Strategic planning: Missing link for SME success in Sri Lanka

The question is not whether your SME can afford to invest in strategic planning, but whether it can afford not to

In the bustling corridors of Sri Lankan business, I have witnessed countless Small and Medium Enterprises (SMEs) rise and fall like waves against the shore. As a Chartered Human Resource professional, my journey through government, private sector, and multinational corporations has provided me with a unique vantage point to observe what separates thriving businesses from those that merely survive.

Over several years serving as a member of the panel of judges for the Federation of Chambers of Commerce and Industry’s Best Entrepreneur of the Year competition, I had the privilege of visiting numerous successful SMEs across the country. This extensive exposure provided invaluable insights into what truly drives business success at the grassroots level. What struck me most was not the diversity of their products or services, but rather a common thread that ran through every successful enterprise: the presence or absence of strategic planning.

The strategic planning revelation

My most profound understanding of strategic planning’s transformative power came in 2001 when I joined People’s Bank as Deputy Head of Human Resources under the visionary leadership of CEO Derek Kelly and Chairman Mano Tittawella. This experience forever changed my perspective on organisational transformation and strategic thinking.

People’s Bank was then what many called a “sleeping giant” -- a Government-owned institution struggling with bureaucratic inertia and competitive pressures. Derek Kelly, brought in from HSBC with extensive international banking experience, faced the monumental task of restructuring this institution. His approach was revolutionary: he assembled a team of top executives from the private sector and implemented comprehensive strategic planning across all major disciplines including finance, marketing, human resources, and banking operations.

The transformation was nothing short of remarkable. Under Derek Kelly’s leadership, working alongside skilled Sri Lankan bankers and the new management team, People’s Bank evolved from a negative net worth of Rs. 20 billion to breakeven within two years. Within four years, it became the highest profit-earning bank in Sri Lanka, even surpassing foreign-owned banks operating in the country.

What made this experience particularly enlightening was witnessing how strategic planning cascaded through every level of the organisation. It wasn’t merely about setting financial targets; it was about reimagining the bank’s entire operational philosophy, customer service approach, HR management, IT infrastructure, and market positioning. The transformation demonstrated the power of strategic thinking even in the most challenging organisational contexts.

Today, I’m delighted to note the tremendous growth and development of the bank, particularly in nurturing human capital and building sustainable leadership pipelines. The strategic focus on people development has yielded extraordinary results over the decades. The Management Trainees we carefully selected and mentored during that transformative period have grown to become the backbone of the institution, now serving as Deputy General Managers heading critical departments across the bank. This organic leadership development exemplifies how strategic human resource planning creates lasting organisational strength.

Most notably, Clive Fonseka, who was recruited for a managerial role in treasury operations from a competitive bank during our restructuring phase, now leads the institution as CEO. His journey from a specialised treasury manager to the chief executive position perfectly illustrates how the bank’s commitment to identifying, developing, and promoting talent from within has created a robust leadership continuum. This succession success story demonstrates that true organisational transformation lies not just in immediate financial turnarounds, but in building enduring human capital that sustains growth across generations of leadership.

A professional institute’s strategic awakening

While serving at People’s Bank and being immersed in comprehensive strategic planning process daily, I was simultaneously serving as the youngest council member at CIPM (then known as IPM) under the presidency of Jayantha Jayaratne. Having become so accustomed to strategic thinking and planning in my professional role, I experienced a pivotal moment of organisational introspection during one council meeting. It was this experience exposure to strategic planning at People’s Bank that prompted me to ask what seemed like a straightforward question: “Does CIPM have a strategic plan?”

The question was met with striking silence. Eventually, a fellow council member commented, “We are not a commercial entity to have such plans; we are a professional institute.” This prompted me to press further: “Don’t you think even we need a vision, mission, values, and objectives?”

President Jayaratne’s response was both swift and impactful. He cited Thilak Padmarajadasa as “the best person to prepare strategic plans in this country” and commissioned him to chart CIPM’s inaugural strategic direction. The outcome was transformative. CIPM evolved from a conventional professional body into a dynamic and forward-looking institution. This transformation encompassed strengthened infrastructure, expanded educational offerings, increased membership, enhanced national and international partnerships, a broader branch network, greater financial stability, and an elevated image and goodwill that persist to this day. This experience underscored a vital lesson: strategic planning is not exclusive to commercial enterprises. Every organisation, regardless of type or scale, reaps immense benefits from clear strategic direction.

Championing strategic planning throughout my career

Having witnessed firsthand the transformative power of strategic planning at People’s Bank and CIPM, I became a passionate advocate for strategic thinking in every organisation I subsequently served. Throughout my career, I have consistently encouraged and supported strategic planning initiatives across diverse sectors, from government institutions to private and multinational corporations. This wasn’t merely professional duty; it was a conviction born from experiencing tangible results.

