Lack of a Clear Plan, Ineffective Leadership, Marketing Effectiveness - Term Paper Example

Lack of a Clear Plan, Ineffective Leadership, Marketing Effectiveness, And Lack of Execution Are Common Problems of a Small Business and How Strategic Planning Can Help Avoid Them Name of the Instructor Your Name 12/18/2010 Name of the Institution.... Introduction of the Problem A multitude of problems and obstacles which plague a business or a going concern arises due to its size. While one may think that quality management issues are more likely to arise in large sized companies only; the fact is that management issues are as much a reality in small businesses as in large ones. The difference lies in the type of problem typical to different sizes of businesses. As per SBA guidelines, a small business is a concern that is organized for profit with independent ownership & operations and has a regional presence rather than a national one. Independent ownership implies sole proprietorship, partnership, corporation, or any other legal form (U.S. Small Business Administration, 2010). Irrespective of the industry, a small business operates in; it has been found that they suffer from largely the same types of problems. Small size of a business enterprise ensures that the management acts as a sharp cost controllers and active member of routine operations. This gives rise to many leadership related problems and loss of far-sighted visions. The discussion below further details the types of problems faced by small businesses. A major problem that infests a small business is ineffective leadership. Leadership, to be effective, should be influential enough for the employees so as to motivate them to work ethically and create values for their customers (Grenny, 2009). Most of the leaders today have no concrete idea of their work. They get involved in the hassles of routine instead of focussing on the long term goal of the business. The problem appears to more widespread in small businesses because the compulsion to save costs are higher. Hence, to cut down upon the number of employees, leaders end-up becoming a part of the operations instead of managing the operations. Also, leaders of such small businesses are often not trained scientifically and their decisions are the outcome of their experiences rather than established managerial practices. Another common problem among small businesses is lack of a clear plan (Harsberger, 2010). Lack of a plan results in short sightedness of the business and distracts the manager in aligning all the activities towards the common goal of the organization. Ultimately, non-essential activities result in wastage of cash resources which otherwise could be applied more usefully. There appears to be a direct correlation between the clarity of plan and the success of the business (Perry, 2001) Even if a business has proper marketing strategy and plan, the execution of the same might not be handled adequately to ensure successful operations of the business. Most of the businesses suffer due to lack of execution of strategic planning (Faulkner, 2009). The grind of day-to-day operations takes the strategy out of work. Execution is as important as planning and should not be overlooked. Lack of marketing effectiveness makes the problem of small businesses even more complex. Marketing effectiveness is driven by marketing strategy, creativity in marketing, execution of marketing plan, marketing infrastructure and exogenous factors (which are not in the control of the management). Small business organizations often do not have the tools and orientation to build comprehensive marketing strategies and plans to ensure marketing effectiveness. The above discussion indicates that small businesses suffer from the problems of ineffective leadership, lack of clear planning & execution and improper marketing effectiveness. The next part of this paper focuses on the major management principles which might be of help in solving the current problems of the small business enterprises. Statement of Major Relevant Principles to be Applied Role of effective leadership cannot be overstressed in the management of businesses. It requires the leaders to envision the goal, energising the employees and enabling them to meet the goal (Luthans, 2002). To develop effective leaders, the method of coaching appears to be a relevant one for small business units. Coaching refers to the method whereby the relationship between the coach and the client is based on mutual trust, respect and freedom of expression. Another method of developing effective leaders in small businesses may be strategy based. Strategy based competency models derive the key to development from strategic company issues and directions. Planning, as asserted by several management theorists, is one of the most essential functions of a manager. But only planning is not enough- the planning approach should be appropriate for the organization. For small businesses, issue based strategic planning is relevant to the nature and size of the business and volatility of markets (Namara, 2010). Issue based planning is not an isolated concept instead it is an evolved version of basic planning. Basic planning consists of most of the following steps: External/internal assessment to identify “SWOT” (Strengths and Weaknesses and Opportunities and Threats) Strategic analysis to identify and prioritize major issues/goals Designing major strategies (or programs) to address issues/goals Designing/updating vision, mission and values(some organizations may do this first in planning) Establishing action plans (objectives, resource needs, roles and responsibilities for implementation) Recording issues, goals, strategies/programs, updated mission and vision, and action plans in a Strategic Plan document, and attach SWOT Develop the yearly Operating Plan document(from year one of the multi-year strategic plan) Develop and authorize Budget for year one(allocation of funds needed to fund year one) Conduct the organization’s year-one operations Monitor/review/evaluate/update Strategic Plan document Most businesses comprehend their growth, by increase in revenue. They know where they started from, they are sure what the net increase is and they even have an idea as to where they want to go in the future. Although they have a fair understanding that all these steps need to be put together to reach a certain goal in the future, they fail to execute it. To avoid making the mistake of planning without execution-the following steps are suggested: Focus on the right matter The decision