Wednesday, February 20, 2008

Strategic Planning – when should the team be expanded?

The question of the size and composition of your strategic planning team should constantly annoy you. It should be annoying because there are two really important, but competing factors that should drive your choices. First, your planning will be more focused and effective with a smaller group. Second, your planning will have far greater impact if a larger number of people in your company feel they own the plan.

In recent years, we have tried many different compromises driven by these two factors. We’ve done planning with teams of 20, we’ve worked with teams of 3. Some of the innovations that have come out of this are well worth trying in any company. Still, at the end of the day, some clients want to have a very large number of people participating in their strategic planning meetings. Here are a couple of approachs that have worked for different companies:

  1. Have larger teams work on the homework from sections 1 and 4, and bring them in for the first day of meeting 2 to present their information.
  1. Invite all members of action plan teams into meeting 3 to review their action plans and participate in the scheduling process
  1. Have an informational meeting with a larger group at the end of the strategic planning process
  1. Conduct a strategic issues discussion (page 5.2) with larger groups and collate the results with the top management team.

Of these, I’m very partial to (1) and (2). Approach (1) drives ownership of the information.- and the strategy – down a level in your organization. Approach (2) drives ownership of executive to the appropriate level, where people who will do the work are also responsible for management of the implementation.

In any event, I would be wary of doing any of these approaches the first time out. Your management team will be under enough stress engaging in a new (or different) process without the added problem of performing for an expanded audience. Indeed, when there are specific remedial issues to address, you probably want to keep the strategic planning team as small as possible.

Have you involved a larger group in your company’s strategic planning? I’d love to hear about other approaches that have worked well.

Monday, February 18, 2008

Strategic Planning - Do you think like your customers?

Yesterday, someone brought to my attention a video of an ad that airs on late-night TV for an auto insurance company in Washington State. On the surface, it’s not a slick ad. Many insurance agents would immediately poo-poo it as unprofessional, cheap and sleazy-looking. Frankly, it would hurt to be responsible for this ad.

So why do I like it?

I like this ad because it works – and it works for a reason that bears thinking about in your strategic planning. The ad is for insurance for people who are pretty bad risks. It’s a group I would want to insure myself, but then someone has to. Here’s what I think makes this ad work: the people who see this ad, folks who are, perhaps, watching cheesy re-runs at 2 a.m., are not, for the most part, “professional”. They see an ad that shows someone pulling up to a McMansion in a BMW and immediately tune it out – because they know it’s not for them. But this ad hits those same people hard because it is for them….it’s quick, funny in a cheesy way, and there are bits that will appeal strongly to the lowest common denominator.

Obviously, there are things I do not like about this ad campaign. For one thing, there are nasty sexist bits in there that I wouldn’t touch with a ten-foot pole. But, at the end of the day, Vern Fonk keeps running these spots because they get business in a cost-effective way. And that means the spots probably work - even though most marketing folks would hate to have produced them.

So…in your strategic planning, I’d like you to ask yourselves: are we approaching our market thinking they will behave just like we do? How would our customers make different choices? What can we do to find out what really works, if we don’t really think as our customers do?


Friday, February 15, 2008

Strategic Planning - avoiding the downward spiral

This week I'm at a convention that I really have enjoyed over the years. The trouble is, I notice that the numbers have been smaller, and the association is cutting corners on lots of visible things that affect my perception of the value of the meeting.

I envision the people doing the strategic planning for this event discussing their challenges and noting that, because attendance is off, there is less money to spend. Shouldn't we meet this challenge by spending less? Of course, the answer is yes, but I think it's critical to examine the distinction between costs that add value for customers and those that do not. When we fail to do this, customers notice that every year, things suck just a little bit more. A good example of this is the entire airline industry. Southwest Airlines took advantage of this by cutting to the chase and cutting deep very early on - and they still spend extra money on things that really do affect the customer's value perception. The rest of the industry is stuck on the downward spiral...diminished expectations driving down the customers' willingness to spend leading to less money...and so on...

How can we spot this syndrome in strategic planning - and how can we avoid it? It helps to ask - would customers pay extra to get certain things? It also helps to have a firm idea of who you are for your customers. If you are an association, do you deliver value the members can't get any other way? If you are an airline, are you a comfortable, friendly way for business travelers to get wherever they are going? If you run a construction business, do you get projects done on time and under budget? These are just some examples, but they can help make it very clear where you should spend money even when things get tight. Failure to do this makes you vulnerable to a competitor who does what your customers think you should be doing. Does this mean you may have to lose some customers who aren't willing to pay you to be who you are? Yes, it does. Do you have to choose which customers you want to target in strategic planning? You bet - that's one of the reasons why it's hard.

Next time you are discussing the challenge of a tighter budget in strategic planning, you might want to ask yourself where the value lies. You may be better off charging more and getting smaller numbers anyway than following the cheapest customers into the downward spiral.

Wednesday, February 13, 2008

Strategic Planning – the infinite loop

Yesterday, I had a strategic planning session with a fellow speaker, who mentioned to me that her strategy is to have everything she does be part of an “infinite loop”. This picqued my curiosity, so I asked her about what this meant. In her view, this meant that every new client she takes has to help her learn things that will help her get the client after. In other words, she intentionally seeks business where the her learning helps her get more of the same type of business.

In systems thinking, we would refer to this as a “recursive process” – that is, the output of the process ultimately becomes input to the process. Some engineers might recognize this as a “feedback loop”. In many cases (for example, in software), we don’t like to see feedback loops – but in business strategy, it’s a great idea. Why? Because the “problem” with feedback loops is that whatever is feeding back gets bigger and bigger with each cycle through the loop. In an audio system, this leads to that horrible screeching we hear when a microphone gets too close to a speaker…but in business, this effect can happen to beneficial results (such as learning or getting more business).

Does your business have a feedback loop? How do you maintain it? Good strategic planning should guide you towards this type of competitive advantage.

Monday, February 11, 2008

Strategic Planning - strategic competency and obsession

Today I had a strategic planning meeting with a long-time client that started out in the business of selling tax forms - Greatland Corporation. I say they started out this way because today they offer numerous products and services, including software and online services, to support compliance with government regulations, mostly in the area of wage and income reporting. While their decision, years ago, to pursue other products made sense from a technological perspective, what really made it work was their obsession with compliance. Today we are looking at ways they can extend this obsession into other products and services, which makes me think this quite possibly a useful strategic competency.

In reflecting on this, it is clear to me that great strategic competencies almost always arise from obsession about something that is valuable to your customers. What are you obsessed about? Next time you do strategic planning, ask your team about what they think your company's obsession is - you might find the answers useful.

Wednesday, February 06, 2008

SWOT analysis - why not try another approach?

People make a lot of the SWOT analysis in strategic planning. As a rudimentary approach to thinking about strategy, the SWOT works pretty well. Decades of experience has shown us that great strategy requires much more focus on strengths and opportunities.

There is so much more to great strategy than a simple SWOT analysis. Sure, it’s a great buzzword, but I’d much rather see a strategic plan built around the strategic competency work of C.K. Prahalad and Gary Hamel. Why? There are three main reasons. First, the SWOT methodology creates unnecessary friction around the weaknesses and threats. Second, SWOT-based strategies seldom push the management team hard enough on creating truly distinctive competitive advantage. And third, there has been little, if any, effort put into making the SWOT analysis more data-based (by most practitioners).

So why not just toss out your old SWOT analysis if your strategic planning isn’t working for you this year? I think this is a darn good question.