Strategic Planning Kit For Dummies
Overview
Create a roadmap for your company’s future success—the For Dummies way
Strategic Planning Kit For Dummies not only teaches you how to build a solid business strategy, but it gives you the tools to do it. Checklists, worksheets, and real-life examples guide you through answering your most pressing questions. Plus, all-new online resources make creating a lasting strategy easier than ever. Build a company vision statement, assess your strategic position, engage your team, and execute your plan—with easy-to-understand instructions and explanations that anyone can follow. This revised edition shows you how to adapt your strategy, plan for the unknown, and stay resilient through all the changes facing today’s businesses. Advice from For Dummies experts will make any business leader’s strategic dreams a reality.
- Learn the basics of how to create a long-term business strategy
- Create your mission and vision statements and a strategic framework
- Get organized, engage your team, and deploy your strategy through objectives and key results
- Access resources, worksheets, checklists and more—in the book and online
This is the For Dummies guide for business owners and C-suite executives who are building or rethinking their company’s strategy and planning a path for growth. It’s a big job, but you don’t have to do it alone. Dummies has your back.
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About The Author
Erica Olsen is CEO and co-founder of OnStrategy, where she created an online strategic planning system. Erica has facilitated retreats, learning sessions, and consulting projects for organizations looking to enhance their impact.
Sample Chapters
strategic planning kit for dummies
CHEAT SHEET
A strategic plan is essential for a successful business, and creating a strategic plan that you can actually use is key. Your plan should include certain elements, like mission, values, and vision statements. It should also avoid common pitfalls, like neglecting the specific needs of your organization, so it becomes your road map for success.
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Ideally, you want to align your human and financial resources as closely as possible with your strategic direction to eliminate wasted time and money. Stop for a moment and reflect on the hundreds of meetings and projects you and your team worked on over the past three months.
How many of those instances weren’t directly tied to a strategic initiative?
Never lose sight of the fact that strategic plans are guidelines, not rules. Deviating from your plan is okay, but you need to understand why you make a course correction. The following figure gives a visual decision map to help you determine whether you need to adapt your plan.
Every three months or so, evaluate the plan implementation by asking these key questions:
Will the goals be achieved within the time frame of the plan?
Strategic Planning
You successfully made it all the way through your strategic planning meeting. You did it! You accomplished everything you intended. You have the key pieces of your strategic plan in place. You’re feeling great. Everyone is slowly packing up and heading out the door, but you sense a feeling of exhaustion and maybe a little anxiety.
It’s time to apply strategic thinking to your business. What will your company look like and how will it compete in the year 2030 or 2035? What trends do you need to consider in your planning?
In relation to those questions, ask your team to come up with a list of ideas, statements, or activities to describe how the world looks in these five areas:
Economically
Socially
Politically
Technologically
Ecologically
Legally
With these lists on the wall, consider which trends apply to your business and which will affect your vision.
It’s time to take all the research and strategic planning work you’ve done up to this point and put it together in one comprehensive document. This task may seem tedious, but you can no doubt find someone on your staff who loves this type of detail work. So seek out that person to collate everything you’ve done to date.
The design and implementation of your strategic plan depend on the nature and needs of the organization. Some organizations are more political, departmentalized, controversial, or dysfunctional than others. So knowing whether you’re heading into a minefield before you take your first step is crucial. But don’t despair!
Being precise and having a flow to your strategic planning process helps you stand out from the crowd when giving that pitch. But remember, standing out from the crowd takes going through the strategic management process, which facilitates making hard choices about your future direction.
In summary, a strategy
Establishes unique value proposition compared to your competitors
Is executed through operations that provide different and tailored value to customers
Identifies clear tradeoffs and clarifies what not to do
Focuses on activities that fit together and reinforce each other
Drives continual improvement within the organization and moves it toward its vision
If you want to catch a potential customer’s attention and keep your employees motivated to come to work every day, be ready to know your strategy and talk about it.
Although scorecards for measuring your strategic plan are effective, they can also be daunting. For your first crack at this tool, consider just building your scorecard for high-priority goals. Identify the top seven to ten goals and associated measures that are most important to your company this year, known as key performance indicators, or KPIs.
Strategy means consciously choosing to be clear about your company’s direction in relation to what’s happening in the dynamic environment. With this knowledge, you’re in a much better position to respond proactively to the changing environment.
The fine points of strategy are as follows:
Establishes unique value proposition compared to your competitors
Executed through operations that provide different and tailored value to customers
Identifies clear tradeoffs and clarifies what not to do
Focuses on activities that fit together and reinforce each other
Drives continual improvement within the organization and moves it toward its vision
Knowing what strategy is can also be explained by looking at what strategy isn’t.
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Creating value through lowest total cost focuses on appealing to a broad spectrum of customers based on being the overall low-cost provider of a product or service because of the company’s focus on efficiency. The company implementing this strategy provides superior value to its customers by offering them lowest total cost.
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One purpose of strategic planning is to increase your value to your customers or stakeholders. You need to create something better or different than your competitors. You do this by leveraging your existing strengths — or developing new ones — in the following three ways:
Using operational excellence to provide lowest total cost
Using continued innovation to provide product or service leadership
Providing complete customer intimacy by knowing their needs and wants
Strengths usually fall into two broad categories: cost advantage and differentiation.
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When implementing your company’s new strategic plan, the planning team should ensure that the department level goals achieve the corporate goal after all department goals are completed. Follow these steps to cascade goals in your organization down to as many levels as you choose, including individual players.
Select a person to be in charge of managing the cascading process.
By the time company managers get to the action planning part of strategic planning, many are tired and worn out from all the work leading up to this point. But don’t stop yet! Setting action items and to-dos for each short-term goal is essential. The next step is to connect those goals with people, deadlines, and costs.
Strategic Planning
In strategic planning, the basic difference between business unit level strategies are (1) whether a company’s market or industry target is broad or narrow and (2) whether the company is pursuing a competitive position (or creation of superior customer value) linked to low costs or product differentiation. To determine the right business unit level strategy for your company, follow these steps:
Answer the question, “Is the market or industry target broad or narrow?
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Organizations that execute with excellence focus on a handful of clear goals and align the focus of every department and employee to those few goals. Take FranklinCovey Co. and Harris Interactive, Inc., as examples. They conducted a study to test the gap between goal setting and the actual achievement of those goals in various companies.
Good communication unlocks many organizational mysteries, so the fact that communicating your business strategy is critical to your success isn’t surprising. When the owner(s), executives, and managers continually demonstrate the link between strategy and specific business decisions, staff members are encouraged to think strategically as well.
The purpose of a SWOT analysis (strengths, weaknesses, opportunities, and threats) is to help produce a good fit between your company’s resources and capabilities and your external environment. Your SWOT analysis is a balance sheet of your strategic position right now.
In the analysis, you bring together all your internal factors, strengths, and weaknesses, as well as your external factors, opportunities, and threats.
Strategic Planning
In the beginning of your scenario planning phase of your strategic plan, make a strong connection with scenarios and strategy by choosing a decision or issue that has significant strategic implications to your organization. After doing that, use one of the following four approaches (listed from easiest to hardest) to connect your scenarios with strategic decision making:
Evaluate a specific strategic decision.
Strategic Planning
Just because a market looks attractive in a strategic plan doesn’t mean that you can serve it profitably. Before your creative folks start churning out cool ads, do a quick contribution analysis. A contribution analysis determines whether a particular target customer group contributes to the overall financial well-being of the company.
Strategic Planning
As you work through your strategic plan, you are likely to generate a long list of issues you need to address or solve during your planning process. Naturally, all issues aren’t created equal. To focus your efforts, pare down your list to the select few that you think have the potential to have the biggest impact on your organization during your planning period.
Strategic Planning
When measuring the effectiveness of your strategic plan, measures should be placed in context of a target to be reached in an identified time frame. The following are different ways to select your targets:
Internal benchmarking: Generally, organizations select targets based on a change leaders want to see from the previous year to the current year.
Strategic Planning
After you’ve developed an analysis of your strengths, weaknesses, opportunities, and threats (SWOT), you can identify the alternatives or choices to build your strategic plan around. Remember that by itself, a SWOT isn’t actionable. But by matching up factors from one quadrant with factors in another quadrant, you can start to identify potential actions based on the SWOT anaylsis.
Strategic Planning
By creating these different versions of your strategic plan based on who is going to be reading it, you will see how much easier implementing your plan is when employees have the information they need to execute it. You probably don’t need all these versions, and you may have some special versions based on your company’s needs.
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Strategic planning is often about doing what you’re already doing but tweaking it slightly. Sam, the owner of a chain of regional retail auto parts stores, thought his focus should be on profit per store. Although the profitability of a particular location is crucial, profitability isn’t the only variable that counts.
Strategic Planning
Every business endeavor or enterprise already has a strategy. These strategies range from some vague sense of the desires of the owner to massive, overly sophisticated master plans. So the question isn’t whether every company needs a strategy but rather whether the company’s strategy needs to be well thought out, sound, appropriate, and doable.
