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.
Tuesday, September 18, 2007
Monday, September 10, 2007
Strategic Planning - Commas Cause Problems
This past week I gave a speech on strategy to a bunch of professional speakers in Arizona. One of the first things I asked the audience to do was write a list of the topics they speak on. When they were finished, I asked how many of the speakers had commas in their answer. For example, it's not uncommon to have a speaker say "motivation, team building, change management and leadership". I think every comma in their answers represents a focus problem that's pretty acute for a lot of speakers. And when I talked to audience members after that, I was taken with how many of their business issues were wrapped up in this focus issue.
Focus is a serious, serious problem for a professional speaker for two reasons. First, when you speak you are absolutely selling your experience, expertise and polish. These increase dramatically with repetition, and a speaker who gives the same speech twenty times is far better than one who gives twenty speeches once. Secondly, it is so very very easy to lose focus as a speaker. In manufacturing, you have to develop new products or markets, hire new people, and sometimes acquire new facilities or equipment to lose focus. For a speaker to wander off focus, all he or she has to do is read a couple of books and agree to speak on a topic that is outside of his or her focus.
Do you have commas in your list? Why are they there? And can you imagine how much better you would be if they weren't?
Focus is a serious, serious problem for a professional speaker for two reasons. First, when you speak you are absolutely selling your experience, expertise and polish. These increase dramatically with repetition, and a speaker who gives the same speech twenty times is far better than one who gives twenty speeches once. Secondly, it is so very very easy to lose focus as a speaker. In manufacturing, you have to develop new products or markets, hire new people, and sometimes acquire new facilities or equipment to lose focus. For a speaker to wander off focus, all he or she has to do is read a couple of books and agree to speak on a topic that is outside of his or her focus.
Do you have commas in your list? Why are they there? And can you imagine how much better you would be if they weren't?
Thursday, September 06, 2007
Strategic Planning Seminar
Some of my readers will want to know that my Fall 2007 Simplified Strategic Planning seminar schedule is up on the CSSP website. This is a great program that consistently gets rave reviews - and it's a chance to talk about your strategic planning issues face to face.
I will be teaching the programs in Troy, San Francisco and Orlando - so if you'd like to see me in person, be sure to sign up!
I will be teaching the programs in Troy, San Francisco and Orlando - so if you'd like to see me in person, be sure to sign up!
Sunday, August 19, 2007
Strategic Planning: But We Don't Have a Strategic Competency!
Every year I hear this comment from dozens of companies, when I present my program on strategic competency. While the concept is quite possibly the single most powerful tool in strategic planning, the hard reality is that far too many of us do NOT have a real strategic competency.
Does this mean you should give up on the idea because it is irrelevant to you and your business?
Absolutely not.
Strategic competency is the one thing that separates the men from the boys in strategic planning. Wimpy strategic planners will back off from the idea and go after the low-hanging fruit of modest operating improvements and shrewd tactical moves in the marketplace. The muy macho approach is to take the bull by the horns - so we don't have a strategic competency? Let's get one!
The problem with this response - and the reason most companies don't respond this way - is that it's hard. No question about it, building a real strategic competency where one does not currently exist is probably the most difficult, expensive and time-consuming undertaking in strategic planning. And that is exactly why it is also the most valuable. So why do most of us shy away from committing to an obsession with our competency? I think we shy away because it's risky. Commit to the wrong competency and you will waste a ton of time and money, with poor results to show for it.
But...let's have some confidence in our strategic planning, ok? If we've done a good job on the planning process (and, if you use a real professional, you should have confidence in that), why wouldn't we commit? Sun Tzu pointed out that soldiers fought better if you made them smash their rice-pots - because commitment to winning the battle was the only way to assure they would eat. I suspect that many of us in management are unwilling to smash our own rice-pots...and we pay the price every day with less than stellar results.
Does this mean you should give up on the idea because it is irrelevant to you and your business?
Absolutely not.
Strategic competency is the one thing that separates the men from the boys in strategic planning. Wimpy strategic planners will back off from the idea and go after the low-hanging fruit of modest operating improvements and shrewd tactical moves in the marketplace. The muy macho approach is to take the bull by the horns - so we don't have a strategic competency? Let's get one!
The problem with this response - and the reason most companies don't respond this way - is that it's hard. No question about it, building a real strategic competency where one does not currently exist is probably the most difficult, expensive and time-consuming undertaking in strategic planning. And that is exactly why it is also the most valuable. So why do most of us shy away from committing to an obsession with our competency? I think we shy away because it's risky. Commit to the wrong competency and you will waste a ton of time and money, with poor results to show for it.
But...let's have some confidence in our strategic planning, ok? If we've done a good job on the planning process (and, if you use a real professional, you should have confidence in that), why wouldn't we commit? Sun Tzu pointed out that soldiers fought better if you made them smash their rice-pots - because commitment to winning the battle was the only way to assure they would eat. I suspect that many of us in management are unwilling to smash our own rice-pots...and we pay the price every day with less than stellar results.
Sunday, July 22, 2007
Strategic Planning - Eliminating Dead Weight Loss
What is dead weight loss? It's what happens when a customer wants something - and is willing to pay a given price for it - but settles for something that is either above or below his or her ideal price. In many markets, the price difference will correspond with real differences in value delivered to the customer.
