If you’ve been following The Business Prophet for a while either on social media or out in the marketplace you would have heard me talk about the Bureau of Statistics research that shows that 4 out of every 5 businesses fail within the first 3 years of being in business. Of those 4 businesses, 46% failed due to poor strategic management, so in other words 2 out of every 5 businesses failed because of poor strategic management.
What is strategic management?
I love this definition from Margaret Rouse on https://searchcio.techtarget.com
“Strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives.”
As a business coach, I use the Meta DynamicsTM Critical Alignment ModelTM that was developed by Sharon Pearson founder of The Coaching Institute as the main methodology for my coaching. The Critical Alignment Model has four core pillars Environment, Structure, Implementation, People and is the structure by which all business activities can be assessed.
How you use the model is to start any activity by looking at the environment and working your way down through structure, implementation and finally people.
- Environment, is the outcome we want to achieve, the purpose of the outcome.
- Structure is the systems we need to achieve the outcome.
- Implementation is the actions we need to take to achieve the outcome
- People is who needs to be involved to achieve the outcome
If you look at the definition of strategic management through the lens of the Critical Alignment ModelTM we have two main components
- Goals and Objectives (Environment)
- Planning, analysis and assessment (Structure)
If as a business owner, you think about these two components, there’s nothing that is particularly difficult or specialised that any business no matter what industry, size or level of experience can’t manage.
So why is it that 40% of business that fail are caused by strategic management?
I believe that the main reason is because business owners get caught up in the day to day running of the business, the activities that they know, rather than focusing on the activities that define the business’s purpose/goals and the structure to achieve those results.
Don’t get me wrong, I’m not judging these business owners, I have the greatest respect for anyone who is willing to risk everything to start up a business. Unfortunately with most industries there just isn’t the training available to give new business owners the skills needed to run a business.
The mission of The Business Prophet is to empower businesses to succeed.
Please feel free to leave your questions or comments or contact The Business Prophet so we can support you in your making your dreams come true.
