As our economy is on the road to sustainable growth, business managers would benefit from developing or up-dating their strategic plan. But since economic growth is painfully slow, you can bet that the business environment will remain especially competitive. So any strategic plan, if it is to be effective, need be not just good, but excellent.
Here are ten tips for developing an excellent strategic plan:
When you meet to “talk strategy” with your management team, begin your very first strategy session with a thought-provoking question. Your intent, of course, is to get everyone on your team thinking deeply – and strategically – about the enterprise. Specifically, write this question on a flip-chart easel…
For our organization to be successful, we must be especially good at the following activities…
Ask your team to spend a few minutes thinking about the question and writing their answers individually. Then, have each person read their own answers aloud. Next, discuss any differences of opinion, and finally, arrive at a consensus. Challenge your team to provide two or three (but no more) answers to the question. Not only will your management team discover your organization’s most important activities, their discussions will also offer them a deeper, more strategic understanding of their enterprise.
Keep your lists short. All of them. Don’t fall into the trap of creating a list of 16 internal strengths and 14 internal weaknesses. For sure, strength number 3 is more important than strength number 16. That’s why you thought of it far earlier. Challenge your team to stop after listing just a few items in each category.
Recall that, in Tip #1 (above), you discovered which activities are most important to your specific business. Well, one way to keep your lists of strengths and weaknesses short is to insist that each strength or weakness relate to one or another of these most important activities.
Keep asking “why?” Make sure your weaknesses are really weaknesses. So very often, management teams identify symptoms of weaknesses rather than fundamental weaknesses themselves. For example, some would list “poor sales” as a weakness. In fact, poor sales isn’t a weakness at all. Rather it’s a symptom of a weakness. Identify the fundamental weakness by asking, “Why do we have poor sales?” The answer to that question is the fundamental weakness you’re looking for.
Compare your company to its competition. When examining your internal strengths and internal weaknesses, make sure you compare your company to its competition. It’s meaningless to say “we’re strong at marketing,” without being able to say “we’re significantly stronger at marketing than are our competitors. For only with a differential competitive advantage can you sustain a strategy based on your marketing strength.
Include four dimensions in your mission statement. An effective mission statement should identify:
1. Your product or service offering
2. Your customer
3. The functions you perform to provide your product or service to your customers
4. Your position in the marketplace – that is, what, from your customer’s point of view, differentiates your company from your competition.
Here’s an example:
Clayton Instruments Company designs and manufacturers highly reliable monitoring equipment to meet harsh or unusual environments within the process industries.
Note that Clayton’s:
1. Product / service offering = “highly reliable monitoring equipment”
2. Customer = “the process industries”
3. Functions = “design and manufacture”
4. Position = “meeting harsh or unusual environments” (presumably: hot, dusty, corrosive, explosive, etc.)
Rather than discussing all four aspects at the same time, have your planning team discuss one at a time. Conclude how you’ll describe each of the four aspects, then “nail ’em together” to complete your mission statement.
Make sure your objectives are “strategic.” That is, they actually measure the implementation of your strategy. If your strategy calls for new product development, create an objective to increase sales revenue from new products. Or percentage sales revenue from new products. If your strategy is to improve product quality, create an objective to measure the reduction of returned goods. Or customer complaints. Or the increase of repeat business.
Set one-year milestones for each of your objectives. Even if an objective takes five years to complete, set milestones for each year up through five. This will facilitate on-going measurement. Sure you want to double sales revenue in five years. But what might you expect to accomplish next year? And the year after? Year-by-year milestones will help you keep track of your objectives.
Use strong, action verbs when writing your strategies. Avoid numerous strategies which “study,” “determine,” or “analyze.” Instead, write strategies to “sell,” buy,” “invest,” and “build.” If your strategies call for “studying” or “analyzing,” either…You’ve arrived at your strategy sessions without the information you’ll need to make the necessary strategic decisions, or Your management team, for whatever reason, is avoiding making decisions.
Write only a few strategies. Focus, focus, focus. You’ll do better pouring resources on one, two or a few strategies, rather than trying to implement many more. Look back at the few activities which you decided were your most important. (see Tip #1) Do your strategies support those activities?
Beware of “front end loading.” Your management team may become so enthusiastic about their strategies that they set unrealistic due dates. They thus “front end load” their plan. This is a set-up for failure. Be sure to challenge your management team regarding any unrealistic due date.
Bill Birnbaum, MBA, is president of Birnbaum Associates, business strategy consultants of Sisters, OR. He helps clients develop a shared strategic vision, and then turn that vision into a sound business strategy. Bill has served on the board of directors for three high growth corporations. He’s taught strategy courses for the American Management Association and authored “Strategic Thinking: A Four Piece Puzzle.” His book is available through book stores and on-line book sellers.
His website contains informative articles on strategic thinking, on business strategy and on economic trends affecting business: www.BirnbaumAssociates.com