A good example of this happens with airline tickets. There are times when a given route, because of intense competition, is priced very low. Let's say you would be willing to pay $200 for a ticket from New York to Miami, especially if you felt you would be getting good service. Because of competition on that route, you might find prices as low as $100. Now, in the long run, $100 is probably not a viable price for that route - because the average cost of flying the plane exceeds $100. But you buy the ticket anyway, since you want to go to Miami. The airline has suffered an dead weight loss of $100 when you buy the ticket for $100 less than you were willing to spend.
dead weight loss also occurs when you decide NOT to buy the ticket if the fare rises to $250. In that case, the dead weight loss is $200, because you did not spend any money with the airline. Airlines tend to use a process called yield management to fill as many seats as possible at a given price level with minimum dead weight loss, but it tends to be a losing battle. The main reason is that the main fare variations tend to happen in very predictable ways, and passengers understand those systems pretty well. But the basic concept does have some merits, because it enables airlines to offer multiple prices for the exact same seat, which reduces the dead weight loss. How can you do this in your business?
First, it's safe to assume that your current pricing doesn't represent the ideal price to most of your customers. In some cases, you lose customers because your price is too high, and in other cases, you are leaving money on the table because your price is too low. If customers were honest with us about the prices they are willing to pay, we could, theoretically, ask each customer and set the price for that customer. Unfortunately, this doesn't work in most real world cases, and in some cases it involves an illegal practice known as price discrimination. However, you can always offer customers a little more or a little less when you sell them anything. For example, when customers buy electronics at many chain stores, they are offered a service plan. Without going into the merits of the service plan or its real value, this is a good example of upselling customers who are willing to pay a little more for a better consumer experience.
How can you do this in your business? In my next post, I'll explore some of the ways this can be done, and after that, a process for identifying the possibilities in any business.
For those of you who are interested, our Fall Simplified Strategic Planning seminar schedule has been posted. I'll be teaching programs in Anaheim, San Francisco, Orlando and Troy, Michigan. The California programs will be the first time I've taught a public program outside of Orlando and Troy in years, so I hope my West coast readers will take advantage of it.
A good example of this happens with airline tickets. There are times when a given route, because of intense competition, is priced very low. Let's say you would be willing to pay $200 for a ticket from New York to Miami, especially if you felt you would be getting good service. Because of competition on that route, you might find prices as low as $100. Now, in the long run, $100 is probably not a viable price for that route - because the average cost of flying the plane exceeds $100. But you buy the ticket anyway, since you want to go to Miami. The airline has suffered an dead weight loss of $100 when you buy the ticket for $100 less than you were willing to spend.
dead weight loss also occurs when you decide NOT to buy the ticket if the fare rises to $250. In that case, the dead weight loss is $200, because you did not spend any money with the airline. Airlines tend to use a process called yield management to fill as many seats as possible at a given price level with minimum dead weight loss, but it tends to be a losing battle. The main reason is that the main fare variations tend to happen in very predictable ways, and passengers understand those systems pretty well. But the basic concept does have some merits, because it enables airlines to offer multiple prices for the exact same seat, which reduces the dead weight loss. How can you do this in your business?
First, it's safe to assume that your current pricing doesn't represent the ideal price to most of your customers. In some cases, you lose customers because your price is too high, and in other cases, you are leaving money on the table because your price is too low. If customers were honest with us about the prices they are willing to pay, we could, theoretically, ask each customer and set the price for that customer. Unfortunately, this doesn't work in most real world cases, and in some cases it involves an illegal practice known as price discrimination. However, you can always offer customers a little more or a little less when you sell them anything. For example, when customers buy electronics at many chain stores, they are offered a service plan. Without going into the merits of the service plan or its real value, this is a good example of upselling customers who are willing to pay a little more for a better consumer experience.
How can you do this in your business? In my next post, I'll explore some of the ways this can be done, and after that, a process for identifying the possibilities in any business.
For those of you who are interested, our Fall Simplified Strategic Planning seminar schedule has been posted. I'll be teaching programs in Anaheim, San Francisco, Orlando and Troy, Michigan. The California programs will be the first time I've taught a public program outside of Orlando and Troy in years, so I hope my West coast readers will take advantage of it.
Friday, July 06, 2007
Keeping the Excitement in Strategic Planning
The other day I was watching my son play a game on the internet. It's a tedious game, with lots of repetitive action, and I was puzzled by how much he likes this game. You see, my son gets bored pretty easily. Getting him to do his homework can be a real challenge. But there he was, clearly enjoying spending an hour on a task that looked suspiciously like work to me. Why?
People who have researched this kind of behavior point out that the key to my son's enjoyment of the game were the "levels" he was achieving. You see, playing the game properly (which isn't that hard) leads to gaining a "level". This game started out as a pretty easy one - my ten-year-old was able to gain ten levels in his first hour of play. After a while, though, it got harder...and he still kept going. He's proud of his levels. He talks about them with his friends. And it turns out they all play this game - a lot.
What can we learn from this behavior? I see three key points for keeping excitement going for anything in your business:
1. Measure, measure, measure. Everyone wants to keep score, and the things we measure help create a sense of accomplishment.
2. Give feedback. While some people are motivated by team scores, most individual effort seeks a personal score. The more immediate the feedback, the stronger the motivation. If it takes a quarter to get feedback, you won't get as much bang for your buck.
3. Allow comparison. People love to measure themselves against each other. It's the equivalent of little boys talking about what level they are in a game. Think about how to give your people useful feedback about their contributions to your efforts that make sense when compared with others.
