One of the fascinating things I think about these days is all the nonsense that passes for "strategic planning". Strategic planning is a VERY specific process, which involves setting the course of an organization. A good strategic plan always answers the following 3 questions:
1. What do we do?
2. For whom do we do it?
3. How do we beat the competition (or absent competition, how do we excel)?
A good strategic plan also incorporates a systematic analysis of the environment, current situation, organizational capabilities, and assumptions about the future as a foundation upon which to build the answers to those questions. Finally, a good strategic plan, being a tool for creating better results, is simple and includes short-term implementation activities that make a critical difference in pursuing your organization's long-term vision.
Anything less than this is just a piece of a strategic plan that someone is calling a strategic plan so they can charge you more money for it. At best, these planning fragments will be useful but leave you exposed to many of the common pitfalls of poor strategic planning. At worst, they will waste your organization's time and money and leave people disillusioned about the entire strategic planning process.
Fortunately, the Simplified Strategic Planning process will help you avoid these pitfalls. Unlike ANY other model, it has been fine tuned through application over 25 years in hundreds of companies of all sizes.
Sunday, April 22, 2007
Sunday, April 15, 2007
Strategic Planning - making it more personal, part II
Another exercise that helps make participation in the strategy more personal involves identifying key relationships.
Using a diagram similar to the 3-7 element flowchart mentioned in my last entry, you can ask the team which relationships/communication points are most critical to effectiveness in each area. For example, in some companies, the key to effectiveness in customer relationships is the relationship between sales and operations management. Since these areas involve very different mental disciplines, it's not unusual to find the two departments don't communicate well with each other, and there may be some excellent opportunities there to improve effectiveness.
One way to dig in to this diagram is to ask each team member how value is created or destroyed for the customer in their department. Once you have identified, say, the top three ways value is created in each department or area, you can draw lines that connect those value drivers to the departments involved. In many cases, this mapping process can identify areas where you can greatly increase your value to the customer by putting a little effort into improving how the involved departments communicate and work together.
After completing this diagram, it's useful to ask the individual team members how they might improve their role in the identified relationships. You may also want to ask individuals to pick something they do that works well in this area that the other managers might benefit from trying.
I almost always use these tools when discussing strategic issues (page 5.2) in the simplified strategic planning process, which is in the second meeting of the cycle.
Using a diagram similar to the 3-7 element flowchart mentioned in my last entry, you can ask the team which relationships/communication points are most critical to effectiveness in each area. For example, in some companies, the key to effectiveness in customer relationships is the relationship between sales and operations management. Since these areas involve very different mental disciplines, it's not unusual to find the two departments don't communicate well with each other, and there may be some excellent opportunities there to improve effectiveness.
One way to dig in to this diagram is to ask each team member how value is created or destroyed for the customer in their department. Once you have identified, say, the top three ways value is created in each department or area, you can draw lines that connect those value drivers to the departments involved. In many cases, this mapping process can identify areas where you can greatly increase your value to the customer by putting a little effort into improving how the involved departments communicate and work together.
After completing this diagram, it's useful to ask the individual team members how they might improve their role in the identified relationships. You may also want to ask individuals to pick something they do that works well in this area that the other managers might benefit from trying.
I almost always use these tools when discussing strategic issues (page 5.2) in the simplified strategic planning process, which is in the second meeting of the cycle.
Wednesday, April 04, 2007
Strategic Planning Reborn - Making the strategic plan more personal
While personalizing the strategic plan is one of the most effective ways to bring energy and commitment to it implementation, it's also one of the most difficult ways to do this. This is because, unlike many of the variables of the strategic planning process, the complexities of the personalities involved pose analytic difficulties that are both broad - covering a wide range of possibilities - and deep - making them far more difficult to unravel than, say, a question of market responses to certain product changes. Even so, there are some ways of working with the personal nature of involvement with your strategic plan that can yield excellent results
One way of driving home the personal nature of commitment to your team's plan is to bypass personality issues and address the question in a fairly neutral way. An exercise I often use to do this involves asking the team members to identify exactly how they envision themselves contributing to forward motion along the lines of the strategy, and how they see themselves (and their activities) creating obstacles to that same forward motion. As you might guess, it's much easier to get team members to discuss their positive roles in a group setting. One way around this is to reduce the initial interactions around this to a one on one conversation. It's also a great exercise to have team members pair up and discuss the positive contributions, then have each member report on the positive elements of his/her partner.
