Abraham Lincoln coined the phrase: “the best way to predict the future is to create it.” In business, that quote is always relevant, and that’s why businesses use strategy.
What is Strategy?
Strategy is understanding where you are, where you are going and how you are going to get there. It’s is a plan to achieve a desired future. Successful businesses use their strategic plans to outline future goals, develop competitive advantage and to build upon it Strategic plans, then, are roadmaps that help us plan for the future that detail the best route from point A to point B.
Great news! Your business doesn’t need to be a Fortune 500 company to understand or to develop a really strong strategic plan. It is important to recognize that even in our personal lives we are often using strategy, although it looks slightly different.
- Achieve financial independence and be debt free
- Create an exciting, adventurous vacation where I can recharge and reconnect with my partner.
- Adopt a healthier lifestyle where I exercise more and eat healthier.
- Design a beautiful, welcoming home that reflects my values, interests and love.
- Cultivate a nurturing yet structured environment for my little league baseball team to love learning the fundamentals of the game.
Maybe you don’t have it written down like this, but you get the picture.
Why is a Strategic Plan Important?
The most sobering reason for having a strong strategic plan is the likelihood of business failure. While estimates vary, the Bureau of Labor Statistics estimates that 50% of businesses fail within the first five years. In many cases, people get so busy working “in” their business they never take the time to work “on” their business. They end up spinning their wheels and get caught up in the day-to-day operations. The challenge is managing the short term operational reality with long-term thinking to take the business to the next level.
We inherently know when we are working with a strategically directed business, because we hear it and see it through the actions of everyone we encounter in the organization. There is a heightened level of enthusiasm, which results from having this level of clarity. There are other extremely important benefits:
1. It’s not enough just to have a dream.
There must be direction and focus. If a business has little idea of where it’s headed, inevitably it will wander aimlessly with priorities changing and confusion about its initiatives. Remember the Cheshire Cat’s reply to Alice’s query about which way she should go? “If you don’t know where you are going any road can take you there.”
By unifying the entire team—from entry-level to Board of Directors—everyone is on the same page of what is to be done and how it will be achieved. This also increases productivity, morale and efficiency, because everyone understands the direction and is working towards common goals. Ultimately, having an overall strategic direction enables a business to align the decisions and resources needed to achieve success.
3. Simplifies decision-making.
A solid strategic plan prioritizes the activities necessary for success. It makes it easier to evaluate all the opportunities that come our way and to say “no” to distracting initiatives.
4. Communicates the message.
Many leaders walk around with a virtual strategy locked in their heads. A strategic plan helps unlock that strategy so staff, suppliers, partners or even customers will understand where you are going. With this understanding, you’ll find a greater eagerness to help maximize your success of getting there.
Learn from a Leader
We’re all familiar with Starbuck’s. The experience you have at every Starbuck’s store is very consistent, even at supermarket kiosks, because of their powerful strategic plan in action. They update their plans every five years, reestablishing their growth goals and determining what will drive long-term brand loyalty. None of their strategies is complex or confusing. They are straight-forward, which increases the likelihood that everyone from the store-level barista to the Corporate R &D Specialist are clear on the vision. The following are Starbucks’ seven overarching strategies from their strategic plan, unveiled in December 2014. If you’ve been watching what’s happened at your neighborhood Starbucks lately, compare it to what they established two short years ago.
1. Be the Employer of Choice
Invest in partners capable of delivering a superior customer experience.
2. Lead in Coffee
Continue to build our leadership position around coffee agronomy, sourcing, roasting, brewing and serving handcrafted beverages.
3. Grow the Store Portfolio
Increase the scale of the Starbucks store footprint with disciplined expansion. (Different formats, licensing opportunities and international expansion)
4. Create New Occasions to Visit Stores
Grow store usage across day parts with new product offers. In addition to breakfast, create new food offerings for lunch, afternoon refreshment and snacks, and evenings.
5. CPG Brand Growth
Focus on the Starbucks brand to unlock profitable growth rarely seen in consumer packaged goods internationally.
6. Build Teavana
Create a second major business in tea. The global tea market is about a $109 billion dollar industry. (Emphasis on Tea Bars, relevant tea products and formats, Teavana in Starbucks, and Teavana in the grocery aisle).
7. Extend Digital Engagement
Drive convenience and brand engagement through mobile commerce platforms. This includes expanding the number of customers participating in My Starbucks Rewards, and launching Mobile Order & Pay and Delivery. (1 in 8 Americans received a Starbucks gift card for Christmas)
Visit us next week, when we explore the Five Key Steps to a Well-Crafted Strategic Pan. In the meantime, we would love to hear your comments and questions!