Are there pitfalls in this approach? Absolutely. You can measure the wrong thing. Sometimes feelings will get hurt. And some measurements will make key people think they aren't contributing much - when, in fact, they are critical to your success. But a little thought can lead to great excitement about the things that really matter to you and your company.
If progress on your strategic planning seems to be slowing down, you may want to consider how to get your team to treat the process as more of a game. While some teams just don't have the spirit, a good team will always seek to win when they know there is a score.
People who have researched this kind of behavior point out that the key to my son's enjoyment of the game were the "levels" he was achieving. You see, playing the game properly (which isn't that hard) leads to gaining a "level". This game started out as a pretty easy one - my ten-year-old was able to gain ten levels in his first hour of play. After a while, though, it got harder...and he still kept going. He's proud of his levels. He talks about them with his friends. And it turns out they all play this game - a lot.
What can we learn from this behavior? I see three key points for keeping excitement going for anything in your business:
1. Measure, measure, measure. Everyone wants to keep score, and the things we measure help create a sense of accomplishment.
2. Give feedback. While some people are motivated by team scores, most individual effort seeks a personal score. The more immediate the feedback, the stronger the motivation. If it takes a quarter to get feedback, you won't get as much bang for your buck.
3. Allow comparison. People love to measure themselves against each other. It's the equivalent of little boys talking about what level they are in a game. Think about how to give your people useful feedback about their contributions to your efforts that make sense when compared with others.
Are there pitfalls in this approach? Absolutely. You can measure the wrong thing. Sometimes feelings will get hurt. And some measurements will make key people think they aren't contributing much - when, in fact, they are critical to your success. But a little thought can lead to great excitement about the things that really matter to you and your company.
If progress on your strategic planning seems to be slowing down, you may want to consider how to get your team to treat the process as more of a game. While some teams just don't have the spirit, a good team will always seek to win when they know there is a score.
Thursday, June 28, 2007
Strategic Planning Fix #6 - How much time did you spend on the process?
It's possible to spend either too little or too much time on strategic planning. Strategy is what you use to steer your company, so it's worth spending the right amount of time on. Strategic Planning is not, however, a substitute for the things that actually make your company go.
Far too many companies do strategic planning as a 2-day retreat. I imagine this has been driven by well-meaning, but amateur, "facilitators" who see strategic planning as an easy way to sell a weekend gig in between their "more important" work. In my experience - which is considerable - you need three meetings for a good strategic planning process. Each of the meetings asks a different question:
1. Where are we?
2. Where do we want to go?
3. How will we get there?
Most people pretend you can just ask the middle question. Sadly, as in any navigation, if you don't know where you are, you can't really figure out the proper direction you should be going. Worse yet, in strategic planning, if your management team doesn't AGREE on where you are, they won't agree on your course. You'll save yourself a lot of headaches by having a meeting before you strategize, to figure out what you need to know and how to structure that information. If you skip that meeting, you will likely end up with poor strategy - or, at best, a poor discussion of your strategy.
The third meeting is just as important, because it's not enough just to have a strategic plan. You have to implement the plan, and the hundreds of plans we have completed have shown conclusively that an implementation framework (and a few other tricks we use) greatly increases the number of strategic objectives achieved. In other words, with an implementation plan, you will actually end up doing most of what's in your strategic plan. Without it, you are likely to achieve only 30% of your objectives.
The last comment I'll make on spending time on strategic planning is about spending too much time on planning. Your team has work to do, and planning is only a part of that work. Four or five meetings are not better than three, and if you try to do your planning in, say, an hour a week, you will never, ever get through the process. Almost everyone should allocate between four to seven days (that's 8 hour days) for their strategic planning process every cycle - and maybe another 10-20 hours for homework. That's it. If you need more time, you are probably attempting to implement your objectives inside your strategic planning meetings. While this is admirable, in some respects, it will ultimately sink your strategic planning. So make sure you set a practical, realistic schedule for strategic planning - and stick with it. Otherwise, it can eat you alive.
Naturally, a good, experienced strategic planning professional will tell you these things, and help you navigate all of the questions that come up about the strategic planning schedule.
Far too many companies do strategic planning as a 2-day retreat. I imagine this has been driven by well-meaning, but amateur, "facilitators" who see strategic planning as an easy way to sell a weekend gig in between their "more important" work. In my experience - which is considerable - you need three meetings for a good strategic planning process. Each of the meetings asks a different question:
1. Where are we?
2. Where do we want to go?
3. How will we get there?
Most people pretend you can just ask the middle question. Sadly, as in any navigation, if you don't know where you are, you can't really figure out the proper direction you should be going. Worse yet, in strategic planning, if your management team doesn't AGREE on where you are, they won't agree on your course. You'll save yourself a lot of headaches by having a meeting before you strategize, to figure out what you need to know and how to structure that information. If you skip that meeting, you will likely end up with poor strategy - or, at best, a poor discussion of your strategy.
The third meeting is just as important, because it's not enough just to have a strategic plan. You have to implement the plan, and the hundreds of plans we have completed have shown conclusively that an implementation framework (and a few other tricks we use) greatly increases the number of strategic objectives achieved. In other words, with an implementation plan, you will actually end up doing most of what's in your strategic plan. Without it, you are likely to achieve only 30% of your objectives.
