Strategy is one of the most powerful drivers of growth for middle market companies, accounting for nearly 15% of the growth of the average middle market company. Strategy helps companies define where to compete, what resources they need, and what priorities they set. Strategy guides their choices about what to do (and not to do) to achieve their aims.
The National Center for the Middle Market, based at Ohio State University, surveyed 400 active financial decision makers from middle market businesses across a range of industries and geographies to learn more about companies’ specific actions and attitudes around strategy. Respondents completed a 25-minute, self-administered online survey in August, 2018.
By looking at attitudes toward strategy, approaches to strategic planning, the challenges companies face in developing and executing strategy, three components of strategy have been shown to be critical to middle market growth —definition, development process, and execution—that work together to enable companies to more rapidly realize their corporate objectives and growth goals.
- A well-defined strategy. Companies that can clearly define their strategy are better able to articulate the value to customers, and these companies grow twice as fast as companies that can’t. The strategy should clearly describe where the company competes, what it sells, how it wins and defends markets, and how it sets itself apart from the competition. The more succinct the strategy is, the easier buy-in from all stakeholders will be, including employees, customers, suppliers and partners. Buy-in is essential for the company to succeed.
- A robust and inclusive process for formulating strategy. The process doesn’t need to be highly formalized. It does need to factor in a wide range of inputs including ideas from employees across and throughout the organization. It needs to include external inputs like customer and industry trends, and the latest strategy and management thinking.
- An execution process that engages the entire company. Goals, incentives, and key performance indicators are all aligned with the strategy so that employees at all levels understand the strategy and how what they do connects to the strategy and goals. Now employees can align their actions and behavior with the strategy for better execution and greater success.
Companies with well-defined strategies report year-over-year revenue growth that is 26% higher than the growth of companies with less-defined strategies. To find out more, see https://www.middlemarketcenter.org/middle-market-research-reports-full-research/strategic-planning-for-growth.