maker should ensure that the strategic plan considers business as an investment portfolio. Organization’s position in the market should be assessed keeping in mind the market growth rate and strengths of the business. Sometimes the plan may be too assumptive or may contain personal gratification temptations of the planner but may not contain real things which would lead to the pre-determined goal. Such fallacies should be avoided. Communicate The plan should be communicated to the team as frequently as possible. If a leader continues to share the vision of the organization with the team, it will allow the team to have a clear line of sight to what is important. Keep goals simple Years ago, Nike had the goal of "Crushing Reebok". They focused all their efforts on those two words and it helped get them to where they are today. Once the goals are simple, it is easier for the leader and the team to comprehend if their activities would help them in getting anywhere near the goal. Reward the employees for the right things If one of the team goals is to complete "The X Project" then it should be ensured that the employees performance objectives are linked accordingly. Too often companies put together complex reward and compensation structures that reward employees for doing the wrong things. For a progressive organization, team’s goals and performance objectives should be aligned. Henry Fayol’s fourteen principles of management hold relevance for almost all sorts of small enterprises. Of all the principles of management, division of work, unity of command, remuneration, and esprit de corps stand out most significantly for small businesses for the execution of their strategic plans. An organization’s marketing effectiveness is reflected in the display of its maturity in marketing orientation. Major attributes of marketing orientation are: customer philosophy, integrated marketing organization, adequate marketing information, strategic orientation and operational efficiency (Kotler, 2003). In short, marketing effectiveness is an effort to understand and satisfy the customer. To ensure overall marketing effectiveness, marketing effectiveness reviews should be conducted on a regular basis. Marketing Excellence Review is also one of the most suited options for a small business to focus on its strong and weak areas. Analysis and Application of Principles In a small business set-up the problem of losing focus on the strategic goals due to overwhelming routine tasks can be solved by effective leadership. The two ways to develop effective leaders in a small business is through coaching and through strategy based competency models. For the start-up firms, coaching appears to be the most appropriate form of developing leadership. Such leaders personally advise the staff in dealing with complex, ambiguous and uncertain situations. For relatively bigger organizations strategy based competency models may serve the desired purpose. When a leader is out of strategy based leadership development school; s/he is able to envision the picture of the goal or the future where he wants to be and shares it with the team members. S/he communicates the high expectations of the management to each of the employees and expresses important purposes in simple and straight forward ways. This enables the entire team to work towards a common goal and align their activities towards that goal. It reduces the misdirection of the activities since it leaves nobody groping in the dark. The leader also motivates the employees to act and coordinate for the achievement of the common goal. S/he not only acts as the problem solver but also promotes rational thinking and problem solving capabilities of the employees. Last but not the least, an effective leader enables the employees to act or perform in the face of challenging goals. Both the approaches are employee centric and participative. Due to small size of the organization, interactions with the employees on a personal level is possible such interactions are extremely beneficial in solving small problems which might become critical later if not solved promptly. Being in a small business set-up, the leader has the advantage of knowing ground realities also which can be put to use while resolving conflicts and other problem solving. Issue Based Planning is an ideal way of strategising for a small business. Small businesses are often infested with too many operational problems due to lack of appropriate manpower or skilled manpower. Issue based planning attempts to solve this problem by identifying the major issues concerning the organization at the present. It then works its way towards the future by looking into the probable bottlenecks. Planners identify major issues the organization is facing in the present. The planners specify action plans about who is going to do what and by when in order to address each issue. Though an external environment scan may be required, planners focus especially on the internal environment of the organization in order to ensure the organization accomplishes strong internal systems. Issues-based planning usually produces a plan with a short time range, example, one year. Issue based planning is beneficial for small businesses which are set up recently (say 1-2 years old), or has many current issues and/or has very limited resources in terms of people and funding. After the successful implementation of issues-based planning, the internal systems of the business will be much stronger and ready to do more future-based planning. An added benefit of issues based planning is that it usually gets much stronger buy-in from planners or small business owners because it takes their minds off current major issues, while they’re conceiving far-reaching goals. It is also expected that planners will associate action plans with each goal. Action plans clarify who is going to do what and by when in order to achieve the goal. Even if proper planning is in place, it is not of much relevance if the execution is not proper. Imbibing classic theory of Principles of Management, while execution of strategic plans, would enable the small enterprise to reach their goal. The principle of division of labor and specialization is especially beneficial because small organizations tend to clump too many things together in order to save upon the cost. This results in unsatisfactory results and inefficiencies. Division of labor and specialization would not only hone the skills of the labor but also enable them to focus on their core job. Principle of Unity of Command is another suitable norm