The last comment I'll make on spending time on strategic planning is about spending too much time on planning. Your team has work to do, and planning is only a part of that work. Four or five meetings are not better than three, and if you try to do your planning in, say, an hour a week, you will never, ever get through the process. Almost everyone should allocate between four to seven days (that's 8 hour days) for their strategic planning process every cycle - and maybe another 10-20 hours for homework. That's it. If you need more time, you are probably attempting to implement your objectives inside your strategic planning meetings. While this is admirable, in some respects, it will ultimately sink your strategic planning. So make sure you set a practical, realistic schedule for strategic planning - and stick with it. Otherwise, it can eat you alive.
Naturally, a good, experienced strategic planning professional will tell you these things, and help you navigate all of the questions that come up about the strategic planning schedule.
Thursday, June 21, 2007
Strategic Planning Fix #5 - Did you use an outside planning facilitator?
This is a question that I, of course, have some self-interest in, since I am an outside planning facilitator.
There are two important parts to this question, and they both lead to insights about how to improve your strategic planning.
First, should you use an outside strategic planning professional? Of course, I think the answer is yes, but not always. A professional planner (and by this, I mean someone who does NOT consult on other topics, such as marketing, team-building or manufacturing) can add a lot to your process by stimulating good strategic thinking and giving lots of examples of strategies that have worked at other companies. A planning professional can also take a lot of burden off of your team - by knowing what to do, when to do it, and how much time to spend on it. A highly experienced strategic planning professional will know exactly when to let a conversation run on and when to cut it short, in order to create a strong strategic plan with great support from your strategic planning team. When companies try to do this on their own, they inevitably have difficulties with discipline and buy-in, and worse, the person doing the planning has to divide his or her attention between the planning activity and the strategic content of the plan.
Here are the most common mistakes around the question of whether to use an outside strategic planning facilitator:
1. Not using a strategic planning professional when you need one
2. Using one when you don't need one
3. Using the wrong person
Most poorly written strategic plans that I've been asked to fix over the past twenty years have been the result of either #1 or #3.
Second, who should you use as a strategic planning facilitator? Obviously, an experienced professional who does nothing but strategic planning. Why? Because strategic planning is like surgery - yes, a doctor can do it, but if you need it, you probably want someone who does it over and over again. The difference between getting your strategy right and "pretty close" may only be one or two percent - but that can amount to millions of dollars over time for even a small company.
So what skills should you look for? Here is a list that I have found useful when hiring strategic planning professionals for my firm:
1. Strategic thinking skills
2. Team facilitation skills
3. Solid business understanding
4. The ability to absorb a large amount of information quickly
5. Strong personal integrity
6. Familiarity with a large number of different business models
7. Familiarity with the strategic planning process
Here are some skills which do NOT affect the quality of your plan (although I sometimes look for them when hiring):
1. Experience in your industry
2. Familiarity with the latest buzzwords
3. Sales ability
4. Certifications of any sort
5. Public speaking ability
Hopefully, these comments will help you understand the need for a strategic planning professional, and how to pick a good one.
There are two important parts to this question, and they both lead to insights about how to improve your strategic planning.
First, should you use an outside strategic planning professional? Of course, I think the answer is yes, but not always. A professional planner (and by this, I mean someone who does NOT consult on other topics, such as marketing, team-building or manufacturing) can add a lot to your process by stimulating good strategic thinking and giving lots of examples of strategies that have worked at other companies. A planning professional can also take a lot of burden off of your team - by knowing what to do, when to do it, and how much time to spend on it. A highly experienced strategic planning professional will know exactly when to let a conversation run on and when to cut it short, in order to create a strong strategic plan with great support from your strategic planning team. When companies try to do this on their own, they inevitably have difficulties with discipline and buy-in, and worse, the person doing the planning has to divide his or her attention between the planning activity and the strategic content of the plan.
Here are the most common mistakes around the question of whether to use an outside strategic planning facilitator:
1. Not using a strategic planning professional when you need one
2. Using one when you don't need one
3. Using the wrong person
Most poorly written strategic plans that I've been asked to fix over the past twenty years have been the result of either #1 or #3.
Second, who should you use as a strategic planning facilitator? Obviously, an experienced professional who does nothing but strategic planning. Why? Because strategic planning is like surgery - yes, a doctor can do it, but if you need it, you probably want someone who does it over and over again. The difference between getting your strategy right and "pretty close" may only be one or two percent - but that can amount to millions of dollars over time for even a small company.
So what skills should you look for? Here is a list that I have found useful when hiring strategic planning professionals for my firm:
1. Strategic thinking skills
2. Team facilitation skills
3. Solid business understanding
4. The ability to absorb a large amount of information quickly
5. Strong personal integrity
6. Familiarity with a large number of different business models
7. Familiarity with the strategic planning process
Here are some skills which do NOT affect the quality of your plan (although I sometimes look for them when hiring):
1. Experience in your industry
2. Familiarity with the latest buzzwords
3. Sales ability
4. Certifications of any sort
5. Public speaking ability
Hopefully, these comments will help you understand the need for a strategic planning professional, and how to pick a good one.
Monday, June 18, 2007
Strategic Planning Fix #4 - Who Did Your Strategic Planning?
The problems that come from having the wrong people do your strategic planning are sometimes harder to spot. A plan that has glaring omissions of data or perspective, a plan with poor management team support, and a plan that looks like the CEO wrote it by himself (or herself) are all examples of a plan that may have been created by the wrong people.