The power of strategic planning became evident time and again, improved organisational clarity, enhanced performance metrics, better resource allocation, and most importantly, sustainable growth trajectories. These weren’t theoretical concepts but measurable outcomes that reinforced my belief in strategic planning’s fundamental importance.

The SME strategic planning gap

Through my extensive interactions with hundreds of SMEs as a judge during multiple years of entrepreneur competitions, combined with my ongoing advocacy for strategic planning across various organisations, a concerning pattern emerged. While these businesses demonstrated remarkable innovation, dedication, and market insight, many lacked formal strategic planning processes. They were sailing without a compass, relying on intuition and reactive decision-making rather than proactive strategic thinking.

The most successful SMEs I encountered shared several strategic planning characteristics:

Clear vision and mission: They articulated not just what they did, but why they existed and where they were heading. This clarity permeated their organisations, from the founder to the newest employee.

Market positioning strategy: Rather than trying to be everything to everyone, they identified their unique value proposition and targeted specific market segments with precision.

Resource optimisation plans: They understood their constraints—whether financial, human, or technological—and developed strategies to maximise impact within these limitations.

Risk management frameworks: They had identified potential threats and opportunities, developing contingency plans rather than hoping for the best.

Performance measurement systems: They established key performance indicators that went beyond financial metrics to include customer satisfaction, employee engagement, and operational efficiency.

Why strategic planning matters more for SMEs

For large corporations, strategic planning is often institutionalised through dedicated departments and extensive resources. SMEs, however, face unique challenges that make strategic planning both more difficult and more crucial:

Resource constraints: Limited financial and human resources mean every decision carries greater weight. Strategic planning helps ensure these precious resources are allocated optimally.

Market vulnerability: SMEs are often more susceptible to market fluctuations and competitive pressures. Strategic planning provides the framework for anticipating and responding to these challenges.

Growth management: Many SMEs struggle with scaling their operations. Strategic planning provides the roadmap for sustainable growth while maintaining quality and culture.

Succession planning: Family-owned SMEs, which constitute a significant portion of Sri Lankan businesses, often lack formal succession strategies. Strategic planning addresses long-term sustainability beyond the founder’s involvement.

The Sri Lankan SME context

Sri Lanka’s SME landscape presents unique opportunities and challenges. The country’s strategic location, skilled workforce, and diverse economic base provide tremendous potential. However, global competition, regulatory complexities, and infrastructure limitations require sophisticated strategic responses.

SMEs that embrace strategic planning are better positioned to navigate regulatory changes and compliance requirements, access international markets and supply chains, attract investment and financing, build resilient business models, and develop competitive advantages.

Implementing strategic planning in SMEs

The good news is that strategic planning for SMEs doesn’t require the complexity of multinational corporations. Based on my observations and experience, successful SME strategic planning follows these principles:

Start simple: Begin with fundamental questions—Where are we? Where do we want to be? How do we get there?

Involve key stakeholders: Ensure that family members, key employees, and trusted advisors participate in the planning process.

Focus on differentiation: Identify what makes your business unique and build strategies around these strengths.

Plan for multiple scenarios: Develop strategies for different market conditions and growth trajectories.

Review and adapt: Strategic plans are living documents that require regular review and adjustment.

The way forward

As Sri Lanka’s economy continues to evolve, SMEs will play an increasingly vital role in driving growth, innovation, and employment. Those that embrace strategic planning will not only survive but thrive in this dynamic environment.

My journey from questioning CIPM’s strategic direction to witnessing People’s Bank’s transformation, observing countless SMEs over several years of competition judging, and continuously championing strategic planning across diverse organisations throughout my career, has convinced me of one fundamental truth: strategic planning is not a luxury for SMEs, it is a necessity.

Having experienced its transformative power firsthand and witnessed measurable results across various sectors, I continue to advocate for strategic thinking wherever I serve. The evidence is overwhelming, organisations that embrace strategic planning consistently outperform those that don’t.

The question is not whether your SME can afford to invest in strategic planning, but whether it can afford not to. In an increasingly competitive and complex business environment, strategic planning provides the clarity, direction, and resilience that separate successful enterprises from those that merely survive.

The time for Sri Lankan SMEs to embrace strategic planning is not tomorrow, it is today. The future belongs to those who plan for it strategically.

(The writer is a Chartered Human Resource Professional and Past President of the Chartered Institute of Personnel Management Sri Lanka. He has extensive experience in strategic planning across government, private sector, and multinational organisations, and served as a judge for national entrepreneurship competitions.)