If you want to witness true cultural diversity, watch Dubai International Airport come to life one morning. Every color, every language, and every custom you can imagine weaving through an Armani- and Rolex-studded mall.
We claim to celebrate diversity in America. But when it comes to companies, we prescribe one size fits all. This realization hit me hard this week. There is a disconnect. Something is wrong.
You see, most of what we learn in business schools and textbooks is written for large companies. There are many justifiable reasons for this. Jim Collins, business consultant, author, and lecturer on company sustainability and growth, once explained to me and a group of entrepreneurs that he studies large public companies simply because there is not enough information available for smaller private ones. And we make the erroneous assumption that since every small company wants to grow (it doesn’t), it should strive to adopt the practices of the large firms that made it.
I read a fascinating dissertation on my flight over to Perth, Australia this week that proves what I have suspected all along. Best practices for large companies dictate they should plan carefully. They should adopt an annual planning rhythm, survey their environments, build scenarios, set strategies, and monitor their results. But for small companies, the winning recipe may be precisely the opposite. Small companies should not do strategic planning.
I got off my flight at 6:30 a.m., rushed to my hotel for a quick shower, and by 9 a.m. was starting my first of three workshops, for a group of about 10 companies. As I listened to the CEOs share their challenges and plans, I saw the thesis of that paper coming to life. Strategic planning is inappropriate for small companies because:
- No time: They don’t have the management time or resources to invest in days of planning.
- Big cost: Because their top teams usually lead their sales efforts, taking them off the road has an immediate negative impact on revenues.
- Small payoff: The payoff of strategic planning is often measured in millions of dollars rather than hundreds of millions, so it makes no financial sense to overinvest in the effort.
- Short-lived: Smaller businesses must continually adjust their strategy so the strategies they develop during a strategic planning session are usually short-lived. They win because they are more nimble, quicker to seize unexpected opportunities, than their larger competitors. Long-term planning can slow them down and kill this advantage.
This doesn’t mean small-growth companies should fly blind. It means they should adopt an adaptive opportunistic approach to strategy. They should plan in the hallway, not the boardroom.