So - who should do your strategic planning? Ideally, the strategic planning process should be undertaken by a strategic planning team made up of the CEO and his or her direct reports. In a perfect world, this would be a team of 6-8 people who have intimate knowledge of all the different facets of your business - markets, operations, and financial issues. This group must also have the ability to implement the plan through their day-to-day involvement with the operation of your business. This means that the primary strategic decision making role should go to the people with the primary strategy implementation responsibilities. NOT the board of directors, NOT outside suppliers or union representatives, NOT customer representatives, and NOT a consultant. There are roles for all of these people in your planning process, but the decisions need to be made by the people who will actually have to carry them out. A really good strategic planning consultant, for example, will coach your team through the process in a way that saves them time and stimulates them to better strategic thinking. But by no means should such an outside actually set your strategic for you!
The key idea here is that there are two critical things required for a good plan to work: one is input from the right people, and the other is commitment from the right people. Involving the right people in your strategic planning process will get you both.
So - who should do your strategic planning? Ideally, the strategic planning process should be undertaken by a strategic planning team made up of the CEO and his or her direct reports. In a perfect world, this would be a team of 6-8 people who have intimate knowledge of all the different facets of your business - markets, operations, and financial issues. This group must also have the ability to implement the plan through their day-to-day involvement with the operation of your business. This means that the primary strategic decision making role should go to the people with the primary strategy implementation responsibilities. NOT the board of directors, NOT outside suppliers or union representatives, NOT customer representatives, and NOT a consultant. There are roles for all of these people in your planning process, but the decisions need to be made by the people who will actually have to carry them out. A really good strategic planning consultant, for example, will coach your team through the process in a way that saves them time and stimulates them to better strategic thinking. But by no means should such an outside actually set your strategic for you!
The key idea here is that there are two critical things required for a good plan to work: one is input from the right people, and the other is commitment from the right people. Involving the right people in your strategic planning process will get you both.
Thursday, June 14, 2007
Strategic Planning Fix #3 - How Do You Track Your Implementation?
Most people who claim to do strategic planning really fall down on this one. If you are ever in a position to interview someone who claims to be a strategist, make sure you ask them what percent of strategic objectives are met by their average client. Half will choke on this question, because they don't track it (and how can you optimize something you don't track?).
The cold, hard fact about strategic planning is that it isn't over when the strategic planning meeting is over (and the consultant goes home). Strategic planning is NEVER done - it is part of a cycle of activity that should be changing your company in significant, noticeable ways over time. If you are doing strategic planning and you are not seeing noticeable change, it's probably because you have no mechanism for tracking.
In Simplified Strategic Planning, we tell people to review progress on strategic objectives by writing action plans for them with monthly milestones - and then track progress on those milestones with a mandatory monthly review meeting. This meeting takes a couple of hours most months, and is well worth the time. There are two key benefits you get from this: (1) It puts accountability into the implementation plan and (2) It gives you the ability to correct your course in mid-year when reality doesn't match your plans.
In my experience, of the hundreds of companies I've done strategic planning with over the years, the top 10% ALL do a monthly monitoring meeting and the NONE of the bottom 10% do a monthly monitoring meeting. When you consider that the top 10% in my database averaged 40% per year profit improvements over 5 years, you can see why I strongly recommend this approach!
The cold, hard fact about strategic planning is that it isn't over when the strategic planning meeting is over (and the consultant goes home). Strategic planning is NEVER done - it is part of a cycle of activity that should be changing your company in significant, noticeable ways over time. If you are doing strategic planning and you are not seeing noticeable change, it's probably because you have no mechanism for tracking.
In Simplified Strategic Planning, we tell people to review progress on strategic objectives by writing action plans for them with monthly milestones - and then track progress on those milestones with a mandatory monthly review meeting. This meeting takes a couple of hours most months, and is well worth the time. There are two key benefits you get from this: (1) It puts accountability into the implementation plan and (2) It gives you the ability to correct your course in mid-year when reality doesn't match your plans.
In my experience, of the hundreds of companies I've done strategic planning with over the years, the top 10% ALL do a monthly monitoring meeting and the NONE of the bottom 10% do a monthly monitoring meeting. When you consider that the top 10% in my database averaged 40% per year profit improvements over 5 years, you can see why I strongly recommend this approach!
Sunday, June 10, 2007
Strategic Planning Fix #2 - Set the Right Number of Objectives
I've given this advice so many times since I started coaching strategic planning teams in 1981. Let's say your team can achieve 10 good-sized strategic objectives in the next 12 months. What will happen if you give yourselves a "stretch goal" and try to do 20? In my experience - almost nothing will happen. Your team, which would find 10 good objectives challenging and productive, will be lucky to get halfway done with each of the 20. At the end of the year, you will have a typically poor showing in the execution department and your team will have just a little less faith in the strategic planning process as a whole.
A good rule of thumb for objective setting is to have no more objectives than you have effective team members. For many companies, this puts the limit somewhere in the 5-10 range. Most companies I've worked with in the past five years have done very well with six objectives.
A good rule of thumb for objective setting is to have no more objectives than you have effective team members. For many companies, this puts the limit somewhere in the 5-10 range. Most companies I've worked with in the past five years have done very well with six objectives.
Friday, June 01, 2007
Strategic Planning Fix #1 - What Process Did You Use?
This is the first question I ask anyone who asks me if I can help fix their strategic planning. The reason is simple - every process has strengths and weaknesses, and the issues you are having with your strategic planning may well be the direct result of the process you chose to use.