for small businesses. Ownership of small businesses is usually bifurcated with families and partners and ego tussle among them might lead the workers to confusion. Unity of Command would ensure that in case of any conflict, the worker works in a single direction. Esprit de corps would ensure that howsoever small a team might be, it would still function as a team and imbibe the basics of team work. It will enable the small businesses to encash upon the collective strengths of the people rather than individual efforts. Right remuneration and reward system in an enterprise would make the employees more committed and motivated to work. This is particularly true for small businesses where both positive and negative vibes are more contagious than any amount of reward. Lack of execution in small business can also be tackled by keeping a constant eye for the goal and communicating clearly to the employees. Instead of using jargons, the plans should be translated into simple language to make the workers of every level understand them fully. Workers should also be rewarded for their well-done jobs which would motivate them to perform even better next time. To ensure marketing effectiveness, small business firms should take marketing effectiveness review on a regular basis. Since marketing effectiveness reviews an organization’s understanding of its customers and the operating market, it is one of the most essential tools for a small business whose performance often goes unreviewed. The marketing effective review instrument is a self-check audit of the organization’s orientation towards its customers. While marketing effectiveness review gauges the degree of market orientation a business has, marketing excellence reviews the performance of the organization vis-a-vis the best practices of high performing businesses in the same industry. Marketing Excellence Review enables an organization to place itself more accurately in terms of its weaknesses and strengths highlighting where the company should make changes to become a truly outstanding player in the market place. Conclusion From the above discussion, it is evident that although most of the small businesses suffer from the same type of problems and issues, there could be more than one way to address the problem. The type of solution chosen further depends on the long term strategies of the business. Ineffective leadership in small businesses can be combated by developing leaders through coaching. Small business structures have the climate of partnerships and lesser rungs of hierarchy which are suited by developing the leaders’ pool by coaching. Coaching would enable the prospective leaders to clarify their values and overcome limiting beliefs and negative feelings. It would also ensure that they align their activities to the organizational goals and accept the responsibility and accountability for their team’s performance. For developing a comprehensive strategy for the new start-up businesses or businesses with limited resources, it is suggested that an Issue Based Planning Model be adopted. Issue-based Planning represents a new approach to planning which is focused on working around the issues which hinder the daily activities of the organization. All the operational processes possess strengths and weaknesses that make them suitable for some organizations and less appropriate for others. In such circumstances, issue based planning indicates the best way to weigh to prune the processes to suit the organization. Issue based planning is a remarkably flexible administrative process. It starts from the current scenario and works around the issues so as to end in a simpler future. Since small firms have too many operational problems before they achieve the scale of efficiencies, issue based strategic planning is suggested to them. Proper execution of strategic plans is suggested by implementing the four management principles of division of labor and specialization, unity of command, remuneration and esprit de corps. While division of labor and specialization ensure speedy processes with increased perfection, unity of command would bring more clarity in the processes and in the minds of the workers. Right remuneration is a form of reward to encourage the workers to work towards the goals of the organizations. The principle of Esprit de corps aims to bind individual workers as a team and strengthen their efforts towards a common goal. It would also be beneficial to keep the following points in mind in execution: focus on the right matter, communicate, keep goals as simple as possible and reward the employees for the right things. To ensure marketing effectiveness, it is suggested that the organizations regularly take marketing reviews. Such reviews indicate the degree of market orientation an organization has in terms of customer understanding, integrated marketing organization, adequate marketing information, strategic orientation and operational efficiency. Marketing reviews is an exercise of self appraisal and provides the organization with direct feedback about its position in the market. It is expected that by implementing the suggested steps of developing leadership through coaching, issue based planning, principles of management and marketing reviews, small business enterprises will be able to overcome their problems and grow at a better pace. Bibliography Faulkner, R. (2009, October 28). Lack of Execution - The Business Killer. Retrieved December 2, 2010, from ezinearticles.com: http://ezinearticles.com/?Lack-of-Execution---The-Business-Killer&id=3170685 Grenny, J. (2009, June 5). Leadership: Intentional Influence. Retrieved December 1, 2010, from Business Week: http://www.businessweek.com/managing/content/jun2009/ca2009065_772331.htm Harsberger, M. (2010, February 21). What are the biggest problems facing small business today? . American Chronicle . Beverly Hills, CA. Kotler, P. (2003). Marketing Management. New Jersey: Prentice Hall. Luthans, F. (2002). Organizational Behaviour. New York: Mc Graw-Hill. Namara, C. M. (2010). Basic Overview of Various Strategic Planning Models . Retrieved December 3, 2010, from Managementhelp.org: http://managementhelp.org/plan_dec/str_plan/models.htm Perry, S. C. (2001). The Relationship between Written Business Plans and the Failure of Small Businesses in the U.S. Journal of Small Business Management , 1-8. U.S. Small Business Administration. (2010). What is a Small Business. Retrieved December 1, 2010, from SBA: http://www.sba.gov/contractingopportunities/owners/basics/whatismallbusiness/index.html Read More