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Reasons that May Make a Strategic Plan Unsuccessful
Introduction
According to Marian C. Jennings, the president of a national health care consulting firm that specializes in strategy initiation and development. A strategic plan may be unsuccessful due to various reasons. One of the reasons is a strategy that focuses on a single possibility in future thus ignoring uncertainties presented by the market. She gives an example of the occurrences in the 1990s where many delivery systems that were integrated in nature assumed that a form of payment would be accepted thus dominating the market. The mistake committed was concentration on this assumption. As soon as capitalization failed to materialize, the organization responsible for such an assumption made losses (Anonymous 2000).
Reasons for failure of strategic plans
Proper implementation of a successful strategy depends on proper understanding of what a strategic financial plan is and its constituents. This is another reason why strategic plans fail because on several occasions officials in organizations do not understand such strategies. This makes it difficult for them to implement the strategies as the information presented is not well taken and understood. Another problem is the peoples understanding in relation to these strategies. In most occurrences the understanding is poor thus leading to failure.
Another mistake that is committed by financial officers is considering the strategic financial plan as something that they should have or something that would be nice to have instead of considering it as a plan that requires careful formulation and implementation. Such individuals lack the information and enthusiasm necessary to maintain the plan (Reiff and Nelson 1993).
The use of tools by financial manager that are considered ineffective in abid to develop financial strategies for managed care is another reason for failure. These tools do not account for the uncertainties surrounding the market like the future of Medicares managed care and the influences of behavior exhibited by consumers. Employee benefit structure is another market uncertainty that such tools disregard. In an effort to overcome this situation thus ensuring success of a strategic plan such uncertainties need to be detected and mitigated (Krentz & Gish 2000).
Ways to increase the success of a strategic plan
As Jennings says, unsuccessful strategic plans arising from poor assumptions in regard to the forces in the market can be avoided by imagining a series of events in the market that lead to different results. This is termed as practicing the future. These alternative events are likely to influence the strategic positioning of an organization thus influencing key events which in turn lower the chances of failure. Failure of such plans can be avoided by identifying the trigger points for each plan. These are indicators that show the direction of the market. Organization of assumptions around categories of uncertainties can also help in minimizing failures in planning strategies (Anonymous 2000).
In order to successfully implement these plans, the chief information officer must put into operation a system that trains personnel on what a financial plan is and what it entails. An organization also needs to carry out a forecast which should include an income statement, a cash flow statement and a balance sheet. This forecast has to show the integration of all the factors that affect the profits and the liquidity of the organization. This kind of planning gives an organization the ability to analyze its activities; with this kind of information the organization can develop an effective strategy with a high percentage of success (Reiff and Nelson 1993).
Scenario analysis overcomes possible failures of a strategic plan. This is through acknowledging the uncertainties in the market thus articulating a set of other alternative futures for use. This usually gives an organizations executive team the insight and ability to create an effective strategy with the ability to improve an organizations position in the market. Increasing the preparedness of an organizations financial manager for the changes in the market can also help in reducing the possibility of failure in the implementation of a strategic plan. This feat can be attained by training the financial managers on alertness thus sensitivity of trigger points that could in turn signal the rise of a specific scenario.
Increasing success of a strategic plan
Some examples of these market (healthcare) forces include collective bargaining as the case for physicians, benefit structures for employees in the health sector, consolidation of health plans, inflation and impact of customers and models on health planning. To ensure successful scenario analysis thus successful implementation of financial plan, planners should select two market forces that are likely to affect an organization. These forces are used to make a matrix that shows four viable futures. The planners can then use these futures to detect the extreme outcomes that can result from the market forces at work (Krentz & Gish 2000).
In order to create a successful financial plan, the financial managers should also identify the factors which are within the control of the organization. These include factors like skills and resources, finances, communication, values, membership among others. The finance managers should pinpoint the effects of these factors on the ability of the organization to reach its goals. An organization can also face certain influences which it might not control.
Conclusion
These influences have both negative and positive effects on an organization. Examples of these factors include lifestyles, markets, economy and technology. To ensure that these influences do not affect the organization negatively, their significance in the markets will have to be measured by looking at the gap between the current status of the organization and what the organization needs in order to respond to external and internal influences. In general implementation of a strategic plan depends on adequate information on the markets and the organization in question (Fleming- OMAFRA 1991).
References
Anonymous. (2000). Health Care Strategic Management: Scenario planning a useful tool for health cares uncertain times. Chicago. 18(10),5, 3.
Fleming, P. OMAFRA. (1991). Fact sheet 89 (173). Queens Printer for Ontario.
Krentz, E. & Gish, S. (2000). Healthcare Financial Management. Using scenario analysis to determine managed care strategy. Westchester
Reiff, D. and Nelson, M. (1993). Computers in Healthcare. Financial planning: A necessity for the 90s. Englewood. 14(5). 20, 5.
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