Surprisingly, a common answer to this question is "We didn't really use a process" or "We read a couple of books and came up with our own process". Obviously, both of these can lead to problems. There are inevitable pitfalls in process design in strategic planning, and no process, or a mishmash of elements from several processes, can get you into those pitfalls quickly. So my first point is use a strategic planning process! Ideally, you want to use a process that's been tested and refined through use in thousands of companies in many different industries over the past 25 years, with a proven track record. Anything else is probably a mishmash of other processes put together by an inexpert strategist who wants to get into the business, and just as likely to lead to problems. Your best bet, of course, is a program like Simplified Strategic Planning, which is the most popular strategic planning model in use today.
The second point I want to make is that many processes that people use for strategic planning leave huge gaps where there should be data, analysis and documentation. My favorite example is Balanced Scorecard, which is an blown-up version of the Measures of Performance we started using in 1981. It's not a complete planning process - it's just a part of the process - and yet many companies treat Balanced Scorecard as their main strategy effort. That's like trying to drive from New York to LA by watching the speedometer and gas gauge - but not a map. Sure, you'll make good time...but where the heck will you be going?
The most common gap I find in other people's planning processes is implementation. Be sure to ask about how a process handles this, because implementation is the most common issue with strategic planning among attendees at our Simplified Strategic Planning seminar.
Surprisingly, a common answer to this question is "We didn't really use a process" or "We read a couple of books and came up with our own process". Obviously, both of these can lead to problems. There are inevitable pitfalls in process design in strategic planning, and no process, or a mishmash of elements from several processes, can get you into those pitfalls quickly. So my first point is use a strategic planning process! Ideally, you want to use a process that's been tested and refined through use in thousands of companies in many different industries over the past 25 years, with a proven track record. Anything else is probably a mishmash of other processes put together by an inexpert strategist who wants to get into the business, and just as likely to lead to problems. Your best bet, of course, is a program like Simplified Strategic Planning, which is the most popular strategic planning model in use today.
The second point I want to make is that many processes that people use for strategic planning leave huge gaps where there should be data, analysis and documentation. My favorite example is Balanced Scorecard, which is an blown-up version of the Measures of Performance we started using in 1981. It's not a complete planning process - it's just a part of the process - and yet many companies treat Balanced Scorecard as their main strategy effort. That's like trying to drive from New York to LA by watching the speedometer and gas gauge - but not a map. Sure, you'll make good time...but where the heck will you be going?
The most common gap I find in other people's planning processes is implementation. Be sure to ask about how a process handles this, because implementation is the most common issue with strategic planning among attendees at our Simplified Strategic Planning seminar.
Wednesday, May 30, 2007
Can I Fix My Strategic Plan?
Occasionally, I'll get a call from a team which has been doing strategic planning for a while on their own and are disappointed with the results. In most cases, they are just not getting value out of the time spent on the process. This is a shame, because good strategic planning usually yields excellent results for companies that approach the process with discipline.
There are a few questions I always ask, because they lead to some of the most common reasons why people have trouble with planning.
1. What strategic planning process did you use?
2. How many objectives did you set?
3. How are you tracking implementation?
4. Who did the planning?
5. Did you use an outside strategic planning facilitator?
6. How much time did you spend on the process?
7. How many market segments are you using?
8. Are you segregating your assumptions from facts?
9. How are you measuring the success of your plan?
In my next few posts, I'll discuss each of these questions, and the answers that are often warning signs that the planning process needs a major fix.
There are a few questions I always ask, because they lead to some of the most common reasons why people have trouble with planning.
1. What strategic planning process did you use?
2. How many objectives did you set?
3. How are you tracking implementation?
4. Who did the planning?
5. Did you use an outside strategic planning facilitator?
6. How much time did you spend on the process?
7. How many market segments are you using?
8. Are you segregating your assumptions from facts?
9. How are you measuring the success of your plan?
In my next few posts, I'll discuss each of these questions, and the answers that are often warning signs that the planning process needs a major fix.
Tuesday, May 29, 2007
When should I do my strategic planning?
I get asked this question a lot in my seminars. There are three basic ways to time your strategic planning around your annual cycles. First, you can schedule your planning process so that it precedes the budget cycle. This is useful if you feel it's important to get the money for strategic projects into your budget. This means you will have to complete and review your action plans before starting your budgeting, but it has the advantage of giving you some pretty detailed information about the expected cost of new strategic projects.
The second way to schedule your strategic planning process is to do it just after your year end. The main advantage of this is to give you the most complete, accurate and up-to-date data on your company's strategic performance. If your financial data gives you key insights about what strategies are working well for you (and it should), this approach might give you the best information for your strategic planning. One possible disadvantage is that it might not allow for inclusion of the action plan expenditures into your budgets, requiring a second look at your budget at the end of the strategic planning process.
The third scheduling approach is to time your strategic planning for a low point in management activity for the year. The main advantage of this is that you won't overload your executive team with the additional burden of planning meetings and homework. For construction, this might be the Fall or Winter, while for schools this is most likely the summer.
All of these approaches have pros and cons, and - of course - there are hybrid approaches that combine these approaches to scheduling strategic planning. I'd suggest you try one and see how it works for your team, understanding that it's always possible to change the timing of your strategic planning in the future. And, of course, a short discussion with an experienced, qualified strategic planning consultant can really help you find the timing that is right for your organization.
The second way to schedule your strategic planning process is to do it just after your year end. The main advantage of this is to give you the most complete, accurate and up-to-date data on your company's strategic performance. If your financial data gives you key insights about what strategies are working well for you (and it should), this approach might give you the best information for your strategic planning. One possible disadvantage is that it might not allow for inclusion of the action plan expenditures into your budgets, requiring a second look at your budget at the end of the strategic planning process.
