I often define strategic planning as an ongoing mental organizational process used to point your company in a direction and help leaders and employees share goals, establish priorities, and allocate resources so that everyone’s daily actions support the company’s ultimate vision.
All contractors harbor goals for their company. Short term goals (one to two years) are usually financial, specific, and top of mind. Every manager in the company is aware of these short-term financial goals and knows what is expected of his/her department.
Long term goals, however, often float around in a contractor’s mind as a vision of the future.
The Formal Strategic Planning Process
A construction firm’s strategic goals (long term intentions) are too often non-explicit or sometimes not even clear to management themselves. This is where a formal strategic planning process comes in.
- It is a formal process that enables top management to define where the company is now and where they would like it to be 3 to 5 years out.
- If done properly, the formal planning process enables management to state clearly why their business exists today and what their long-term picture for the future is.
- The next formal step is to list the main rules and beliefs that will guide the team’s daily work.
- And finally, the formal strategic planning process uses a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis to look at the company’s internal strengths and weaknesses and match them with outside market opportunities and threats. (A SWOT analysis is a foundational framework used to evaluate a company’s competitive position. It splits factors into internal attributes (which you can control) and external forces (which you cannot control).)
The 7 basic elements of a strategic plan are vision, mission, core values, a SWOT analysis, long-term goals, specific objectives, and actionable steps. These 7 elements work together to give the company a clear path for the future.
Set Goals and Build Action Steps
To shift a construction company from a reactionary organization to a purposeful business, the formal strategic planning process is best conducted off site in a controlled environment for a specific period. (Usually one to several days depending on the size of the firm at an appropriate location that can accommodate multiple executive participants.)
If conducted correctly, the planning process described above:
- Creates clear, measurable targets for the next 3 to 5 years.
- Breaks down big goals into small tasks.
- Assigns someone to be responsible for each task and sets strict deadlines.
- Picks Key Performance Indicators (KPIs) to track the company’s progress, usually monthly.
- Identifies broad, long-term targets that support your main vision.
- Specifies clear, measurable steps used to reach those goals.
- Assigns detailed tasks that show who will do what, and when it will happen.
Making Dreams Come True
Long term goals or visions of the future that are not made actionable are dreams that never come true. The formal strategic planning process is designed to make your vision of the company’s future a tangible reality. Wandering around in the day-to-day complexity of the construction industry almost always leads to disappointment. The construction business has a way of running its management rather than the other way around. Don’t let this happen to you.
Next Week
Next week we’ll discuss how you can get in the driver’s seat and stay there. Construction companies have a way of drifting off course when they begin to prioritize short term goals. When management find themselves with diminishing operating capital, for example, they usually rush to sign the next contract even if it represents questionable profitability. They start to pursue jobs that are too big for their company’s capacity or take work which they are not familiar with. The immediate opportunity to reenergize cash flow is too tempting, and the long-range goals go out the window. I have seen this happen repeatedly prior to financial distress.
Next week we’ll discuss how to avoid this pitfall and many others. See you then.
For more information on strategic planning, read more at: PLANNING
For a broader view of seeing the future, read more at: FUTURE
To receive the free weekly Construction Messages, ask questions, or make comments contact me at research@simplarfoundation.org.
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