Not to oversimplify the planning process, but by dividing a strategic plan into four areas, you can clearly see how the pieces fit together. The four pieces of the puzzle are found in these questions:
Where are we now?
Where are we going?
How will we get there?
How will we measure our progress?
Each area has certain elements to show you how and where things fit.
Strategic Planning
Your mission statement serves as a guide for day-to-day operations and as the foundation for strategic planning and future decision making. Make sure that your statement includes the following criteria:
Focuses on satisfying customer needs: Focus the business on satisfying customer needs instead of spotlighting your product or service.
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The vision statement, a key element of your strategic plan, needs to incorporate many elements. The following list contains elements that you can include in an effective vision statement (you don’t have to use every one, but keep them in mind when you’re writing or evaluating):
Audacious: Your vision represents a dream that’s beyond what you think is possible.
Strategic Planning
More often than not, life and daily operations take over a well-intentioned strategic management process. If the strategic plan is one more thing people have to do, it begins feeling like a burden instead of being exciting. Following are some tips to help keep your company’s strategic plan current, relevant, and always moving forward.
Strategic Planning
Expense and revenue estimating is an imperfect science; during strategic planning it’s meant to give you an idea of the additional cash outlay you need to implement each area of your plan and the revenue you can expect to generate.
You may already have identified potential expenses for action items as well as potential revenue for each target market group you develop.
Strategic Planning
In strategic planning, the first phase of identifying your strengths and weaknesses is looking at your capabilities or intangible assets (intangible means incapable of being realized or defined — not having physical presence). These assets point to why organizations are good or not good at identifying and leveraging people, culture, and knowledge.
Strategic Planning
During your strategic planning process, you should develop a vision statement that’s far reaching but attainable. If you attain it in a shorter amount of time, congratulations! But if you don’t push your thinking out far enough, you find yourself being too tactical in your strategic planning.
Visions are also referred to as big, hairy, audacious goals, or BHAGs, a term made popular by Jim Collins and Jerry Porras in their Harvard Business Review article, “Building Your Company’s Vision.
Strategic Planning
If you don’t already have one, you should develop a mission statement as part of the strategic planning process. Mission statements are as varied as organizations. Here are a handful of mission statements to get your creative juices flowing. (Note: Some of these mission statements are older versions, which are included to provide effective examples from a diverse range of organizations.
Implementation is the phase that turns strategies and plans into actions in order to accomplish strategic objectives and goals. Implementing your strategic plan is as important as — or even more important than — your strategy. The critical actions move a strategic plan from a document that sits on the shelf to actions that drive business growth.
Strategic Planning
Your strategies are the general methods you intend to use to reach your vision. Although strategies are embedded in all elements of your strategic plans, consider listing the top one to two strategies or long-term activities your company needs to pursue in order to achieve its vision.
A strategy is like an umbrella.
Strategic Planning
Committing time and resources to implementing a strategic plan is almost more important than the plan itself. Don’t underestimate how much effort it takes to get the plan moving. The absolute worst thing you can do is continue business as usual, as though you never had a strategic planning off-site. Not only have you wasted everyone’s time and your money, but you’ve also made it nearly impossible to get people to participate in the future.
The difference between strategic planning and strategic management can be profound to an organization when understood. Strategic planning usually refers to the development of a plan. Strategic management refers to both strategy development and execution.
Strategic management is a business process. Strategic planning is an event.
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Strategic planning can create a ton of questions. If you already have a long list of questions, you’re not alone. Here are some answers to the most commonly asked questions.
Who uses strategic plans?
Everyone uses strategic plans — or at least every company and organization that wants to be successful. Companies in every industry, in every part of the world, and in most of the Fortune 500 use strategic plans.
Strategic Planning
Often overlooked are the five key components necessary to support implementation: people, resources, structure, systems, and culture. All components must be in place in order to move from creating to activating the plan. These five components are as follows:
People: The first stage of implementing your plan is to make sure to have the right people on board.
During the past several years, due to the economy, government entities have been forced to rethink what it means to be sustainable. Organizational sustainability isn’t an end, but rather a business process that understands the resources needed and emphasizes balance between the present and the future in a dynamic and constantly changing world in order to fulfill the organization’s mission.
Because government entities operate as monopolies in most cases, have elected boards that change every four to six years, and provide services that are legislated instead of based on market demand, these organizations must recognize how those factors affect their planning. Following are some ways to accommodate some factors that affect government strategic planning.
Fundamentally, a sustainable government organization has the capacity to fulfill the elected officials’ mission and objectives to provide necessary public services now and into the future. Tons of great resources for government strategic planning can help you in your planning efforts. Here are just a few recommendations:
International City/County Management Association: This organization is the professional and educational organization for chief appointed managers, administrators, and assistants in cities, towns, counties, and regional entities throughout the world.
What makes a great company great? When it comes to strategic planning, becoming the best at something is often achieved by modeling the behaviors of winners and putting those behaviors into practice. Here are the characteristics of a high-performance company:
Has a purpose that focuses the energy of all its members (typically, that purpose is to be the best there is or ever was)
Simultaneously and continuously maximizes the self-interests of all its stakeholders
Outperforms all others (by any measure) not because of what propels it but in spite of any and all obstacles that impede it
Makes it possible for ordinary people to perform in an extraordinary fashion
Transforms its people into owners of the organization’s destiny
Is a healthy organization committed to being great, no matter what it takes
Knows that the execution is more important than the strategy
Whereas a strategic plan is the means, growth and high-performance are the ends to those means.
Strategic Planning
Because strategic planning is about focusing on the right things, keep your customers’ values in the forefront of your planning efforts. For many owners and executives, focus represents the biggest roadblock to corporate growth. The problem isn’t exactly a lack of focus but more the tendency to unintentionally focus on the wrong things.
Before you can really develop a strategic plan, you must know why you’re doing what you’re doing (your mission), where you’re trying to go (your vision), and how you’re going to go about it (your values). These are the glue that holds an organization together. You preserve these elements while your strategies and goals change and flex with the market.
Strategic Planning
Organizations that are strategy-focused are more effective with their resources, have higher employee retention, and make more money because they serve their markets better than their counterparts. And they stay in business longer because they proactively respond to the environment around them. Want to create a culture that’s strategy-focused?
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Choosing which target markets to pursue in your strategic plan can be challenging. You may want to target all segments, especially those that are growing and appear very profitable, but resist the temptation. Most businesses can’t possibly serve all identified target markets (or at least not well). Try to choose between one and three new markets to target at any given time.
Strategic Planning
After you’ve completed your goals and actions, assess the financial viability of your strategic plan. While your action items and goals are fresh in your mind, estimate the costs associated with the implementation of each item.
All the best-laid strategic plans are subject to time and money. Look at the estimated expenses and the potential revenue.
Now that your strategic plan is all together in one place, you should take a step back and evaluate. Did you create the strategy you intended to create? More than likely, you and your team have put a lot of time into the document you now have in front of you.
The first step after you’ve assembled your strategic plan is put it away for a week and don’t look at it.
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Eventually in the strategic planning process, you will have funneled everything you’ve gathered to date into a short list of internal and external priorities. Before you move on from there, do one last check to make sure that what you’ve decided to focus on is aligned with the other parts of your strategy.
Here are some guiding principles to keep in mind when evaluating priorities:
Boundary principle: Evaluate every priority based on whether it’s within your mission.
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If you worked through creating a SWOT analysis and developing a list of possible strategic alternatives, you have some lists of choices. But because you can’t do everything, now you have to eliminate some of those choices. Know that every other business owner, executive director, and department manager has come to the same place you’re at right now.
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A strategic plan needs to adapt to survive changing or unanticipated conditions. A business that develops and executes a strategic plan gains significantly from the experience, and starting with a working model and achieving a tangible plan can be more successful for your business than having no plan at all.
Change, even though we often resist it, is inevitable.
Strategic Planning
You’ve developed your strategy plan and have a clear road map designed to reach your vision. The next step is to put your plan into action and manage the process as well as the plan’s performance. Creating good, solid measures is the first step to developing your performance scorecard. Measures are quantifiable performance statements, and they must follow certain guidelines.
Strategic Planning
No matter whether you’re strategically targeting 18- to 34-year-old high-income males or 65- to 85-year-old fixed income retirees, you’ve got to reach them effectively and efficiently. That means finding the right balance of marketing tools and program elements to create and deliver the right product or service to consumers at the right price, right location, right time, and with the right features and attributes.
Rolling out your plan can range anywhere from a big, high-profile campaign to a low-key announcement. Whatever you decide to do, make sure to inform everyone in your organization. You may choose to give complete copies of the plan, including background material in appendixes, to certain groups of stakeholders, whereas you may give other groups only the body of the plan without its appendixes.
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The purpose of writing a positioning statement during strategic planning is to ensure that all your marketing activities for a customer group are consistent and clear. (And having a positioning statement saves you tons of time in the long run.)
