future in a proactive manner instead of a reactive manner.

  5. Continuing in the same vein, many firms, especially those that have been successful see no point in formulating newer strategies since their position is comfortable and they are content with success. Success breeds arrogance as the case of Nokia, which went from market leader to the bottom in a few years time reminds us.

  6. With experience, many managers think that they can weather any storm because they “have been there, done that”. However, this attitude is counterproductive as planning for eventualities is necessary and formal models of strategy have to be drawn up since experience is not always the best guide. This is especially the case with the modern era where the advent of the digital age has changed the rules of the game.

  7. Perhaps one of the most important reasons why firms do not engage in strategic management is that they fear the “unknown”. What they forget is that precisely because of the unknown and the unpredictable; they have to plan in advance.

    Further, the managers might be uncertain of their abilities to learn new skills, of their aptitude with new systems, and their ability to take on new roles. This happens when organizational arteries are clogged because of inertia and a general sense of laziness and ostrich like mindsets.

  8. Finally, the other important reason why firms and the managers within them do not engage in strategic management is the lack of consensus and differing ideas as to what a good strategy ought to be.

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Strategic Management