The second post in a series based on the National Center for the Middle Market’s research report, Strategic Planning for Growth: How Middle Market Companies Map Their Futures, this article describes the strategy development process best practices of high-performing middle market companies.

Our latest research reveals that the fastest growing and best performing middle market companies rely on well-defined, easy-to-execute strategies to drive their growth. In order to develop those strategies, these companies do not necessarily have written guidelines or formal rules that govern the process. They do, however, have designated strategy development teams, which typically include the CEO, CFO, business unit heads, and operation leaders.

What truly sets them apart is that their strategy development teams don’t operate in a vacuum or rely exclusively upon themselves to come up with solid strategy. They don’t define strategy behind closed doors and then dictate it to the rest of the organization. Rather, they actively invite and consider input from a variety of sources, both internal and external.

Specifically, the best-performing middle market companies consider the following as part of their strategy development process:

  1. Input from employees throughout and across the organization.
  2. Most middle market companies, including high performers, have a top-down strategy development process that starts with the executive team. But it doesn’t end there. The majority of the fastest growers (70%) have processes in place to allow bottom-up ideas to reach management, compared to 55% of slower-growing organizations. Some go a step further by defining specific steps employees can take to challenge management assumptions. Allowing and even encouraging the bottom to challenge the top is clearly associated with faster growth, a more well-defined strategy, greater confidence that the strategy will lead to success, and greater satisfaction with strategy overall.

  3. Customers’ needs, industry trends, and competitors’ strengths and weaknesses.
  4. Fast-growing middle market firms place greater importance on considering inputs from outside their four walls than their slower-growing peers do. They keep tabs on their customers, the industry, and the economy. They are also more likely to consider what their competitors are doing. The 26% of companies that take full account of the competition boast an average growth rate of 10.5% vs. 7.0% for those who only somewhat consider competition or don’t consider it at all.

  5. Strategic management and strategy development process best practices. Leaders from high-performance companies make an effort to stay current on strategy management thinking, industry trends, and best practices.
  6. They are avid consumers of periodicals, the business press, and books, and they attend seminars and executive education courses to stay sharp. These efforts help provide theory and context executives can use to shape the insights they gain from employees and external sources and turn them into ideas and plans for success.

Ultimately, a robust, inclusive development process leads to better strategy and better execution.

The strategy development process directly impacts how well a strategy is defined and how well it is executed, and all three components are associated with stronger, faster growth for middle market companies. To learn more about strategy development and how it influences the other critical elements of strategy, download the Center’s full report, Strategic Planning for Growth: How Middle Market Companies Map Their Futures.

This post is part of a larger research project by the National Center for the Middle Market. Get the full picture through the resources below: