As we saw in our last blogpost, strategy is a bit of an art and a science. Given the amount of ambiguity that defines the modern business landscape, it isn’t surprising that strategic planning involves a high degree of uncertainty. Addressing strategic challenges in the mid-market—where we operate—layers on another level of uncertainty.
The mid-market represents a powerful economic segment in our economy. Larger than your local mom-and-pop shop but smaller than a publicly-owned corporation, companies in the mid-market range from manufacturers of critical parts to service providers in B2B markets. Strategy in a segment as broadly defined as the mid-market therefore poses different challenges for senior management.
To understand strategic planning in the mid-market, we interviewed fourteen CEOs by asking the following series of questions:
- What is your plan for creating value?
- How can you capture the value you create?
From this, we compiled key insights on what drives strategy in the mid-market. In this blogpost, we highlight some of the challenges that CEOs mentioned the most. In our next, we’ll discuss how companies in the mid-market develop strategies.
What challenges do organizations in the mid-market face?
Amidst disruptive macro trends like increasing urbanization, globalization, and technological change, it’s easier than ever to start a business—and harder than ever to stay in business. This is can be seen in the significant turnover of the Fortune 500; fewer than 12% of the companies included on the list in 1955 were still on the list in 2017. For the mid-market, the most pertinent challenges for building strategies in our changing environment include the following:
1. Difficulty Gathering Actionable Insights
Many leaders in our sample noted the difficulty collecting honest and objective information for strategic planning. From competitive intelligence to consumer information, mid-market companies rely on actionable data from consumers, competitors and the market at large in order to develop meaningful strategic plans. Larger companies can manage this challenge by dedicating entire departments to collecting critical insights and tracking macro trends, whereas smaller companies can look to external sources and reach out to their own consumers.
2. Managing Limited Resources
Resource allocation in the mid-market is especially critical, because companies often have limited access to human and financial capital. Strategic planning requires a high degree of focus, so any organization that manages its resources poorly is at a significant disadvantage in being successful in undertaking a strategic plan.
In addition, CEOs (particularly first-time CEOs) find that managing their time effectively is a challenge. Although many leaders in our sample hoped to dedicate 20-50% of their time to strategic planning, they often struggled to find time to step away from day-to-day operations and think about the big picture. As a result, 100% of the former management consultant CEOs noted how important it was to focus on 3-5 priorities and execute on those well.
3. Ensuring Communication and Coordination
Many CEOs in our sample noted the significant amount of communication necessary to keep everyone on the same page. Ensuring that people translate the overarching company strategy into everyday decisions requires periodic reviews, installing measures for accountability and ensuring consistent communication from senior management. Aligning leaders as well as aligning the middle levels of the company and the front lines required communication and coordination. To guarantee communication and coordination across your organization, don’t forget to implement processes that encourage people to work across silos and share information.
4. Managing Growth
Mid-market companies must constantly manage challenges related to growth. For companies that recently experienced a phase of rapid growth, all of the executives mentioned how difficult it was to keep their strategy strong as the company grew. Strategic focus on growth also varies based on the size of the company. CEOs of smaller companies consistently ask themselves: What do we need to do differently to take a strong company with a great growth rate and grow several magnitudes faster? For larger companies, developing a strategy that is mindful of growth requires an understanding of how to manage people efficiently. The larger an organization, the harder it is to implement changes and improvements. At any stage of growth, you must develop a strategy that can thrive even as your company changes.
5. Executing Strategy
For mid-market companies, driving strategy through the business is always a significant challenge. As one CEO noted, “I would rather have a half-baked strategy that is executed than the best strategy in the world that is only half-way executed.” Another noted that the worst outcome possible was building a strategy that never saw the light of day. He described it as “a black hole that sucked in all the innovative ideas and people’s trust.” To manage this challenge, build a realistic timeline, divide labor appropriately and create systems for accountability.
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Our clients appreciate that we help them “look around corners” and look forward. It can be tricky to keep the big picture in mind when you’re in the throes of everyday operations, but don’t discount the value of thinking through these challenges with your team. A sharper strategy in the mid-market could mean the difference between market leadership and failing to thrive.