Initially, focus on writing a positioning statement that’s used only internally.
Strategic Planning
Potential opportunities and threats may impact your business. In the strategic planning process, you discover some of the larger trends likely to impact all businesses over the next ten years. You need to identify the forces, issues, trends, and events that can positively or negatively impact your business. What possibilities do you see on the horizon, and where are the minefields?
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You should be able to state your competitive advantage succinctly, both in your strategic plan and when talking to others about your business. Learning from others can be helpful in identifying your own competitive advantage. Check out the following two examples to see how these organizations define their uniqueness.
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Launching goals with a major rollout isn’t enough. Goals must be visible and repeated to keep the commitment alive. Why not have some fun with your ongoing communication. You can find plenty of creative ways to keep your employees up-to-speed on the status of the plan.
Taking it one step further, you can reinforce goals without coming across as a nag by adding humor, inspiring quotes, and customized encouragement to the messages.
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Your organization’s governing or policy board plays an important part in your strategic planning efforts. The degree of influence boards have varies from nonprofit to government organizations. But in some form or fashion, these appointed or elected members are responsible for defining the organization’s purpose and mission, articulating the strategic priorities for the planning year, and monitoring the execution of the plan.
Strategic Planning
Strategic planning is doomed to failure when certain circumstances aren’t in place. If you’re aware of what you need to make the process work well, you’re more likely to be successful. Companies that jump in to planning simply assuming they’re ready will likely fail somewhere mid-plan and derail the whole process.
The process of researching, segmenting, targeting, and reaching new customers doesn’t need to be something you do only when you’re focused on finding new customers. In fact, world-class companies have made being market-focused a habit. Being market-focused means taking marketing activities out of just the marketing department and away from initiatives.
A company’s strategic plan is the game plan that management uses for positioning the company in its chosen market arena, competing successfully, satisfying customers, and achieving good business performance. Most business owners and executives have countless excuses for not having a formal strategic plan. I’ve heard everything from “We’re too new” to “We’re not big enough” to “We’ve never had one; why start now?
After you’ve decided that strategic management is the right tool for your organization, clarifying what you intend to achieve with the outcome of the planning process is critical to a successful process. Strategic planning means different things to different people, so agreement is critical to reaching the desired end state.
Strategic Planning
Creating momentum in your life, just like in business, takes increasing the activities that move you forward and decreasing those that hold you back. Sounds like a snap, but living the life you desire isn’t always easy to achieve. You have habits and cycles to overcome.
But by creating momentum, you can move past those habits and toward the life you want.
Strategic plans can come in many different shapes and sizes, but they all have the following components. The list below describes each piece of a strategic plan in the order that they’re typically developed.
Mission statement: The mission statement is an overarching, timeless expression of your purpose and aspiration, addressing both what you seek to accomplish and the manner in which the organization seeks to accomplish it.
Strategic Planning
Realistic goals ought to serve as a tool for stretching a company and its strategic plan to reach its full potential; this means setting goals high enough to be challenging to energize the company and its strategy. Short-term goals are immediate mileposts on your way to your vision. Think about achieving them in a one-year time frame.
Strategic Planning
After you’ve researched, developed, and assembled your strategic plan, you’ve reached the point where you can actually operationalize and give your plan life. Remember that C-level leaders and board of directors expect your strategy to be well thought out, concise, persuasive, and easy to understand in just a few presentation slides.
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Successful growth stems from matching your strengths and weaknesses with the opportunities that exist in your business environment. Your growth strategy is the way in which you position your company to exploit your strengths and opportunities and mitigate your weaknesses and threats. By strategizing how to grow, you’re actively deciding how to connect your mission with your vision.
Strategic Planning
After you have a strategic plan in place, a powerful tool to monitor your progress and communicate company direction is performance management software. Before you choose a system for managing performance, you want to make sure that you’ll get the most out of it. In order to make the most of your software, you need to avoid some common strategy pitfalls by putting in place some of the following time-honored business practices.
Strategic Planning
Clearly the big difference between strategic planning for-profits and nonprofits and governments is that pesky little word profit. Social-sector organizations are mission-driven, not profit-driven. So instead of the bottom line being strictly money (although that’s necessary to keep the doors open), the real reason for these organizations’ existence is public and community service.
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The following strategies are applicable to both the organizational and program levels, adapted from Alan Andreasen’s and Philip Kotler’s Strategic Marketing for Nonprofit Organizations (Prentice Hall). This list helps generate ideas and goals about how your organization can reach its vision. As you review this list, take note of what strategies you’re currently employing or ones that you can.
Strategic Planning
“Being tight on the ends” involves building a strong commitment and understanding of objectives and goals of your organization and its board. Although you write the objectives and goals in ink, create the action items in pencil. Allow those who are responsible for the goals — that is, your board — to develop their own methods to best achieve the goals.
Strategic Planning
Businesses that succeed do so by creating and retaining customers. Because marketing plays the key role of making that happen, it has a large part in setting the strategic direction of the organization. But unlike the other sections of your plan, the marketing section starts with a target customer group instead of a goal.
Nonprofit staff often concentrates on those it serves and focuses less on analyzing competition and allocating resources. However, since the beginning of the Great Recession, this trend is changing. For-profit businesses compete for customers, and their very survival depends on providing services or products to satisfied, paying clients.
Strategic Planning
Strategic planning is all about making choices. And strategic choice is about making subjective decisions based on goal information. To do so, you first generate a list of all feasible alternatives. You’ve more than likely developed a SWOT analysis that’s multiple pages in length. Now you need to narrow your focus to create a short list of strategic alternatives.
Strategic Planning
In strategic planning, making equitable trade-offs requires comparing apples to apples. Internal priorities are competing with other internal priorities, and external priorities are competing against other external priorities. The following example demonstrates how one company went about choosing their strategies.
Strategic Planning
To maximize resources and funding, organizations need to focus on what they do best and outsource the rest. Easier said than done, right? The MacMillan Matrix, a tool developed by Wharton School of Business professor Ian MacMillan, was specifically designed to tackle this task.
The MacMillan Matrix can help you discover the program areas that are most needed in your community and that you’re in the best position to provide.
Strategic Planning
You can move faster into the future by avoiding roadblocks and pitfalls you’ve already encountered to identify strategic issues you need to address during your planning process. Strategic issues are critical unknowns that are driving you to embark on a strategic planning process now. These issues can be problems, opportunities, market shifts, or anything else that’s keeping you awake at night and begging for a solution or decision.
If organizations fail to anticipate or prepare for fundamental changes, they may lose valuable lead time and momentum to combat them when they do occur. These fundamental elements of business are customer expectations, employee morale, regulatory requirements, competitive pressures, and economic changes, and they’re always in flux.
Strategic Planning
When they’re strategically planning next moves, some organizations don’t worry about what their competitors are doing and just charge ahead. Others track every move and assess how to react. You want to fall somewhere in the middle.
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are.
Strategic Planning
The amount of control your suppliers have over the price of goods you purchase dictates whether this area is an opportunity or threat. Suppliers or vendors are any companies that provide raw materials, components, or services into your industry. The more suppliers, the less control any one company can have over controlling your costs.
The rivalry or intensity at which you compete against your competition can move and change over time as the dynamics of the industry change. Competitive rivalry is an opportunity or a threat, depending on how you handle it.
Do you recognize the intensity of the competition, and are you positioning yourself accordingly?
Knowing what’s going on with demographic changes and movements helps you plan for the demand for your company’s products and services as well as labor issues. For example, sometimes seemingly unexplainable lulls or growth spurts, especially in the retail and restaurant industries, can be explained by understanding the changes in the demographics.
Economic indicators can be frustrating to watch because today’s news often contradicts yesterday’s report. Nevertheless, the economy is probably one of the biggest influences on your business.
Movements and shifts in the economy affect consumer purchasing power and spending patterns. The state of the United States and world economies can be either an opportunity or a threat for any business, depending on whether your company improves and declines with the economy (real estate) or whether the opposite happens (price of gold).
You need to have a complete picture of your company to adequately prepare a strategic plan, so taking a high-level look at your market is important. Your market is a group of customers that you can easily identify who respond to your products or services in similar ways. Your offering satisfies the needs and wants of the whole group.
Strategic Planning
As far as strategic planning goes, no one has a crystal ball that can peer into the future, but certain trends appear to be in the making and are worth considering now. Although knowing how environmental forces are going to impact your business is difficult, they really do matter.
Take the weather, for example: You’re subconsciously aware of the force, but not until a big storm comes do you really pay attention.
Strategic Planning
In the past, collecting data on your competitors for the purposes of strategic planning was difficult. Today’s overabundance of information makes this important analysis much easier. Now you can collect data legally and ethically and through a plethora of sources available to you. Check out the following table for a list of sources.
