Tuesday, September 18, 2007

Strategic Planning - the great chance

Sometimes, when doing strategic planning, we encounter opportunities that scare us. Now, opportunities could scare us for a number of reasons, but I'd like to focus on opportunities that are frightening because we simply cannot know, before committing to the opportunity, whether it will work or not.

What should we do when we face such opportunities? I've noticed three distinct behaviors when such an opportunity comes up: 1. Pretend it won't matter. 2. Embrace it. 3. Figure out a way to try it, cheaply.

Of the three, I'd say #3, The Cheap Trial Run, is by far the best. I think this is because I'm partial to the scientific method - form a hypothesis, figure out a way to test it (ideally with a control!) and compare the results. The more we can do this in our business lives, the better off we will be.

Option #2 is better than #1, in the long run, unless the cost of embracing the opportunity is unaffordably high. I say this because we, as humans, have a terrible penchant for sticking with the tried and true. In business, this is almost always the enemy of innovation, and time and again I see companies get in trouble because they insist on the "safe" route which ultimately leads down the path of staleness and lost market share.

Have you seen other behaviors? How do you respond to the big unknown opportunities in your business? Some thinking about this - and the long term impact it has on your strategic success - may be a productive way to begin your next strategic planning meeting.

1 comment:

Alan S Michaels said...

I very much agree with your options and your selections, although it can make a difference if you are the industry leader or not.

In some cases, industry leaders mistakenly adopt a new technology too quickly and change the rules which lower barriers and diminishes their competitive advantage.

On the other hand, if you're not the leader, it might be best to change the rules with new technologies as fast as possible. In some cases, the fastest way to do this is by joining with other competitors to establish a new industry standard. (For example, the way MHT Bank and Chemical Bank in the 80's created the New York Cash Exchange because Citibank was so far ahead in ATM technologies.)