Strategy is not just an exercise in goal setting. It’s not what you hope your performance will be with no basis in reality. It’s not list-making and job-assigning. A well-crafted strategy examines the critical trends in the marketplace, anticipates the future, and evaluates opportunities while considering the critical obstacles along the essential pathways in order to create an aligned approach.
Sound like a complicated process? It doesn’t have to be. In fact, the most successful businesses look forward to the process, because it helps visualize the path to achieve their greatest business dreams.
I worked CEO who proudly proclaimed his “3x3x5” strategy: triple the revenue and triple the profitability in five years. I asked about the specifics of his strategy. He said that as a former college athlete, his team was going to “win” in the marketplace by working harder and beating the competition on the playing field. Hmm.
I pressed further. He actually had been working on developing the equivalent of a rolling 3-to-5-year budget, but unfortunately, the budget was built on a series of aggressive and unrealistic annual plans. He soon came to the realization she did not really have a strategy of “how to win” nor the specific focused actions that would be necessary. That is what we ultimately developed.
5 Steps to Maximize Your Opportunity for Strategic Success
Step #1: Determine Where You Are
If strategy entails going from point A to point B, then understand your “point A,” or your present situation.
- What is the industry, market, community, customers, and competitive landscape like?
- How well are your products and services meeting the needs of my current customers?
- How is your business performing today?
- Is your business designed to perform at maximum potential based on its structure? Culture? Competitive capabilities? Systems? Resources? Talent?
- What are your strengths, weaknesses, opportunities and threats (SWOT)?
- Strengths and weaknesses focus on your internal business
- Opportunities and threats focus on the external environment
Understanding what is taking place within the external environment and your market is important to preparing a strategy that will ensure long-term profit and growth. Ultimately, the goal of strategy is to leverage your strengths to focus on the opportunities and to minimize the weaknesses as it relates to the threats.
Step #2: Determine Where You Want To Be
To create your vision of the future (point B), consider these things:
- What is important to you?
- Have you articulated your mission statement, values and beliefs?
- Where do you want to go over time (markets, customers, products, etc.)?
- What can you do to change the playing field? What is my unique value proposition?
- How does your business remain relevant in the future?
As the pace of change accelerates, successful businesses realize what made them successful today is not what will make them successful tomorrow. As Wayne Gretzky once said, “I skate to where the puck is going to be, not where it has been.” So, for your industry and business, where is the puck likely to be? What are the trends that are converging when you consider things like demographics, the environment, social, political, regulatory, technology and other factors?
Step #3: Determine How You Will Get There
Now that you have chosen your destination, determine how to focus your strengths on a set of actions to get you there. Just like taking a trip to another city, you will decide which route and transportation option to use to get you there most quickly and safely. Peter Drucker, considered the father of management, described strategy as a process of “analytical thinking and a commitment of resources to action”. Some things to consider:
- What path will allow you to arrive at your destination while achieving success?
- How do you best align your business given all of the external and internal factors?
- What do you need to start doing, stop doing, or do in a different way to create more value, attract more customers and achieve my targeted financial and market performance?
Step #4: Determine Who is Accountable
As you create the action plan, to have clear accountability for how you will achieve the defined objectives. This means:
- Allocate time
- Provide the human capital required for the plan
- Establish realistic budget for activities (tactics)
Step #5: Determine How You Are Doing
This is perhaps one of the most important steps. Peter Drucker, also said, “you can’t manage what you can’t measure,” so, the following is critical:
- Create a “scorecard” that reflects specific goals for the critical areas to measure
- Establish specific measures with targets you can measure and track over time
- Hold regularly scheduled, formal reviews of the process and the plan
- Develop a continuous cycle of measuring, analyzing and improving in order for your business to thrive
There are many cookie cutter approaches to strategic planning that lack a thorough analysis and coherent approach. Whatever direction you take in creating a great strategic plan, work with consultants who take a personalized approach and understand your business needs prior to investing. Otherwise, you may fall prey to the common pitfalls (the final part of this series) in strategic planning or worse, business failure.
If you are ready to take your business to the next level, we welcome the opportunity to partner with you through our proven, research-based process that creates a strong strategic plan aimed at accelerating your success.
To learn more about our strategic planning process and to gain valuable insights and tool you can immediately apply to your business, please join us for our free introductory workshop on the fourth Thursday of each month from 5:00-7:00 pm in Parker. Space is limited, so register today.
As always, we look forward to your comments and questions.