The third scheduling approach is to time your strategic planning for a low point in management activity for the year. The main advantage of this is that you won't overload your executive team with the additional burden of planning meetings and homework. For construction, this might be the Fall or Winter, while for schools this is most likely the summer.
All of these approaches have pros and cons, and - of course - there are hybrid approaches that combine these approaches to scheduling strategic planning. I'd suggest you try one and see how it works for your team, understanding that it's always possible to change the timing of your strategic planning in the future. And, of course, a short discussion with an experienced, qualified strategic planning consultant can really help you find the timing that is right for your organization.
Thursday, May 24, 2007
Strategic Planning - Should you go for the home run?
Every once in a while, when I'm doing strategic planning with a client, we hit a home run. It doesn't happen with every client, and it doesn't happen every year, but it does happen. A frequently asked question is "Should we try to get a home run?"
I have two very opposing views on this. The first is that swinging at home runs can be very distracting and, when you actually get a hit - it can be downright disastrous. One of my earliest home run stories tripled the size of the company in less than a year and brought their strategic planning to a halt. Within three years, the company - partly because they had stopped planning - had serious growing pains, including cash flow issues. The great "opportunity" they had found nearly killed the company! This is not as uncommon as you would think - there is a very real danger of growing your company to death. Also, let's not ignore the fact that, as in baseball, you are likely to have a lower batting average if you are always hitting for the fences.
On the other hand, while most of my success stories are about dependable, steady growth, there are quite a few that were explosive...and that can be the just thing to get a company out of a rut. Certainly, I'm proud of the home runs that worked out well, because they were built on sound strategic thinking and created sustainable competitive advantages.
So my basic answer is this: put most of your effort into your strategic competency, and the strong, steady growth that comes from that. Consider having a project with home run potential on a side burner, especially if it relates to your competency, but don't bet the farm on it. And...if it starts to take off, be very careful of how it will affect the viability of your company in the long term. Strategic planning is an excellent tool for assessing these kinds of situations, and if you are looking for explosive growth - or in the middle of it - you will be well rewarded if you take the time to do a good job of strategic planning.
I have two very opposing views on this. The first is that swinging at home runs can be very distracting and, when you actually get a hit - it can be downright disastrous. One of my earliest home run stories tripled the size of the company in less than a year and brought their strategic planning to a halt. Within three years, the company - partly because they had stopped planning - had serious growing pains, including cash flow issues. The great "opportunity" they had found nearly killed the company! This is not as uncommon as you would think - there is a very real danger of growing your company to death. Also, let's not ignore the fact that, as in baseball, you are likely to have a lower batting average if you are always hitting for the fences.
On the other hand, while most of my success stories are about dependable, steady growth, there are quite a few that were explosive...and that can be the just thing to get a company out of a rut. Certainly, I'm proud of the home runs that worked out well, because they were built on sound strategic thinking and created sustainable competitive advantages.
So my basic answer is this: put most of your effort into your strategic competency, and the strong, steady growth that comes from that. Consider having a project with home run potential on a side burner, especially if it relates to your competency, but don't bet the farm on it. And...if it starts to take off, be very careful of how it will affect the viability of your company in the long term. Strategic planning is an excellent tool for assessing these kinds of situations, and if you are looking for explosive growth - or in the middle of it - you will be well rewarded if you take the time to do a good job of strategic planning.
Friday, May 18, 2007
If you are looking at consultants...
Remember, one of the most important concepts in strategy is focus.
Any strategic planning consultant who says "I do strategic planning and..." is not focused. They are just fooling around when it comes to strategic planning.
You wouldn't go to a brain surgeon who says "I do brain surgery and plastic surgery." So why work with someone who does something else, like marketing, operations or teambuilding consulting? Your company deserves the best, not an amateur.
Here are some useful questions for when you are choosing a consultant:
1. How many strategic plans did you work on last year? In the past 10 years?
2. What results do your clients get? Can I talk to them?
3. What else do you do besides strategic planning? Will you try to sell that to me?
4. How are you different from other people who do strategic planning?
5. Why do you think there is a fit between you and my company?
6. Do you work with my competitors? How do I know you won't share my data with them?
On that last question - you want to avoid consultants who work with your competitors. The worst strategy is the one that looks just like your competitors - and using the same consultant is a sure-fire way to get that.
Any strategic planning consultant who says "I do strategic planning and..." is not focused. They are just fooling around when it comes to strategic planning.
You wouldn't go to a brain surgeon who says "I do brain surgery and plastic surgery." So why work with someone who does something else, like marketing, operations or teambuilding consulting? Your company deserves the best, not an amateur.
Here are some useful questions for when you are choosing a consultant:
1. How many strategic plans did you work on last year? In the past 10 years?
2. What results do your clients get? Can I talk to them?
3. What else do you do besides strategic planning? Will you try to sell that to me?
4. How are you different from other people who do strategic planning?
5. Why do you think there is a fit between you and my company?
6. Do you work with my competitors? How do I know you won't share my data with them?
On that last question - you want to avoid consultants who work with your competitors. The worst strategy is the one that looks just like your competitors - and using the same consultant is a sure-fire way to get that.
Thursday, May 17, 2007
Strategic Planning - better implementation
I'm thinking of doing one of my future Hot Seat programs on the Four Pillars of Strategy Implementation. I think it would be an awesome program.