Strategic Planning
If you’re gearing up for a big athletic competition, your training regimen is directly proportional to who you’re competing against. You really don’t want to work harder than you have to, right? Well, the same idea applies to your business. Certainly, if you’re running a for-profit business, you’re competing to win.
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To accurately prepare for opportunities and threats, keeping tabs on your government’s policies and legislation on business-related issues is crucial. Decisions made at the federal, state, and local levels can significantly impact how you do business. For example, new taxes can cut into already thinning margins, or tax cuts can improve them.
The more companies that swim in the same pond and compete for the same customers, the more competitive the industry. Often some competition is better than none. But if jumping in to your industry is easy (for example, restaurants, online services, advertising agencies, and so on), the threat of new competitors is very high.
When analyzing threats and opportunities, cultural and societal shifts are probably the hardest to spot because the results of these forces affect a society’s general attitudes, preferences, tastes, and beliefs. Catching, or even better, predicting, a social trend can be a home run for your business. Think about the low-carb craze, the reinvention of coffee as a lifestyle, digital music, outsourcing, offshoring, and so on.
Failure to monitor and address advances in technology may negatively impact your financial position in the market. Areas to watch include government spending on technology, big new discoveries or products, speed of technology transfer, and changes in business processes as a result of technology.
Many people believe that the revolutionary impact technology has had on products, processes, and communication systems has just begun — think Twitter, Facebook, and video calls.
Strategic Planning
With the continual flux of technologies and the speed of development, the threat of substitute products taking the place of yours is greater than ever before. Substitute products can be an area of opportunity or an area of threat, depending on when you catch wind of the change. If you’re on top of it, you can produce the new product.
An industry is a group of companies that sell products or services that are similar to each other, such as the furniture industry, the car industry, or the financial services industry. Knowing the type of industry you’re competing in helps you predict changes, movements, or shifts that may impact your business.
The values and vision of your organization are embedded in the strategic framework. As a result, involving the whole organization in at least part of the planning process is vital. Although everyone can’t be involved in every part of the process, each person plays a role. Yes, you want everyone involved (at certain times).
Having a strategic plan and a succinct strategy that brings clarity and focus to your organization ensures that your time, resources, and actions aren’t wasted. Planning for the future is important, but very few businesses actually do it. Following are some warning signs that tell you whether you need a new strategy for your strategic planning process.
Strategic Planning
The success or failure of your organization’s strategic planning depends not only on your internal capabilities and resources (strengths and weaknesses) but also on things that happen outside of your control (opportunities and threats). The collective review of these factors for your organization is referred to as a SWOT analysis.
Strategic Planning
In the final phase of the strategic planning process, you will look at your own personal vision, determine the value of your company, and figure out how to plan for your company’s survival after you leave.
Although publicly-traded companies get all the media limelight, roughly 90 percent of the businesses in the United States are privately held.
Strategic Planning
The Balanced Scorecard (BSC) is an excellent management tool that ensures you have a holistic and balanced strategic plan as well as a way to track performance over time to assess whether goals are being met. The SBC examines the following four areas of priorities that are important to your business.
Financial priorities: If we succeed, how will we look to our shareholders?
Strategic Planning
Global food supply and food prices can jump-start their strategic what-if scenario planning thanks to a Food Supply Project commissioned by the United Kingdom in 2008. Chatham House commenced the project, which resulted in robust scenarios that organizations impacted by. The official title for this report is “Food Futures: Rethinking UK Strategy” and includes the following scenarios:
Key Drivers: The driving forces are (1) demand for food is increasing because the global population is rising and major developing economies are expanding, and (2) global supply capacity, meanwhile, is struggling to keep up with changing requirements.
Strategic Planning
For an excellent example of strategic planning at work, consider the following case study. Cisco and Monitor Global Business Network set out to develop scenarios that answered important questions about the future of the Internet. The following example may be relevant to your organization. Although you may not be able to use these scenarios in total because they weren’t created to solve your specific business issue, often you can use them as inputs to your scenario planning process.
Strategic Planning
As part of their strategic planning process, major corporations and research firms often develop and share future scenarios specific to an industry’s future or to address major global problems. Shell Oil continues to be the leader in scenario planning, with a specific eye toward the impact of oil on our society, economy, and environment.
Strategic Planning
Business owners care about strategic planning is because it does make a financial difference. To verify this, in 2004, a research study of strategic planning and strategy execution of 280 firms was conducted in the U.S.
The following list provides the results of that study and explains what you can expect to achieve as well.
Strategic Planning
A strategic plan is essential for a successful business, and creating a strategic plan that you can actually use is key. Your plan should include certain elements, like mission, values, and vision statements. It should also avoid common pitfalls, like neglecting the specific needs of your organization, so it becomes your road map for success.
Having a clear strategic direction and strategic plan with a focused implementation process in place is important. Business success isn’t going to happen by accident. You must look into the future and create a plan for wherever you’re trying to go.
What will your business be like in three years? Do you have a road map to get from today to your envisioned tomorrow?
Strategic planning can yield less than desirable results if you end up in one of the possible planning pitfalls. To prevent that from happening, here’s a list of the most common traps to avoid:
Not having a burning platform: Fundamentally, organizations don’t have to have a strategic plan. Really, they don’t. Yes, you’ll run a better operation and, yes, a strategic plan is an outstanding management tool.
Strategic Planning
Energy drains are those activities or circumstances that drag you down. And when you’re dragged down, you’re probably not putting too much effort into your planning process. Recharge your energy with anything that inspires you and puts you in a good mood, like an organized desk, an afternoon off to enjoy family or good weather (or both together), or lunch with a colleague.
Strategic Planning
After you’ve determined which products or services make money and which ones take money, evaluate which ones to invest in by looking at how attractive the market is.
A widely used tool for conducting a portfolio analysis is the Market Attractiveness Framework, which provides a structure that works with your products and services as listed in the previous section.
Strategic Planning
Government planning reaches farther than business planning because most strategic plans — whether community cultural plans, regional tourism plans, county plans, or neighborhood development plans — exist outside the realm of any single agency. Therefore, successful planning requires enough authority and resources to assure the plans’ intentions are fulfilled.
Strategic Planning
At the end of the day, what is strategic planning all about? Growth. Businesses strive to grow more customers, more sales, positive cash flow, larger deal sizes, higher volume, more billable hours, justification for higher prices, and so on.
Ask any hardworking entrepreneur what he or she is working on and you’re bound to hear a comment related to growth.
Strategic Planning
A mission, vision, and values in a strategic plan can sound abstract, esoteric, and downright fluffy to a lot of people. However, they’re important to building a strong foundation of consensus for your organization. Take the time to articulate these elements on the front end so you have a crystal clear strategic direction, and you’ll be more successful when writing goals and objectives.
Strategic Planning
To plan your strategic position, take a look at the industry or market you’re operating in. Also, look at your company culture — teamwork, leadership, climate for action, as well as your employees and their skills and capabilities. This culture is the scenery surrounding your organization. In this phase, you begin collecting and analyzing this information and data and use it to assess your strategic position.
Strategic Planning
Once you have addressed where you are and where you’re going in your strategic plan, then you can focus on how you’ll get there. Use your SWOT analysis to stay grounded and realistic as you build a road map from where you are today to where you want to be.
Ultimately, this SWOT and your competitive advantage will help you develop your organization-wide strategies, goals, and objectives.
Strategic Planning
Cascading action items and to-dos for each short-term goal in your strategic plan is where the rubber meets the road — literally. Moving from big ideas to action (cascading) happens when strategy is translated from the organizational level to the individual. This point is also when the planning circle widens, and departments and individual contributors join in and develop their short-term goals and actions to support the organizational direction.
Strategic Planning
Now that you’ve established a clear direction and the road map to get there, your strategic planning team is ready to align the strategy to resources. Specifically, in Phase 5, you align financial resources and people to the strategy. Accomplishing this task can be simple or complex, depending on how detailed your team wants to get.
Strategic Planning
Executing your strategic plan is as important as — or even more important than — your strategy. The majority of organizations that have strategic plans fail to implement them (the most common reason being that resources aren’t shared between departments).
Don’t be one of those organizations that spends hours preparing a strategic plan only to let it sit on a shelf.
People are often resistant to change, and leading your company through change is a challenge for which you must prepare before implementing a new strategic plan. Lessons in leading change are timeless, as the following example illustrates.
While in Japan as a professor (1924 to 1929), Eugen Herrigel experienced Japanese culture and became a student of archery from a skilled and somewhat controversial teacher, Awa Keno.
Strategic Planning
Developing a set of values for a strategic plan is one thing; living by them is something else entirely. Having a values statement that’s all talk and no commitment undermines your leadership and the management team’s credibility. Following are some ways to “walk your talk” and bring your organizational values to life:
Communication: Send a letter to every employee; develop a brochure; visit every office to personally explain the values; post the values in a public area.
Strategic Planning
Is being agile on your strategic plan’s list of competitive advantages? Can your business react and change its game plan based on either customer feedback or shifts in market, all while keeping that end vision in focus? A successful business has the ability to assess any given situation and decide how to proceed based on the findings.
