Tuesday, October 08, 2013

What you mean vs. what you say in your strategic plan

Sometimes, in the strategic planning process, I encounter a situation where someone in the team - often the CEO - says "That's what we want, but we don't want to put that in our strategic plan".  This makes me cringe.  Your strategic plan is intended to be a clear, concise statement of where your organization is going.  There are two possible uses for a blatant omission in your plan - 1) You want to mislead your competition and 2) You want to mislead your customers, stockholders, employees or suppliers.  I could think of a case or two where the first use MIGHT be sanctioned - but, to me, this is also a big warning sign that we are putting tactics in our plan rather than strategies.  The second use is almost certain to backfire - even more today than, say, 10 years ago.  People HATE being misled, and to do so in your strategic plan is about the worst place I can think of to do it.
So...take a look at your strategic plan.  Is the truth in there, or does it contain elements you added strictly for PR purposes?  Why would you be willing to pay the price for something like this?

Sunday, August 25, 2013

Would you prefer sales growth or profit growth?

Often, before I work with a company on strategic planning, I ask the owner or CEO what success would look like for him or her.  This simple question has been the source of some great soul-searching over the years.  One of my earliest clients answered – very quickly – that he wanted sales growth.  We created a plan that delivered that, and then some.  The company nearly doubled in size in a short period of time, but the next time we did strategic planning, the owner told me he wanted more profit – even if it meant slowing down growth.  This is not unusual – and many people try to pretend that there isn’t a trade-off.  While it is true that both profit AND sales growth are possible simultaneously, it is much, much more likely that you will experience one or the other.
Here is why most companies experience either sales growth or profit growth:  customers aren’t particularly interested in either of these things for you.  Customers want the best deal on the best products and the best services with the most features and the most convenience.  Try to do all those things at once, and you are going to lose money – unless you have a magic recipe somewhere (and granted, it’s possible, but much more rare than most gurus would have you think).  So…we can sell MORE to customers if we give up a little – or we can sell LESS and make more money.  Your competitors have the same deal going on – some may have special know-how that enables them to wiggle about a bit in this equation, but every company runs into this wall, sooner or later. 
A few years back, I analyzed the results of dozens of companies that I’ve worked with, and this tendency became very clear:  the top performers in sales volume growth were in the bottom quartile in profit growth, and vice-versa.  I find this result a little surprising:  most of us assume that overhead absorbtion creates an economy of scale as you get larger.  The problem with this assumption is that size attracts – you guessed it – competition, and so there is a higher need for investment and the overhead that comes along with it as you get bigger.  In other words, for most companies, there is no magic size you can reach where you are not going to be beset by competition.  If you don’t believe me, take a look at companies like Apple and Exxon-Mobil.  They make great money, and they are huge, but they have to invest heavily to maintain their position because a big company is essentially a HUGE target for competition.
So here is a question for you – would you like to see super high growth in sales or profits – or would you be happy with mid-range numbers in both?  If you can make a clear, focused choice, you will be far ahead of your competitors.

Monday, June 24, 2013

Are you REALLY doing strategic planning?

Do you think your company is doing strategic planning?  Many people do - but strategic planning is more than just an annual vague discussion about your business.  Real strategic planning can be characterized by three things:  SUBJECT, FOCUS and EXECUTION.
Subject is what you are really talking about when you are doing strategic planning.  As I said in my books, there are three questions that we ask in strategy - and if the subject isn't about one of these three questions, you aren't being strategic.  The questions are: 
  1. What do we do?
  2. For whom do we do it?
  3. How do we beat (or better, avoid) competition?
Remember - if it doesn't address one of these questions, it's not strategic.
Focus is not, as most assume, about what you are going to do.  That's too easy.  Focus is about what you WON'T do.  With proper focus, you can tell the world who you are and they will look to you to deliver on the things that make  you outstanding.  The hard part is giving up the things you are NOT focusing on.  Strategic planning is not about what you should do, want to do or could do - it is about what you must do to succeed in a focused target area.
Execution is actually doing what you plan to do.  It's easy to say "we will go here and do this" - it's another thing entirely to DO it.  If you put little or not effort into your execution, you may have great strategy, but you will have disappointing results.
Does your organization do all of these things well in strategic planning?  Which of the three do you find the biggest challenge?

Sunday, February 10, 2013

Video - How to Set and Reach Your Objectives

As a strategic planning speaker I am often asked "How can I implement my strategic plan?"  The short video on this page explains several key parts of the process, based upon 25 years of successful execution of plans in a variety of industries.


Tuesday, February 05, 2013

What is strategic planning?

Strategic planning is something many people think they know because they have seen it done badly.  Strategic planning is NOT:

-SWOT analysis
-A list of objectives
-A book prepared for your board of directors
-A nice looking document that no one looks at after completion
-A balanced scorecard
-A mission statement

Strategic planning is a process of setting the course and direction for an organization or other endeavor.  A well done strategic plan focuses the resources of the endeavor on those activities which will yield the best results.  For businesses, this means optimizing profitability, survive-ability and growth-ability.  

The best way to assess the quality of a strategic plan is to ask these questions:

-What did you do as a result of the plan?
-What difference did it make for your organization?

Considering the answers to these questions, how would you improve YOUR strategic planning?

Tuesday, January 29, 2013

Upstream and Downstream

One of the overlooked ways to improve your strategic planning is by thinking about how your organization fits into the bigger picture.  An excellent exercise in strategic thinking is to take a minute and think about why you are important both upstream and downstream in the value chain.  In other words, what makes you important to your suppliers, and what makes you important to your customers.
I like to closely examine any ideas this may spark about win-win activities that might involve the upstream or downstream players.  A good example would be a social networking site which encourages you to invite friends - you are helping them by growing their network, and helping yourself by expanding the network you can draw upon within that site.  This particular win-win activity goes a long way to explain the rapid growth of social networks as both a business and recreational tool.
Question to ask in your strategic planning:  What activities might you encourage that create a similar win-win situation for your upstream and downstream stakeholders?

Wednesday, January 02, 2013

Starting the year right

One of the best ways to assure your company has a good year is to have a concrete, documented strategic planning process.  Ideally, your strategic planning should occur during a time when it will have less impact on your routine operations, but the key point is that you actually schedule and hold strategic planning meetings.  To minimize conflict and schedule issues, it's also a good idea to plan your meetings one or two months in advance, and possible even longer if your team has difficult travel schedules.  I've found that you will get a lot more out of your team if you hold your planning meeting off-site and work with a professional strategic planner who is not going to try to use the process to sell you other consulting.  If you can afford to get your team out of town to a nice destination, it is definitely worth the effort, as your team will look forward to the process and view strategic planning as something to look forward to.  Start your year off well by scheduling your strategic planning this week!