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Will Your Business Strategically Fail or Succeed?
The economic woes facing South Africa are well documented.
An alarming unemployment rate, one of the lowest entrepreneur generation rates in the world and the extremely high failure rate of start-ups indicate a society that is desperately short of some intrinsic ingredient that could turn this trend around in time to foster sustainable national economic growth.
These economic indicators are also impacting our civil society, as Non Profit Organisations, too, are overwhelmed with the struggle for sustainability and staying afloat.
Many research organisations, pollsters and thought leaders have mooted that the ‘gap’ in knowledge and conduct is the ability to think strategically. The number one reason for business failure is regularly cited as a lack of effective strategic planning, and this lack of strategic thinking is also seen as the primary cause of the low rate of entrepreneur development.
Decades of research by McKinsey and Associates, perhaps the world leader in strategy, reveal that the best indicator of failure was ‘doggedly sticking to the original business plan’.
This led, in fact, to one of the most successful business accelerators, ONSET Ventures, instituting as their first rule that all start-ups must fundamentally change their business model at least once before receiving their next round of funding.
The question remains; how do we cultivate innovative strategic thinking? According to a May 2015 article by McKinsey, the development of innovation, or the ability to “think outside the box” should not be without any constraints or framework since attempting to innovate with any boundaries “overwhelms people with options and ignores established practices”.
The argument is that within basic, simple disciplines that act as constraints, innovation and creativity are actually guided and spurred on. Simple guidelines are necessary; adding just enough structure to help organizations avoid the stifling bureaucracy of too many rules and the chaos of none at all.
By imposing certain elementary constraints on themselves, individuals, teams, and organizations can spark creativity and channel it along the desired trajectory. Instead of trying to think outside the wrong box, a basic framework draws the right box and cultivates innovation within it.
Easibility (Pty) Ltd and their developmental arm, Sustainable Strategy Implementation, completely concur with this finding, particularly within the South African context.
Their answer to this entrepreneurial challenge is met with their programme E.A.S.I.® Entrepreneur. Strategy is not only intrinsically required by every business but one must also understand how to adjust it dynamically with the business’ growth.
Having published their own textbook, where the core, essential disciplines in strategic thinking and project management are simplified and reduced to a fundamental thinking framework, strategy and innovation are cultivated, grown and amplified in a way that is unique to every organisation. Strategy is EASI provides the context and guidelines for the development of true strategic thinking, for the design of innovation that creates value, as well as the core tools for effective implementation. If we could instil these simple rules and disciplines in all South African start-ups, entrepreneurial ventures and NPO organisations, it would seem that the latest research guarantees this would markedly grow the SME sector…and consequently the entire economy.
“Constraints aren’t the enemy of creativity—they make it more effective.”
Learn more about how strategy can be the silver bullet your business or budding idea needs.
Why Even Bother with a Business Plan?
Lewis Carroll’s delightful story of Alice in Wonderland has been a source of philosophical inspiration for many years. Readers try to make sense of an illogical story…a metaphor in so many ways of life, and in this case, business. In the book, Alice comes to a fork in the road and asks the Cat for advice:
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where.” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
A business plan is the map, or route, you wish to take your business on. Without a route mapped out, businesses are just meandering along, directionless and drifting. It doesn’t take rocket science to see why the number one reason small businesses and start-ups fail is ineffective planning.
It’s so critical to the success of an entrepreneur that an depth creation and value-proposition is made to it within our E.A.S.I.® Entrepreneur programme. Learn about the success points we focus on for every entrepreneur.
“The ability to look forward and plan characterises a successful growth business,” says Doug Richard, founder of The School for Startups and a former member of Dragons’ Den.
“As much as you need passion to start a business, you can’t do it on passion alone,” says Wilfred Emmanuel-Jones, founder and CEO of food business The Black Farmer. “You must research and plan. You need to challenge yourself. All too often people aren’t prepared to do that. If you don’t, it’s a recipe for failure.”
Business Planning is essential to the success of any organisation. This is why all funders, donors and credit institutions will ask for a detailed business plan; they need to know that thought, planning and most importantly, strategic thinking has been applied to the business concept, as this is the greatest single determinant of success. In an ideal situation, the business plan evolves from a detailed corporate strategy and should:
- Significantly grow your business or organisation;
- Accompany a business loan or funding application;
- Support an investment decision, and establish company valuation;
- Create new business, sell products and services, and develop alliances;
- Align staff, management team and partners;
- Facilitate decisions on expenses, the hiring of staff and the development of new products and services;
- Set business goals and targets.
Perhaps the most valuable consequence of a real business plan is the effect it has on the time management within any organisation. Displacement is a crucial practical business concept that is described as “Whatever you do is something else you don’t do.” Displacement lives at the heart of all small-business strategy, and without an effective strategy and business plan, can completely ruin any small business.
E.A.S.I.® Entrepreneur carefully guides and mentors those who wish to be wildly successful at their business dreams or current entrepreneurial goals. We cover business plans and many other aspects right here.