Strategic Planning
One step in a SWOT (Strength, Weaknesses, Opportunities, Threats) analysis is looking at the processes. Are you cruising down the road smoothly, or is your SUV coughing and sputtering along, barely making it to the next service station? More than likely, your company is somewhere between these two extremes. And you probably go back and forth between states of high and low performance.
Strategic Planning
Understanding how your company’s resources, capabilities, and processes are used to grow the organization is critical to successfully executing your strategy, growing your company, and ultimately making it sustainable. Often, pinpointing all the things that need to come together to move a company forward is difficult.
Strategic Planning
Although implementation of a strategic plan may not be the most exciting topic to talk about, it’s a fundamental business practice that’s critical for any strategy to take hold. The strategic plan addresses the what and why of activities, but implementation addresses the who, where, when, and how. The fact is that both the plan and implementing the plan are critical to success.
Strategic Planning
In strategic planning, benchmarks are surveys and assessments that help determine how well your company performs compared to other companies in your industry or business size. Following are just a handful of benchmarking tools available:
BizStats: Visit the BizStats website for instant access to useful financial ratios, business statistics, and benchmarks.
As your strategy map tells your interrelated strategy story, your road map shows you mileposts from current to future. Strategic planning is as much about the strategy, as depicted in your strategy map, as it is about the planning, as illustrated in your road map. The road map view is extremely helpful to visualize what needs to be prioritized year-by-year to achieve your vision.
Strategic Planning
Ultimately, no matter how good your research and strategic planning are, all your knowledge is about the past, and all your decisions are about the future. Scenario planning faces up to this dilemma, confronting you with the need to acknowledge that you don’t, and can’t, know the future. Ready to step into your future?
Strategic Planning
During a recent strategic planning process, Calvary Baptist Church, a large congregation with three large campuses, explored a significant strategic shift (using standard business models for churches) in its value proposition.
The planning team asked these questions: “Is our business model changing? Is the way we deliver value to our customers going to be different in the future than it is today based on changing demographics?
Few business owners are fortunate enough to sell their company when its value is at an all-time high. Even fewer owners who’ve sold their companies will ever know how or whether they could’ve achieved a higher price. In case you don’t think selling your business is likely or even possible, here are examples of some entrepreneurial companies who sold their businesses.
In terms of strategic planning, the difference between your current assets (those you intend to convert to cash within a year) and your current liabilities (the obligations you have to pay within a year) is your liquidity.
Of primary importance to all organizations is the ability to pay their bills on time every month.
Strategic Planning
Acting as a coach, you can use the strategic plan as your framework to guide your team to high performance. Think about your favorite Olympic athlete. Do you think the athlete’s goal is foremost on her mind every day? You bet it is. That’s why you and your manager must act as coaches to get Olympic-level performances out of all your people.
Strategic Planning
The most common growth strategy is to focus on what you do best by emphasizing your current products in your current markets. This strategy is also called the concentrated growth strategy because you’re thoroughly developing and exploiting your knowledge and expertise in a specific market with known products.
How do you grow if you’re already doing what you do best now?
Strategic Planning
The goal in scenario planning isn’t to create one specific future. Instead, by drawing attention to key drivers and exploring how they push the future in different directions, planners create an array of possibilities that result in the ability to make crucial decisions today. Then you connect the like themes from all the scenarios to your strategy by updating or adapting your plan or developing an entirely new strategic direction.
Strategic Planning
After figuring out what one of your strategic plan’s short-term variable or uncertainty is, you want to develop other possible outcomes — or basically, plan for the what-if scenario. Here are the steps to building a short-term scenario plan:
Define a time frame for the scenario.
Some events may occur in 20 years, some in 2.
Strategic Planning
Before you start the process of implementing your strategic plan, evaluate your strategic plan and how you may implement it. As a business owner, executive, or department manager, your job entails making sure that you’re set up for a successful implementation.
Honestly answering the following questions will help to keep yourself in check:
How committed are we to implementing the plan to move the company forward?
Strategic Planning
Assessing and possibly redefining your business model, no matter what type of organization you are, can be a powerful and enlightening part of your strategic planning and management process. Many organizations today are redefining how they deliver value to customers yielding unprecedented success.
The business model consists of nine key building blocks that deliver your value proposition, as shown in the figure.
Strategic Planning
The goal of creating target markets in a strategic plan is to target specific customers who have similar needs and wants with the same message, products, and pricing and through the same distribution channels. When done correctly, your target market responds similarly to your marketing efforts.
Think about your market as though you’re someone who’s interested in buying your product or service.
Strategic Planning
Building value is essential to having a successful company as well as a successful exit. Jeff Clavier, founder and managing partner of SoftTech VC, shares his outlook that “good things happen to good companies.” As such, entrepreneurs should worry about only one thing: building great products that users or clients care about.
Strategic Planning
Creating a short list is the last part of synthesizing all your options to the select few for your strategic plan. Ideally, you want to have between three and five external priorities. If you have too many, you may lose focus, and your plan may become too big. More than likely, your lists contain a dozen or so priorities, so you need to eliminate some more.
Strategic Planning
Because your values are a key foundational element to your company and strategic plan, you want to be doubly sure they’re the right ones. You don’t set or establish core values; you discover them. The exercise that follows will help you focus on discovering shared values within your organization by starting with individual’s values and moving up to the organization.
Strategic Planning
Updating or creating a new vision statement can be one of the most exciting parts of strategic planning. Because your vision sets the direction for your entire planning effort, you want to ensure it paints a clear picture of where you want to go. Creating your vision statement can be achieved in a fashion similar to that of creating your mission and values statements.
Strategic Planning
Customer management processes cut across all your customers — current and new. In evaluating your performance, written or unwritten, your organization goes through the following processes when acquiring and serving your customers:
Selecting customers: Are you identifying the right customers whose problems you can solve?
Strategic Planning
Your competitive advantage(s) is the foundation, the cornerstone of your strategic plan. It is what you, your company, or your department does better than anyone else. It’s what makes you unique. It’s why you’re in business, and more importantly, why your business continues to prosper over time.
The No. 1 attribute Warren Buffet — arguably one of the most successful investors in the world — looks for in a company: “Sustainable competitive advantage,” he once told an interviewer.
Strategic Planning
Implementing your strategic plan includes several different pieces. Executing a plan can sometimes feel like it needs another strategic plan of its own. Use the following set of comprehensive implementation steps as your base implementation plan. Modify these steps to make them your own timeline and fit your organization’s culture and structure.
Diversification is entering new markets with new products. Sometimes you just need to bust out and try something new — like learning the polka. Or if you’re a tobacco firm, buying a packaged-food company; a cola firm entering the water business; or a chemical company going into the spa supply business. All these moves, except the polka of course, are examples of diversification.
Strategic Planning
So just when should you hire an outside facilitator for your strategic planning process? In an age of consultants, organizational leaders, and planners for everything under the sun, hiring a helper doesn’t come cheap. The costs to your company for strategic planning include the following:
The value of your participants’ time — more precious than ever in this time-starved world
The cost of any facility rental, AV equipment, travel, food, and lodging
The opportunity cost if, following your meeting, plans and decisions aren’t carried out or your team’s behavior doesn’t change for the better
Add up these actual and figural costs, and you can easily see how strategic planning represents a real investment.
Strategic Planning
As you’re working toward developing a values statement for your strategic plan, beware of the personal and emotional connection most of your team members have with creating the values statement. Developing core values can be tricky because you’re transferring something that’s very personal into a group and business setting.
Strategic Planning
Accountability is key to successful implementation of any strategic plan — hands down. If you and your team don’t have to report to anyone on your progress, the plan may find itself farther and farther down your to-do list or at the bottom of your stacks of papers. You don’t need an elaborate accountability system, but you do need something everyone understands.
Strategic Planning
The fact that you’ll leave your business at some point is a given. If you’ve been ignoring this point, you’re not alone. People start and run businesses for numerous reasons, and so much energy goes into that process that most owners never really consider how it may end.
The reason most business owners avoid this entire discussion is because it’s not the most inspiring topic.
Strategic Planning
Business owners have the unique responsibility of determining the strategic direction of an organization based on their personal endgame — the final result they want out of their business. An endgame can be anything from continual cash flow, to a business sale, to more time off, to changing the world. Basically, the endgame is the business owner’s personal vision.
Strategic Planning
The worst thing for your strategic planning effort is to have a mission statement that’s meaningless to your staff and other stakeholders. A mission statement is a statement of the company’s purpose or its fundamental reason for existing. The statement spotlights what business a company is presently in and the customer needs it presently strives to meet.
Strategic Planning
While you’re developing a strategic plan for your company, evaluating your ratios against those in your industry provides an objective look at how you’re performing. It helps you determine how other companies similar to yours are doing.
When you have industry numbers to compare your company to, you can see whether you’re performing better or worse than other companies.
