Strategic Planning: How to RE-think Your Business Model

This year, a LOT of people seem to be wanting to re-think their business models. This is a pretty good idea, because some things are changing in the world economy at a very fundamental level.

I do have to question the wisdom of tackling this for the first time in a recession, though - and here's why: tuning up a business model requires good information from the market.
The information from the market right now suggests (for example) that US consumers only want to buy 6 million vehicles a year. This is obviously poppycock, as anyone in the auto industry could tell you - but behaviors change during a recession.

When you are re-designing your business model, you are trying to create a structure that will work for you ALL the time - in both good times and bad. In many cases, the best business models simply don't work that well during a recession - so you have to structure your business to weather the storm.

All this being said, some markets may be changing so fundamentally that it would be suicidal NOT to re-examine your business model. So what is the best process for doing this?
In strategic planning, the business model is often one of the core strategic issues, so I often find myself tinkering with it.

In the past 20 years, I've found myself making excellent changes - and sometimes not so excellent ones. Here are a few things I've learned from the hundreds of times I've tackled this:

1. Build your model on DATA, not emotion
2. Understand ALL FLOWS in your model - not just the easy ones
3. Start with an understanding of your STRATEGIC COMPETENCY
4. Looking at your current model, ask WHY and WHY NOT about every area where customer value is not optimized
5. Pay close attention to the things EVERYONE IS DOING - and figure out how to avoid them
6. When you have a new model you like, SHOOT HOLES IN IT - and then fix them
7. Make sure you have a good EXECUTION PLAN for making sure the model changes - you will meet resistance!

My next few posts will be about each of these points, and some of the things I do to assure the output is a sturdy, viable business model.

Strategic Planning - What's Working Now

I've been paying close attention to the things my clients are doing that seem to be working right now. Remember, the economy is still functioning around at least 90% of where it was a year ago, so there is plenty of money to be had out there. Here are the strategies that seem to be working:

1. Target emerging customer desires

Emerging customer desires can be general (such as an increased desire for green products) or very specific (such as the new niche for iPhone apps). This strategy requires a bit of forethought about what's going to be cool next year, but the payoff can be huge.

2. Emphasize needs based purchases

When people tighten their belts, they still buy what they need. An emphasis on basics can pay off, but don't overlook the "downshift" appeal of less expensive luxuries, where people subsitute, say, a domestic vacation for an international one, or beer for wine.

3. Use the breather to tune up your operation

You have extra capacity and manpower right now? Prepare yourself...you may not have enough in a few months. Even if you don't expect this, it's wise use a period of low capacity utilization to increase the efficiency of your operation from the ground up - and NOT just by cutting costs! This would be a perfect time to undertake a lean initiative, for example.

4. Acquire competitors who haven't planned for a recession

Some of your competitors undoubtedly didn't prepare as well as you did for a recession. Why not take advantage of this fact and sniff around to see if any of them would be willing sellers?

New Strategic Planning Process - Drinks at the Pool

I have recently reviewed strategic planning results from a number of clients, and am developing a completely new design based on results over the past 10 years.

This new process, which I am calling "Drinks at the Pool" or DatP for short, reflects learning from some of the most successful organizations I've worked with over the past twenty years. It involves a structured process of drinking whiskey next to a swimming pool in a warm climate.

If you are interested in this streamlined and effective form of strategic planning, I have some dates available in April in Orlando, and would enjoy talking with you about how we can relax and imbibe our way to greater success for your company!