No strategy, no sustainable growth. But effective strategic planning requires joined up (systemic) thinking with actionable steps.
Strategic planning for small and medium-sized enterprises (SMEs) fundamentally means choosing where your organization needs to go and developing sound and practical approaches to get there in a coordinated way. This is how you build sustainable growth.
This strategic planning process unfolds across three critical stages:
- determining what needs transformation in your business
- defining the desired future state for your organization
- executing the transformation through actionable steps
The Theory of Constraints (TOC) offers a distinct Thinking Process for each stage of strategy development. These Thinking Processes introduce systemic thinking in an interactive and visual way that can be easily shared, remotely or in person.
Stage 1: Determining What Needs Transformation in Your Business
When beginning strategic planning for your SME, you typically sense something in your current operations demands attention. Capture this insight by documenting the Undesirable Effects plaguing your present situation—the pain points preventing business growth. After listing these organizational challenges, you can distill them into one overarching Undesirable Effect, which serves as the foundation for constructing a Core Conflict Cloud. This provides a “snapshot” of what is keeping your organization stuck.
Developing this Core Conflict Cloud helps reveal the fundamental needs propelling your organization—needs tied to vision and operational control. After articulating these business needs with precision, you can naturally extract a goal that addresses them both. This gives you an authentic strategic direction for building coherent strategy, rather than forcing an arbitrary goal onto your SME.
Next, you methodically uncover every underlying assumption (your mental models about business) linking the statements you’ve documented. When finished, the Core Conflict Cloud delivers both a clear analysis of what’s holding your company back and a clear articulation of your strategic objectives.
Stage 2: Defining Your Desired Future State (Strategic Solutions)
During this second stage of strategic planning, you identify specific solutions (termed ‘injections’ in Theory of Constraints) that propel you toward your business objective.
You generate these strategic solutions organically by challenging the assumptions and mental models embedded in the Core Conflict you’ve already articulated. These injections serve as directional markers for your business strategy, clarifying your destination. They function as signposts guiding your organization forward.
For an Injection to be an effective solution, we must check that it is free of “unintended consequences”. We can use the Negative Implication Thinking Process to foresee and pre-empt any negative consequences that might arise.
The injections must now be woven together into a comprehensive strategic roadmap. This happens through strategic understanding—the human capacity to envision and prepare for what lies ahead, beyond immediate circumstances, toward meaningful business outcomes. The Future Reality Tree (FRT) Thinking Process amplifies this capacity for strategic planning. Employing sufficiency-based logic, this tool arranges the solutions in an integrated, progressive sequence moving toward the objective defined in your Core Conflict Cloud.
Stage 3: Executing Your Strategic Transformation (Implementation)
By this point in your strategic planning process, both your desired Future Reality and the business solutions needed to reach it have been thoroughly charted.
The next step involves breaking down these strategic solutions into executable actions for your team. This strategic implementation happens in two phases.
First, construct a Prerequisite Tree for each injection in your Future Reality Tree. Generate this by cataloging every obstacle separating your current reality from achieving the injection. Then reverbalize these obstacles so they become Intermediate Objectives that overcome the obstacle. You then sequence the Intermediate Objectives based on which must be accomplished first (or in parallel) to reach the goal of the strategic Injection.
Finally, zoom in to establish action steps that can be organized as a project for each Intermediate Objective. The Transition Tree (TRT) accomplishes this by documenting the exact actions required and their underlying logic. This makes it invaluable not only for individual leaders but for management teams working collaboratively on strategy execution. It creates a strategic protocol with granular instructions and all components necessary for building and scheduling a business transformation project.
Key Takeaways for SME Strategic Planning:
- Use Theory of Constraints Thinking Processes to develop robust business strategy
- Start with identifying Undesirable Effects in your current business reality
- Build a Core Conflict Cloud to understand what is holding your SME back
- Create a Future Reality Tree to map strategic solutions
- Use Prerequisite Trees and Transition Trees for strategy implementation
Time is life (and throughput) so there is no time like the present
Delay and inertia in building and executing strategy effectively slow down the growth of any company. Strategic thinking and planning is not a one and done exercise. It is a continuous activity, and when a team learns it as a systemic method, it becomes embedded in the day-to-day. It fuels the activities in a company, allowing it to compete and grow at the right pace. Sustainable growth requires accurate planning in order to embrace new opportunities in a timely way and accelerate generation of throughput (cash generation in for-profit organizations).
At Intelligent Management we’ve helped SMEs embed the Thinking Processes into their day-to-day to think and plan systemically since 1996. Contact us to learn how to power your sustainable growth with a robust and repeatable method. Reach out to us at intelligentmanagement@sechel.ws or through our online form here: https://intelligentmanagement.ws/contact-us/
ntelligent Management works with decision makers with the authority and responsibility to make meaningful change to optimize your company for the digital age. We have helped dozens of organizations to adopt a systemic approach to manage complexity and radically improve performance and growth for over 25 years through our Decalogue management methodology. The Network of Projects organization design we developed is supported by our Ess3ntial software for multi-project finite scheduling based on the Critical Chain algorithm.
See our latest books: The Human Constraint from Routledge; From Silos to Networks: A New Kind of Science for Management from Springer; Moving the Chains: An Operational Solution for Embracing Complexity in the Digital Age by our Founder Dr. Domenico Lepore, and ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York by Dr. Domenico Lepore, Dr. Angela Montgomery and Dr. Giovanni Siepe.
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