Strategic Planning
While you’re developing a strategic business plan, you can identify which products and services to use to grow your company by looking at the financial performance of your products and services over the past several years and matching it up with market attractiveness.
Every organization has a portfolio of products or services that it offers to its customers.
Strategic Planning
The benefits to strategic planning are intangible and show hard bottom-line return on investment (ROI). Every day, your work impacts aspects of your business. Following these tips can help you realize the true day-to-day impact of having a strategic plan in place:
Spend more time on high-impact, high-growth activities.
Strategic Planning
From a strategic planning perspective, you need to look at what tangible assets you have versus what you need to achieve your strategic plan. Resources are tangible assets — any physical or quantifiable assets that your organization uses to bring revenue into your business. Some assets, such as your brand, are intangible but still have a quantifiable value to your company, just like your long-standing customer relationships.
Strategic Planning
After you lay out different growth strategies, you need to evaluate which path you want to take. But in order to choose a path, you must decide how to execute the strategy. By matching your growth strategies with your strengths, weaknesses, and opportunities, you can determine which ones to pursue.
The best way to visually see your strategic choices is to create a Product/Market grid.
Strategic Planning
Most companies lose about 25 percent of their customers every year for a variety of reasons. As you build a strategic plan, recognizing that you’ll lose customers is important, yet maintaining existing clients instead of acquiring new ones is substantially cheaper. With this in mind, organizations get trapped in a continuous cycle of trying to fill a leaky customer bucket.
Strategic Planning
When developing a strategic plan, one method of getting a better handle on the future is through extrapolating the past. You can do so by finding a leading indicator that your company’s sales revenue lags.
For example, an appliance service company may find that an increase or decrease in its revenue may lag behind the change in the economic indicator of durable goods manufacturing by ten months.
Strategic Planning
In terms of strategic planning, the mix of your debt and equity indicates your risk level. Although other ratios fall into this group, your debt-to-equity ratio is the key to figuring your risk of how leveraged you are or aren’t.
Debt-to-equity ratio says a lot about the general financial structure of your company.
Strategic Planning
The process of strategic planning achieves the outcome of aligning each employee with the organization’s mission. Gallup conducted a study of more than 80,000 managers in 400 companies to determine the most successful managerial behaviors. From that study, they drilled in on 12 key focus areas or traits that best correlate with business success, including the following:
Aligning each employee with the mission
Letting employees know what’s expected
Tapping in to the talents of employees
Talking with employees about their progress
You don’t need to predict the future but do plan for it and lay a roadway to get there.
Strategic Planning
One potential way to strategically grow your company is through vertical integration — moving up and down your supply chain. You can integrate forward by setting up operations closer to your customer, such as a clothing company opening up retail stores. Or you can integrate backward by moving closer to your raw material source, such as the clothing company opening a manufacturing plant.
Strategic Planning
Understanding where your income comes in is critical to your strategic plan. If someone asked you how your organization makes money, more than likely you’d reply by explaining the types and number of products or services you sell. Although that answer is technically correct, look instead at your revenue generation from a different perspective.
Strategic Planning
As the founder of the company, the best time to start planning your exit strategy is when your venture is launched. Any number of front-end decisions and strategies can have long-term impact on the operations. No matter whether you consider an outright sale or decide to groom another person to lead the business, think about these critical factors as you start developing your exit strategy:
Timing: When is the right time?
Strategic Planning
How will you know whether you’re hitting those mile markers in your strategic plan or whether you’ve steered off course? Every plan needs some check-in from time to time. Some important progress measures include:
Scorecard: A scorecard measures and manages your strategic plan. What are the key performance indicators, or KPIs, you need to track to monitor whether you’re achieving your mission?
Strategic Planning
Even if you’re running a nonprofit or government agency, you’re always looking at improving your profit margins. Your margins tell you how much is left after you’ve paid your direct expenses. In the analogy of an SUV, your profit margins tell you how much gas is left in the tank when you arrive at your destination.
Strategic Planning
Most organizations intrinsically know where the drains are. Plugging the drains is more about breaking down institutional barriers than it is about implementing the change itself. Brace yourself for the hard conversations and tough choices, but know that you’ll be rewarded in the long run.
Check out the following ways to detect cash drains and improve your margins:
Fire loser customers.
Strategic Planning
Of course, everyone thinks like you, right? As a good leader, you know that’s not the case. Unfortunately, sometimes you forget what’s obvious and end up structuring a meeting based on your own preferences. In reality, stepping in to other people’s shoes and ways of thinking is a difficult task. But in strategic planning, you want everyone in the room engaged.
Strategic Planning
You can see in black and white how successful your business and your strategic plan can be by putting all your revenue and expense assumptions together and projecting them over three years. Projecting also allows you to grow the business without running out of cash. Growth in sales always incurs additional cash requirements to generate and support the additional revenues.
Strategic Planning
As far as strategic planning goes, having an advantage over your competitors isn’t enough. For your business to be great, it needs to be sustainable and able to endure the test of time. You have to be able to combat today’s fierce market forces and uncertainty.
Think about the graveyard of businesses from the dot-com era.
Strategic Planning
As part of your strategic planning process, you’ve determined the need for a new mission statement. You can start from scratch or even revise the one you currently have.
The three components in the following list can help you craft your mission statement. Consider answering these questions from your customers’ perspective, and you’ll instantly see an improvement in your responses.
Strategic Planning
Unfortunately, many organizations produce unprofitable products and services for a variety of valid reasons. Strategic planning is about driving the right decisions, based on facts, even if they’re unpopular or political land mines. Read on to learn how to factually assess your products and services to ensure that you have winners.
Strategic Planning
Although big, game-changing driving forces may present an array of opportunities and threats in your strategic plan, a number of smaller scenarios hit closer to home — the what ifs. These scenarios are short-term uncertainties that tend to keep you up at night.
A great way to test the waters of scenario planning is to build out a few scenarios based on one of your known short-term uncertainties or risks.
Strategic Planning
The vivid description in your strategic vision needs to be just that — vivid. Include a list of ideas, phrases, adjectives, and so forth that thoroughly explain what achieving the vision statement is like. Try to imagine your organization when you reach your vision. Your vivid description explains what it feels like.
Strategic Planning
Strategically creating value by really knowing your customers concentrates on a narrow market segment by a deep understanding of your customers and their perceptions of the value of the product or service you offer.
A company implementing the customer intimacy strategy competes on scope, providing superior value by tailoring its products or services to match exactly the needs of targeted customers.
Seeing your whole strategic plan — the relationships and dependencies — can be difficult, but doing so is necessary to make sure that your company sees the big picture. Unlike financial plans, with income statements, balance sheets, and cash flow statements, no common or uniform elements exist for describing a company’s strategic plan.
You can strategically grow by leveraging your product knowledge to reach new customers. More than likely, you’ve spent time and money developing your product and service offering. Assuming you’re happy with your current offering, extending it into new markets is a logical next step. Taking that next step is aptly called a market development strategy.
Strategic Planning
You know what kind of market information you need to develop your strategic plan, but now you’ve got to go out and find the answers. Doing market research can be like pulling on a never-ending spool of thread. Sometimes you reach the end of your search and sometimes you don’t. At some point, you need to decide whether you’ve collected enough information to make a strategic decision about which markets to pursue.
Strategic Planning
Measurements and metrics abound in companies today, and they are helpful when you are trying to develop strategic plans. Customer-focused metrics are a quick way to determine customer satisfaction. You can benchmark these metrics off industry standards, but more than likely, you know what you want these numbers to be for your company.
Strategic Planning
The ratios in this section give you a good picture of how productive your company is in using its assets to generate profit. Ratios in this group should be benchmarked against your industry to determine how well you’re performing and where you may find areas of improvement.
Check out these ratios:
Sales to assets: Sales to assets measures how productive your assets are.
Strategic Planning
Strategy planners want to see lasting, positive results. Whether you’re internal to your organization or an external consultant, you likely understand the importance of SMART goals. Chartering actions that are measurable sounds simple enough, but the masterful aspect of a measurable goal is to make sure the metric is aptly suited to reflect non-ubiquitous success.
Strategic Planning
In strategic planning, profitability ratios tell you how well you create financial value for your company. Although net profit is your bottom line, profitability is what you’re aiming for year after year. This activity looks at the profitability of your company as a whole, which includes net profit margin and return on equity (ROE):
Net profit margin: Net profit margin is calculated by dividing gross sales into net profit.
Strategic Planning
During the past dozen years or so, you may have witnessed an explosion in the use of management tools and techniques — everything from Six Sigma to benchmarking. Keeping up with the latest and greatest, as well as deciding which tools to put to work, are key parts of every leader’s job. But picking the winners from the losers is tough.
Strategic Planning
A case study related to the Boy Scouts of America (BSA) illustrates the strength of strategic planning. As the BSA moves into its second century of developing character in youth, the executive leadership team has been rethinking its strategic focus and business model. Why? Because although the organization has roughly 300 local councils serving millions of kids through a wide network of volunteers, its membership has been slowly declining.