To reassure the team, I like to tell them that this exercise is not about who is the best, or who has the least weaknesses. Instead, I point out that the greatest opportunity in this exercise lies in our ability to find the best adaptations to existing weaknesses - and that the more obstacles we can identify, the more obstacles we can get out of our way.
So...here is one process, in outline form:
1. Ask the team members to pair up and spend 5 minutes describing to their partner the ways they can drive the strategy forward.
2. Ask the team members to spend 3 minutes identifying specific ways they either (have created obstacles to this in the past) or (could create obstacles in the future).
3. Lay out what you consider to be the KEY elements of the strategy in a diagram (say, on a flipchart). Ideally, it's optimal to have just 3-7 key elements, such as "customer relationships", "quality processes" or "asset acquisition". For a FULL description of the modeling discipline I use, see Jay Forrester's Industrial Dynamics.
4. Ask people to point out where their partners can contribute the most on your diagram, and illustrate it.
5. Ask people to point out where they might/do obstruct the strategy in the same way - but be VERY encouraging about it. The key here is not to fix the person, but to get the pieces of activity that don't FIT the person moved to someone else. A useful set question here is "How could we accomplish this effectively? Are you the right person for this task? Can we use your skills better elsewhere? Is there a process, person, or piece of equipment that would take some of the difficulty of this activity off of your shoulders?"
6. One of the best ways to really tie this up is to ask the team where they feel they personally can create the biggest improvement in the effectiveness of the company. It is important NOT to permit discussion of what other can do, but rather to keep focus on how you can change yourself, or what you do, to increase effectiveness. At times, I've encouraged this by suggesting we will devote resources to the one or two best ideas, but even simple verbal encouragement will generate good results.
The point of this exercise is to really connect team members with the key elements of your strategy. As you progress with your strategy, this exercise can serve both as a reminder of this connection, for the team members, and a diagnostic for some types of implementation issues, for the CEO.
I've tried this exercise several times with different clients now, and I've been impressed with the results, even with clients who have been through several cycles of the strategic planning process already. There are some critical issues that tend to surface with this approach, and team members feel really good about what we achieve when we put this exercise into the strategic planning process.
In my next entry, I'm going to cover another exercise I use to make the strategic plan more personal.
One way of driving home the personal nature of commitment to your team's plan is to bypass personality issues and address the question in a fairly neutral way. An exercise I often use to do this involves asking the team members to identify exactly how they envision themselves contributing to forward motion along the lines of the strategy, and how they see themselves (and their activities) creating obstacles to that same forward motion. As you might guess, it's much easier to get team members to discuss their positive roles in a group setting. One way around this is to reduce the initial interactions around this to a one on one conversation. It's also a great exercise to have team members pair up and discuss the positive contributions, then have each member report on the positive elements of his/her partner.
To reassure the team, I like to tell them that this exercise is not about who is the best, or who has the least weaknesses. Instead, I point out that the greatest opportunity in this exercise lies in our ability to find the best adaptations to existing weaknesses - and that the more obstacles we can identify, the more obstacles we can get out of our way.
So...here is one process, in outline form:
1. Ask the team members to pair up and spend 5 minutes describing to their partner the ways they can drive the strategy forward.
2. Ask the team members to spend 3 minutes identifying specific ways they either (have created obstacles to this in the past) or (could create obstacles in the future).
3. Lay out what you consider to be the KEY elements of the strategy in a diagram (say, on a flipchart). Ideally, it's optimal to have just 3-7 key elements, such as "customer relationships", "quality processes" or "asset acquisition". For a FULL description of the modeling discipline I use, see Jay Forrester's Industrial Dynamics.
4. Ask people to point out where their partners can contribute the most on your diagram, and illustrate it.
5. Ask people to point out where they might/do obstruct the strategy in the same way - but be VERY encouraging about it. The key here is not to fix the person, but to get the pieces of activity that don't FIT the person moved to someone else. A useful set question here is "How could we accomplish this effectively? Are you the right person for this task? Can we use your skills better elsewhere? Is there a process, person, or piece of equipment that would take some of the difficulty of this activity off of your shoulders?"
6. One of the best ways to really tie this up is to ask the team where they feel they personally can create the biggest improvement in the effectiveness of the company. It is important NOT to permit discussion of what other can do, but rather to keep focus on how you can change yourself, or what you do, to increase effectiveness. At times, I've encouraged this by suggesting we will devote resources to the one or two best ideas, but even simple verbal encouragement will generate good results.
The point of this exercise is to really connect team members with the key elements of your strategy. As you progress with your strategy, this exercise can serve both as a reminder of this connection, for the team members, and a diagnostic for some types of implementation issues, for the CEO.