People who use any strategic planning model tell me that implementation is really the hard part for them. Yes, I make my living helping people come up with great strategies, but I recognize that I get to go home at the end of the meeting and the managers I work with have to actually put a lot of attention and time into turning those strategies into reality. I suspect that the time I spend on implementation - about 20-30% of the whole process - is one of the reasons my clients get such great results. Some clients tell me it feels a little weird the first time through, but after the first year, almost all of them are completely sold on my unusual approach.
One of the keys - and this is a valuable point for anyone concerned with strategy implementation - is that we pay a LOT of attention to the money involved in most of our projects, and very little attention is devoted to the time involved. This has always seemed backwards to me, because (in the hundreds of projects I've worked on) 95% of the projects that fail in execution do so because people at the top of the organization didn't spend enough time on the project.
So my idea for the Implementation Program is to lay out each company's objectives, action plans, and resource issues, and discuss those in depth, probing for areas where little changes can yield big results in effectiveness. I'm guessing there will be some really great stuff we can do in a program like that on three areas: (1) writing better objectives, (2) writing better action plans and (3) structuring the resource allocation process to yield more realistic commitments. This is just an idea, so I'd love to hear what you think about this!
I think any company who is doing strategic planning could leave the room with a much better implementation plan - maybe even people who are already working with me! If you are interested in this program, drop me a line. I haven't decided where to hold it yet - it might be anywhere in the world.
On that note, I still have a couple of days available when I'm in Europe in late June- early August - my plan is to spend most of that time in Switzerland, but I'd love a chance to do a Simplified Strategic Planning workshop for anyone who hasn't had a chance to see me for a while. Since my only European gig was in Norway last year, that's probably most of my readers in Europe. Drop me a line if you think some great strategic stimulus would be valuable to your company.
People who use any strategic planning model tell me that implementation is really the hard part for them. Yes, I make my living helping people come up with great strategies, but I recognize that I get to go home at the end of the meeting and the managers I work with have to actually put a lot of attention and time into turning those strategies into reality. I suspect that the time I spend on implementation - about 20-30% of the whole process - is one of the reasons my clients get such great results. Some clients tell me it feels a little weird the first time through, but after the first year, almost all of them are completely sold on my unusual approach.
One of the keys - and this is a valuable point for anyone concerned with strategy implementation - is that we pay a LOT of attention to the money involved in most of our projects, and very little attention is devoted to the time involved. This has always seemed backwards to me, because (in the hundreds of projects I've worked on) 95% of the projects that fail in execution do so because people at the top of the organization didn't spend enough time on the project.
So my idea for the Implementation Program is to lay out each company's objectives, action plans, and resource issues, and discuss those in depth, probing for areas where little changes can yield big results in effectiveness. I'm guessing there will be some really great stuff we can do in a program like that on three areas: (1) writing better objectives, (2) writing better action plans and (3) structuring the resource allocation process to yield more realistic commitments. This is just an idea, so I'd love to hear what you think about this!
I think any company who is doing strategic planning could leave the room with a much better implementation plan - maybe even people who are already working with me! If you are interested in this program, drop me a line. I haven't decided where to hold it yet - it might be anywhere in the world.
On that note, I still have a couple of days available when I'm in Europe in late June- early August - my plan is to spend most of that time in Switzerland, but I'd love a chance to do a Simplified Strategic Planning workshop for anyone who hasn't had a chance to see me for a while. Since my only European gig was in Norway last year, that's probably most of my readers in Europe. Drop me a line if you think some great strategic stimulus would be valuable to your company.
Sunday, May 13, 2007
Strategic Planning - the four pillars of implementation
At last week's Michigan State University Simplified Strategic Planning seminar, we had a great discussion about the four pillars of strategy implementation. These four things are the best practices held in common by all of the companies I've worked with who achieved 100% of their strategic objectives. They are:
1. Good objective setting
2. Well-written action plans
3. Good allocation of both time and financial resources
4. Routine monthly monitoring of action plan progress
Are you doing all of these things well? If implementation is an issue for you - as it is for most companies - you might want to think about how you can improve your effectiveness in these four areas.
1. Good objective setting
2. Well-written action plans
3. Good allocation of both time and financial resources
4. Routine monthly monitoring of action plan progress
Are you doing all of these things well? If implementation is an issue for you - as it is for most companies - you might want to think about how you can improve your effectiveness in these four areas.
Friday, May 04, 2007
Strategic Planning Implementation - The Dangers of Planning to Plan
One of the things I worry about in strategic planning is the tendency some people have to want to write action plans that result in plans. If something is big and complicated enough, it might require a plan to plan, but sometimes this is just a smokescreen for a bigger issue. Is the team avoiding making a decision for some reason? Is planning to plan a way to avoid conflict? Or is planning easier than the actual work involved in reaching the real objective? Make sure you address these questions squarely whenever you are confronted with an action plan step that starts with "Plan...".
Wednesday, May 02, 2007
Cash Flow - Is it Strategic?
Cash flow is both very strategic and very un-strategic. What I mean by this is, cash flow is the thing that kills most companies that go out of business. I've seen otherwise profitable companies driven to insolvency by poor cash flow management. So staying on top of your cash flow is definitely a strategic priority. But cash flow is also very, very tactical. It has very little to do with the reasons why most companies succeed, and often, cash flow goes down when a company makes good strategic moves. Watching cash flow has rarely led to good strategy - and in fact, companies that are too obsessed with cash flow may be driving away otherwise very profitable customers. So, watch your cash flow, yes - because it affects your survivability. But if the ship isn't sinking, remember to stay focused on moving forward.
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