Strategic Planning
Strategic planning answers where you are now, where you’re going, and how you’re getting there. Visualize a famous bridge, such as the Golden Gate Bridge, Brooklyn Bridge, or Tower Bridge. All bridges have two primary support pillars and a span between the two, allowing one part of land to be connected with another.
Strategic Planning
Spending tons of money and months collecting customer feedback can be too overwhelming and cost prohibitive for many companies developing a strategic plan. But still, obtaining feedback is crucial for the ongoing success and sustainability of your company. You can easily retrieve information during the normal course of your business day.
Strategic Planning
Armed with information about how to calculate financial ratios for your strategic plan, you want to set up a spreadsheet that shows financial trends ideally for the past few years. If you don’t have complete financial data, put together ratios for the years that you do have information on.
Using a spreadsheet, follow these steps to get started.
Strategic Planning
Sometimes a strategic positioning statement sounds like a tag line or a slogan. That’s fine, but remember that the purpose of a positioning statement isn’t to be cute. Instead, its purpose is to help guide all your and your staff’s activities associated with a specific target customer group. This positioning statement is the core message you want to deliver in every medium and everything you do.
When you hear the term product development, you may think about brand new products, but that’s not necessarily the case. Executing a product development strategy can happen by adding more value to your existing product through features, upselling, or cross selling.
The best things about this strategy are you’ve already established yourself in your current markets and you know what your customers want.
Strategic Planning
A product and/or service leadership value proposition sounds something like this: “We offer products and services that expand existing boundaries past what was thought possible.” This strategy concentrates on creating a unique, innovative product or service line while competing on speed. A company implementing this strategy provides superior value by offering its customers a continuous stream of innovative products or services, regardless of the costs in terms of price or inconvenience.
Strategic Planning
Everyone wants to feel successful and recognized for a job well done, but human nature is to brush by achievements. By listing what you achieved last year as an organization, you help motivate and inspire your team to work smarter and harder in the coming year. Additionally, why not try to replicate what worked well last year?
Strategic Planning
In business and strategic planning, finding new customers is the role of marketing. After you sift through all the semantics, misused business lingo, and fuzzy concepts, marketing is really pretty simple: Identify who you want to sell to, figure out how to get those people to notice you, and when they do, get them to buy from you.
Good market research ensures that you don’t spend a lot of time and money on strategic plans and marketing campaigns that customers don’t jibe with or new products that they won’t pay for. To be effective, organizations need good information about their customers’ needs, wants, and characteristics. Generally, if the result of your decision impacts the customer, ask the customer for input into your decision before you make it.
Strategic Planning
The comprehensive approach to determining your company’s value is to conduct a business valuation that includes market comparisons. Several major databases are available via subscription, such as Done Deals, BIZCOMPS, and IBA Market Data. Business owners can also get valuations from accounting, consulting, and investment banking firms.
Strategic Planning
By looking at your operations through your existing customers’ perspectives, you can conduct more business with them. And armed with this information, you can make strategic decisions that raise your worth in the eyes of those customers who’re most valuable.
When you neglect your customers, you tend to assume that you know them, what they want, and that they’ll continue to buy from you.
Strategic Planning
Would you sleep better if you had a clear idea how to mitigate real risks in your strategic planning and business operations? One way to mitigate the uncertainty of the present is to plan for the future. We’ve all seen unsettling headlines pointing to a business slowdown in the newspapers and in national news: “Home Foreclosures Skyrocket,” “Housing Market Continues Slump,” “Disappearing Sales Tax Revenue,” and “Credit-Market Contagion From US Subprime Crisis Affects Global Economy.
Strategic Planning
Without a strategic plan, sometimes business owners lose sight of why they started their business. Your organization exists for a very specific reason, and most likely its purpose is different than any other company out there. Companies are founded for reasons as varied as something to do during retirement to making the world a better place.
Strategic Planning
Selecting only one business unit level strategy to lead with in your strategic plan is widely considered one of the best ways to achieve and maintain your competitive advantages. Why? Because if you select two or more approaches and then fail to achieve them, your organization gets stuck in the middle without a competitive advantage.
Quite often, people confuse strategy and tactics and think the two terms are interchangeable in strategic planning, but they’re not. According to strategy guru Michael Porter, “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.
After you’ve determined how you can exit your business, succession planning helps you determine who runs your business after its transfer. (This phase is relevant for all exit strategies except liquidation.) While you still have ownership and control, adding your input is crucial. No one knows the business better than you, so take advantage of your current situation and aid a successful succession.
Strategic Planning
If you have time to work on only one part of the strategic planning process, take time to formulate your competitive advantage. By knowing what you’re best at, you can focus on what matters for success and profitability.
You don’t have to wait until your strategic plan is complete to put your competitive advantages to work for you.
Strategic Planning
During the strategic planning process, gathering feedback from a variety of sources results in an objective, comprehensive picture of who your customers are, what they want, and what they value. However, collecting the information is only half of the equation. Ensure that everyone in the company knows what customers are thinking by sharing customer feedback throughout the organization.
Strategic Planning
Many process areas are important to understand and explore during your strategic planning process. These processes don’t stand on their own or exist without a process that tangibly produces results. However, highlighting the following three supporting areas makes every organization run a whole lot smoother.
Evaluate your technology
Technology (IT) in and of itself isn’t a strategy.
Strategic Planning
Knowing how to define your competitive advantage in your strategic plan is the first step toward applying it to your organization. Ninety-five percent of all companies don’t know their competitive advantages, let alone how to use them to communicate a compelling reason to choose their product or service.
Here’s a 30-second test to determine whether you know your competitive advantage.
Strategic Planning
From a strategic perspective, looking at where your product or service is in its life cycle helps determine actions in each of the Four Ps (product, price, promotion, and place) related to your target customer.
The following are the four product life cycle phases:
Introduction: This phase provides a period of slow growth with nonexistent profits (because of the extensive promotional costs).
Strategic Planning
When developing a strategic plan, you need a dynamic way to look at your performance month after month because you’d like to see whether you’re growing or shrinking. The Trailing 12 Months (T12M) chart, developed by Kraig Kramers — founder of CEO Tools — can help you track monthly sales for your last 12 months.
Strategic Planning
Strategic market segmenting can be confusing and more difficult than it needs to be. Remember, there’s no right or wrong way to segment your market. Segmenting requires creativity. Take a shot at creating segments that make sense to you and your business situation. You can always revise your segments at a later date.
Strategic Planning
Ultimately, you know what makes your company unique; however, for your uniqueness to be useful in strategic planning, you need to state what you know to be absolutely true about your company. Your list of competitive advantages should make someone say, “Wow, I want to do business with you.” To get your list of wows, you need to look at your business from different perspectives.
Strategic Planning
While developing your strategic plan is a good time to research more about why your customers buy products from your company or use your services. Ultimately, the value you provide is only as good as the benefits the customer receives. Your strategy excels or fails on that perception or lack thereof.
If you ask companies what they sell and then turn around and survey their customers to ask what they buy, you’ll most likely hear two different answers.
Strategic Planning
Another step in reviewing your processes involves taking a look at your creativity. If you’re not innovating, you’re dead. (At least that seems to be the general consensus of the business community!)
Without innovation, anyone can imitate what you’re offering after a period of time. Also, business gets pretty boring if you have the same old stuff.
Strategic Planning
Because strategic planning is about improving the status quo, looking at how to improve operations is the key. Operations produce and deliver the goods and services to customers. These processes encompass managing your creation of customer value. Service companies may be tempted to think that processes aren’t managed in this area, but consider how you deliver your service.
Strategic Planning
Organizations don’t operate in an isolated pool with just their employees and their customers. Instead, companies and departments have relationships with the communities they operate in, governmental agencies, and partners such as other companies, industry associations, and maybe even competitors.
Your company may need to manage relationships with all or a few of these entities because everyone is a piece of the bigger picture.
Strategic Planning
Evaluating your financial situation is part of your strategic planning process, because the financial health of your organization is critical to your corporate growth. Want to know how your business is really doing? Evaluate your financial performance by looking beyond the numbers on your balance sheet and income statement.
Strategic Planning
More and more companies are articulating the core beliefs and values underlying their business activities. Strong values account for why some companies gain a reputation for such strategic traits as leadership, product innovation, dedication to superior craftsmanship, being a good company to work for, and total customer satisfaction.
Strategic Planning
The third phase in the assessment of your company capabilities during strategic planning is reviewing its knowledge capital. The institutional knowledge, or tribal knowledge, is one of those management fads that come and go. But regardless of what may be hip in the business traditions of today, creating and maintaining an efficient knowledge management system to share information companywide is common sense.
Strategic Planning
In the strategic planning process, the second phase in the assessment of your company’s capabilities is reviewing its organizational capital. Now that you have people on board and in the right jobs, answer the following questions:
How is your work environment?
Do you and your employees like coming to work?
