STRATEGIC PLANNING – Developing Your Winning Strategy
Strategic planning sounds impressive, but you may think it does not apply to your business. Strategic planning is typically associated with large companies with strategic planning departments who invest thousands of hours into analyzing their business, assessing their marketplace and developing a strategy. However, the need to develop strategy is just as important for smaller companies, particularly those with aspirations to grow.
Another misconception is that strategic planning means writing a business plan. How- ever, the written business plan is simply a way of communicating the strategy and therefore can only be as good as the underlying strategy. It is a mistake to write a business plan without first developing a sound business strategy. A reader of your business plan is more interested in the plans and assumptions behind the numbers than in the numbers themselves.
Developing and implementing a business strategy is a process not an event. Conceptually, the process can be envisioned as a wheel. There are four major components to this wheel, Strategy, Planning, Execution and Continuous Improvement. Like a wheel, if you take away any one of these components the wheel does not function. The first step in the strategic planning process is the development of a business “strategy.”
Developing a strategy is best accomplished through a two-day retreat away from the distractions of the office. At the retreat, a facilitator can coach you through the strategic planning process and help you to get value from your deliberations. However, before getting away on your retreat, it is essential to obtain up to the minute data on the external environment in which your business operates. This would include economic conditions, status of the competition, cost of resources, availability of labor, cooperation with government authorities, etc.
In addition, the facilitator should interview key the information on the external environment and from the interviews. In addition, members of the management team should make brief presentations on their area of expertise (e.g. finance, sales and marketing, manufacturing, distribution, research and development, human resources, etc.) so that all participants at the retreat are up to date on the latest developments in each area of the business. Then you need to sit back and assess the information that has been provided, identifying the strengths and weaknesses of your current operations, and the opportunities and threats in your industry.
The retreat should address three main areas: first developing an in-depth understand- ing of where your business is today, secondly, developing a shared vision of the future, and finally developing a plan on how you will achieve this vision.
Developing an understanding of where your business is today starts with sharing the information on the external environment and from the interviews. In addition, members of the management team should make brief presentations on their area of expertise (e.g. finance, sales and marketing, manufactur- ing, distribution, research and development, human resources, etc.) so that all participants at the retreat are up to date on the latest developments in each area of the business. Then you need to sit back and assess the in- formation that has been provided, identifying the strengths and weaknesses of your current operations, and the opportunities and threats in your industry.
In developing your willed future the facilitator should help you to develop a vision of where your business will be in three or four years’ time. As an entrepreneur you may al- ready have a clear vision for the future of your company. However, involving all members of the management team in the development of the strategy helps by providing their insights into the development of the vision, ensuring a common understanding of the direction that is being taken, and building buy-in to the plan. It will help ensure that your whole management team is working towards the same objectives.
The final issue to be addressed is: How do we achieve this vision? A plan must be developed to bridge the gap between today’s reality and the vision for the future. There is always resistance to change and the amount of effort that will be required to achieve the vision will be greater than anticipated. The challenge is to determine the factors critical to your success — the factors that you need to focus on in order to get from where you are today to where you want to be in the future. Following the retreat, the next step in the Strategic Planning Wheel is, “Planning.”
Taking the high level strategy and expanding it into more detailed plans requires communication. The strategies developed at the retreat should be communicated to everyone who will be involved in implementing the plan. The more often you communicate where you are headed and how you are doing relative to the plan, the better. This builds psychological commitment to the plan and provides positive reinforcement. Ideally, hold a meeting with all members of the organization within two weeks of the retreat to inform them of your intentions and plans and to get their input on how these can be achieved. The planning stage may also include writing a business plan to obtain the financing you will need to achieve your goals.
The third phase of the process is “Execution.” This is where you implement the strategies and tactics you have developed in your plan. The more you have talked about your goals, objectives and tactics the more you will find you are committed to actually doing what you said you were going to do. One of the keys is to develop measures of performance that reflect the strategies. Through the process of measurement you can monitor the changes necessary to implement the plan and keep people focused on how you are doing.
The last phase of the strategy wheel is “Continuous Improvement.” This phase involves two key activities; one of which is to make changes to the plan and strategy and the other is to develop ways to continuously improve upon what you have done so far. For planning and implementation to be successful you must have a process to develop changes along the way. Set milestones and regularly ask whether what you are doing is working and if not what you need to change.
There is tremendous value to be had in going through all four stages of strategic planning, and if you get them right, the process and the approach will improve your chances of success and increase your competitiveness. If you can get everyone singing from the same song sheet you will have a much more harmonious result.
This article was originally published in the Spring 2017 Issue of Office Today Magazine