I've tried this exercise several times with different clients now, and I've been impressed with the results, even with clients who have been through several cycles of the strategic planning process already. There are some critical issues that tend to surface with this approach, and team members feel really good about what we achieve when we put this exercise into the strategic planning process.
In my next entry, I'm going to cover another exercise I use to make the strategic plan more personal.
Tuesday, April 03, 2007
Strategic Planning reborn - Drilling down, part II
I've gotten a lot of questions about drilling down, so I'm going to outline some of my favorite techniques for doing it.
As stated before, "drilling down" is a term I use for picking apart parts of the strategy framework. I'm assuming you are using simplified strategic planning as your basic strategic planning model. If not, be sure that your planning process has the following information outlined WELL before you attempt this technique. (I say this because most strategic planning processes are written by people who don't do that much actual planning, so the important chunks may be missing):
1. A good outline of your own capabilities. If you've done a standard "SWOT" analysis, you are probably fine, but avoid focusing on the weaknesses and be wary of BS.
2. A good outline of the capabilities of your 3-5 key competitors. NOT 20 competitors...just 3-5 that really bug you.
3. A good analysis of customer behavior in your markets, in particular, needs, preferences and specialty/commodity tendencies.
4. A good understanding of your operations, current technology, and supplier markets.
If you have all of these, "drilling down" simply involves picking ONE element - such as your supplier markets - and closely examining how they affect the strategic dynamics inherent in the information provided above. For example, in one retailing client, when we first looked at supplier markets, we assumed they wouldn't have much impact on our strategy, because everyone was in the same boat vis the different suppliers. Drilling down led us to ask whether a differentiated supplier market position was possible. We looked at 4 key supplier markets:
1. Capital/real estate
2. Labor/key skills
3. Merchandise/raw materials
4. Advertising
What immediately became clear in our discussion was a firm belief that our larger competitors would quickly copy any strategic move we made in most of these markets - and beat us squarely. In key skills, however, we identified that the size of our competitors would make them reluctant to radically change their human resource practices, so we opted to examine possibilities relating to those. The "drill down" involved a very detailed, almost tactical look at opportunities and operational changes required to change our ability to attract and retain people with key skills. We specifically rated each idea for 2 characteristics:
(1) How easily would/could our competitors copy this change?
(2) How well does this change fit our strengths?
Ultimately, this helped us choose a combination of initiatives (including training and recruiting) which yielded a significant advantage in this area. In the following year, the company increased market share by 10% in a large and mature market while maintaining premium prices.
As stated before, "drilling down" is a term I use for picking apart parts of the strategy framework. I'm assuming you are using simplified strategic planning as your basic strategic planning model. If not, be sure that your planning process has the following information outlined WELL before you attempt this technique. (I say this because most strategic planning processes are written by people who don't do that much actual planning, so the important chunks may be missing):
1. A good outline of your own capabilities. If you've done a standard "SWOT" analysis, you are probably fine, but avoid focusing on the weaknesses and be wary of BS.
2. A good outline of the capabilities of your 3-5 key competitors. NOT 20 competitors...just 3-5 that really bug you.
3. A good analysis of customer behavior in your markets, in particular, needs, preferences and specialty/commodity tendencies.
4. A good understanding of your operations, current technology, and supplier markets.
If you have all of these, "drilling down" simply involves picking ONE element - such as your supplier markets - and closely examining how they affect the strategic dynamics inherent in the information provided above. For example, in one retailing client, when we first looked at supplier markets, we assumed they wouldn't have much impact on our strategy, because everyone was in the same boat vis the different suppliers. Drilling down led us to ask whether a differentiated supplier market position was possible. We looked at 4 key supplier markets:
1. Capital/real estate
2. Labor/key skills
3. Merchandise/raw materials
4. Advertising
What immediately became clear in our discussion was a firm belief that our larger competitors would quickly copy any strategic move we made in most of these markets - and beat us squarely. In key skills, however, we identified that the size of our competitors would make them reluctant to radically change their human resource practices, so we opted to examine possibilities relating to those. The "drill down" involved a very detailed, almost tactical look at opportunities and operational changes required to change our ability to attract and retain people with key skills. We specifically rated each idea for 2 characteristics:
(1) How easily would/could our competitors copy this change?
(2) How well does this change fit our strengths?
Ultimately, this helped us choose a combination of initiatives (including training and recruiting) which yielded a significant advantage in this area. In the following year, the company increased market share by 10% in a large and mature market while maintaining premium prices.
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