Despite their best efforts, many companies base their decisions on faulty strategies, says Rick Howarth, president of the Strategic Thinking Institute and author of several books, including Strategy Espresso.

Here are the three most common strategic errors Howarth sees companies making — and how you can fix them:

Mistake #1: Planning instead of thinking. Many novice leaders substitute strategic planning for strategic thinking. When you jump straight into planning, you don’t fully explore your options and often miss out on a better strategy.

New way: When you encounter a problem or need, spend at least one hour with your team brainstorming all possible solutions. Then consider all the possible obstacles to success for each potential solution.

Mistake #2: Always saying “Yes.” No matter how bad you feel, sometimes “Yes” is the wrong answer. When you lack the discipline to say “No,” you’ll often waste valuable time and resources on projects and ideas that you know won’t work.

New way: Identify the best use of your resources so that when a new project or idea pops up, you can make sure it fits into your grand plan.

Mistake #3: Letting your budget dictate your strategy. Many organizations observe how much money is in the budget and then determine which strategy fits that amount. This means the strategy they choose isn’t necessarily the best one for the company.

New way: Hold a strategic-thinking session before you know your budget. Then use your budget to prioritize your initiatives.

Filed under: Management Minute