Excessive expectations and unused opportunities

Some companies have written down in their documents - and now on their websites - a strategy derived from a vision. However, both - vision and strategy - fulfil little more than a placeholder function. This state of affairs may also be the source of some disappointments on the part of employees. One possible explanation for this is that the management would have to develop such a strategy in order to introduce a quality management system or when applying for financing, but then delegates this task to an external consultant or a newly trained employee. As soon as the quality management system comes into force or the financing is approved or agreed, the management puts the strategy paper aside and devotes itself undeterred to the operative business. In such cases, strategy and vision reflect little more than the current situation of the company - supplemented with a few non-binding references to a vague, desirable future.

When asked why employees miss a strategy, some tell of erratic behavior on the part of the company's management. The direction of the company has been changed without notice - even several times - and no one knows about it. Others want clear goals and would like to understand what their contribution to the success of the entire company could look like. Some still complain about a lack of or inconsistent decisions and believe that the management often owes an explanation.

Three reasons for abandoning strategy
But how do the managers of Swiss SMEs themselves see this? From my own research work, I have come to the conclusion that some companies deliberately forgo a strategy for three reasons:

1. Some do not want to exceed a certain growth threshold. For example, they grow to the maximum management span they can directly preside over and then forego further expansion if the increase in the number of employees would be accompanied by the introduction of an additional hierarchical level. Another limit to growth is geographical: some entrepreneurs do not want to expand beyond a certain region because they would have to travel around a lot more or transfer some of their responsibilities.

2. Others do not want to commit themselves. They want to opportunistically look for opportunities and feel that the long-term commitment to a defined course is an unnecessary limitation. They like to experiment, repeatedly launching new initiatives, but are also quick to reject unsuccessful ideas.

3. Some business leaders point to the unpredictable environment and view the task of charting their company's course well in advance and calibrating it according to the already uncertain changes in the environment as a waste of time and resources. Such business leaders prefer to invest their efforts in the task of making or keeping their organizations fit and agile so that they can take advantage of environmental changes quickly and effectively.

In addition to those mentioned, there is probably a residual category that includes numerous other business leaders who simply ignore strategy because they are completely occupied with the operational business - whether it is running well or badly.

What is the point of strategy for an SME?
When you study corporate strategy, you learn analytical methods, you practice using structured procedures to reflect on the company, its environment and their interaction in a forward-looking manner. Within the framework of such procedures, opportunities are determined, the impact of risks from the competitive environment is weighed up, options for action are worked out, business models are reviewed and trimmed. Models and procedures that are applied here function according to the well-known GIGO principle: garbage in, garbage out. Formulated: An uninspired analysis based on a few superficial data will not deliver forward-looking results. Even more: No analysis will be able to replace the entrepreneurial spirit, let alone trump it. Entrepreneurial decisions are fraught with risk, and no analysis, no matter how carefully executed, is likely to eliminate all uncertainties. Thus, a strategy is not able to make decisions in place of the entrepreneur. This may lead some entrepreneurs to abandon it altogether.

So what is strategy really good for an SME? There is a threefold answer to this:

1. Some entrepreneurs perform such ana-lyses "automatically". That is, they proceed intuitively and see this as a natural part of their role. However, their approach is based less on intuition and more on their many years of experience in the field of activity of their company. A structured approach based on a strategy, however, offers just such entrepreneurs an opportunity to think beyond the boundaries of their usual horizons and thus to uncover one-sidedness, blind spots and contradictions, as well as to explore new possibilities.

2. Especially experienced entrepreneurs are forced by careful strategy work to disclose assumptions, presumptions, convictions about the company and its competitive position, perspectives on the environment and its development and thus to make them discussable at all.

3. Well-done strategy work provides a platform for SME managers to share their entrepreneurial perspective with employees. At the same time, there is the opportunity to involve them through an exchange of opinions. The management itself benefits from not seeing the employees exclusively in an executive role. For some entrepreneurs, the effort of an explanation may seem too great compared to the expected result. Others may have the intention of not wanting to disclose their own recipe for success to everyone. However, if the employees are to actively support a strategy, it is necessary to involve them accordingly. It is not even necessary to involve the employees directly in the development of the strategy. What is important is to enter into an exchange of opinions with them, let them ask their questions, raise objections, formulate proposals for adjustments and explain the company's business model better.

Paying attention to change
With regard to the first two aspects mentioned, it should be noted that the knowledge of the rules of the game and success factors in an industry, which underlies the tried and tested way of thinking and acting of an experienced management team, is referred to in the specialist literature as the "dominant logic". This is extremely helpful in reducing complexity (as it contains simplifications) and in productively applying the experience gained over time. However, it has a downside that is easy to see: when circumstances change or when new circumstances gain relevance, the truisms of an industry lose their validity. The more radical the change, the more important it is to review one's own perspective. Unfortunately, many entrepreneurs, especially successful ones, cling to old logics and continue to proceed according to the prevailing, hitherto proven method. This reduces their chances of successfully mastering the inevitable change. The topicality of the subject can currently be measured by the challenge of digitalization in all its facets.

A final remark: In many discussions about strategy, it is overlooked that strategy does not necessarily lead to success per se. Especially in Switzerland, we should know by now that even companies with sophisticated strategies fail, because there are also bad strategies.