Does everyone get along?
Strategic Planning
In the strategic planning world, scenario planning is a way of simplifying a complex future by providing the opportunity to ask the what-if questions and to rehearse how you may respond should a certain event or trend happen in the future. Pierre Wack sums up the outcome that scenarios seek to change our mental maps of the future.
Forming a strategic vision should provide long-term direction, delineate what kind of enterprise the company is trying to become, and infuse the organization with a sense of purposeful action. Vision serves as a unifying focal point for everyone in the organization — like a North Star. In fact, your vision statement needs to be something you can achieve at some point in the future.
Strategic Planning
Often starting with what something isn’t is easiest. So your competitive advantage isn’t a list of your strengths. (Not to downplay strengths, because they’re important, too.) But if your competitive advantage list only comprises strengths, it’s not very competitive, now, is it? You have to be better than your competitors in order to have a competitive advantage.
Strategic Planning
No matter what your business, you have a business model--the essential core of what you do and how you do it. A business model can be simple or very complex. A restaurant’s business model is to make money by cooking and serving food to hungry customers. An online business model can vary from advertising to selling products to creating a community, or can even be a combination of models.
Strategic Planning
Just how valuable are your customers? A strategic planning calculation called the lifetime value of a customer translates value into hard dollars. The outcome of this calculation represents a relatively accurate estimate of your customer’s value to your company over the lifetime of that customer’s business.
The lifetime value of a customer calculation (illustrated in the figure) doesn’t determine profit but rather the overall customer value that can eventually be realized in the best-case scenario that a customer stays with you forever.
Strategic Planning
When developing your company’s strategic plan, the elements of the question “Where are we going?” help you answer other questions, such as these: What will my organization look like in the future? Where are we headed? What is the future I want to create for my company?
Because the future is hard to predict, you can have fun imagining what it may look like.
As you think about where your organization is as you create your strategic plan, you want to look at your foundational elements (mission and value) to make sure that nothing has changed. More than likely, you won’t revise these two areas very often.
Then, you want to look at your current or strategic position, which is where you look at what’s happening internally and externally to determine how you need to shift and change.
Strategic Planning
Ideally, as you develop your company’s strategic plan, you’re performing some market research and asking your current customers why they use your services. But you also likely have a general sense of what it is that drives people to buy from you. Here are some questions to ask yourself to determine what’s bringing customers through your door:
How do we help our customers?
Strategic Planning
You aren’t alone if you’ve ever wondered what a competitive advantage really is and what you do with it as far as strategic planning goes. Think of your competitive advantage as your organization’s DNA — a collection of genes and attributes that makes you unique. When you’re capitalizing on your uniqueness, you’re healthy, fit, and successful.
Strategic Planning
To get customers and potential customers to pay attention, you must clearly and strategically position yourself in your customers’ mind. To do so, you need a positioning statement that guides all your marketing efforts directed at the target customer group.
You’ve determined who you want to market to, what their needs and wants are, and that they, as a group, are attractive enough to get your interest.
Differentiating between a strategy review and an operational review is important. Simply put, an operational review is an in-depth look at the big picture, addressing communication issues, operating procedures, profitability issues, and other factors that affect a business, making it unstable.
A strategy review monitors progress of the company from a strategic level, making sure that the objectives are on track.
Strategic Planning
The monthly or quarterly strategic plan review meeting is the heartbeat of the strategy management process. In order for a plan to be an effective management tool, it must be up-to-date, guide decision making, and be top of mind.
Therefore, consistent review and monitoring of the plan are necessary to know whether you’re on or off course and to modify the course if necessary.
Strategic Planning
To move from where you are today in your strategic plan to where you want to go, you have to determine your strategic position, or where you stand today. This process is like taking your SUV into a mechanic for the annual tune-up. You get an assessment of what’s working, what’s not, what you need to fix, and what can wait.
Strategic Planning
Have you ever wondered what the guy next door is doing all day? Or, more interestingly, what are the CEOs of growing organizations spending their time on? If you could just be a fly on the wall in the offices of some of the Inc. 500 CEOs, I bet you’d discover quite a bit about what it takes to grow an organization.
Strategic Planning
A common trend in compensation plans is to pay for performance. No doubt about it; people pay attention when it comes to their own pocketbooks. Linking performance to short-term goals and action items in your strategic plan is a natural connection. Performance-based compensation is a huge way to structure performance plans.
Strategic Planning
In order to put a strategic plan together that gets you from Point A to Point B effectively and efficiently, you need a system in place to help you achieve the end result. This process is continuous and cyclical, and in a disciplined mode, it requires a focus and pattern to stay on track and be productive while enjoying the journey along the way and learning from it.
Before you get too far into your strategic planning process, check out the following tips — your quick guide to getting the most out of your strategic planning process:
Pull together a diverse, yet appropriate group of people to make up your planning team. Diversity leads to a better strategy. Bring together a small core team — between six and ten people — of leaders and managers who represent every area of the company.
Strategic Planning
When you’re figuring out how to measure the success of your strategic plan, you’re basically developing an action plan for each goal. An action plan explains who’s going to do what, when they’re going to do it by, and in what order they’re going to do it for the organization to reach its goals.
Tips for cascading one level
For every short-term corporate goal, identify the following items.
Strategic Planning
Strategic planning is a process that you want to flow smoothly, but sometimes you have to face the facts: When you plan for a smooth ride, it never goes that way. Something always throws a wrench in the plan, making it an unpredictable process. Fresh ideas at an afternoon meeting may change decisions made earlier in the day.
Strategic Planning
The three words strategic planning off-site provoke reactions anywhere from sheer exuberance to ducking for cover. In many organizations, retreats have a bad reputation because stepping in to one of the many planning pitfalls is so easy.
Holding effective meetings can be tough, and if you add a lot of brainpower mixed with personal agendas, you can have a recipe for disaster.
Strategic Planning
By embedding your strategic plans into daily operations, completing items on your strategic plan becomes natural instead of something extra. Following are some quick ways to keep your strategic plan agile, preventing it from landing on the shelf and collecting dust.
Delete the fluff from your strategic plan
The sure death of a strategic plan is entombing it in hundreds of pages of text.
Strategic Planning
Completing your strategic plan is on your to-do list, right? But is it slipping lower and lower down the list? Don’t worry; you’re not alone! In fact, most everyone in the planning process struggles with the same problem. Completing your strategic plan and maintaining momentum with implementing it are arguably two of the most important things you have to do.
Strategic Planning
This area is probably the most widely debated part of strategic planning. Having goals, objectives, and strategies are great, but knowing how they all work together (if in fact they do) and if you need them all is another story. Ignore the semantics and focus on establishing a time frame. What matters is having a combination of long-term and short-term markers to keep your organization moving in the right direction.
Strategic Planning
Developing competitive advantages and strategic plans isn’t always easy or straightforward. For many, a competitive advantage is developed by nurturing a strength over time. This process turns the activity or intangible asset into something that’s difficult to copy. If you have a strength that can help you break away from your competition, spend your energy and resources to develop it further.
Strategic Planning
Why hire a facilitator for your strategic planning meeting if you’re perfectly comfortable leading the group yourself? Think of it this way. If you were having a party for 100 of your closest friends, assuming money was no object, would you cook for them or hire a caterer?
More than likely, you’d hire a caterer.
Strategic Planning
The scorecards you build in the implementation planning process are the link from your plan to progress against your plan. You then track the progress against each goal in your scorecard and use it during your strategy reviews.
Using your scorecard is a step-by-step process that you can implement in your organization.
Strategic Planning
Often, business owners and executives fall prey to the allure of setting too many financial or strategic planning goals. Or their goals are exclusively financial. Thinking too much about the financial side of business detracts from the other reasons they’re in business, such as employing people, contributing to their communities, or providing a needed product or service.
Strategic Planning
Consider starting your annual strategic planning retreat by futurecasting — the practice of trying to envision your company’s future. Companies spend a lot of time predicting what sales will be like in the future, but little time actually thinking about the factors that impact that future. These factors include the following:
Underlying dynamics
The sweeping trajectory of new competition
The way customers evolve
The collision course one industry may be on with another
Really push your team to think about what will be happening in five or ten years.
Strategic Planning
When selecting a professional to guide your strategic planning session, be selective. Facilitation is different from public speaking or training. It’s not about having solid content, good platform skills, or an understanding of adult learning principles. Instead, facilitation involves working with groups of people in the moment.
Strategic Planning
Although it’s imperative that key employees have a voice in planning, not everyone has to literally be at the meeting table. The old cliché that too many cooks spoil the broth couldn’t be closer to the truth. Too many people in the room can lead to chaos and confusion, resulting in a strategic plan by committee instead of through educated decisions and leadership.
Simply put, a strategic plan is the formalized road map that describes how your company executes the chosen strategy. A plan spells out where an organization is going over the next year or more and how it’s going to get there. Typically, the plan is organization-wide or focused on a major function, such as a division or a department.
Strategic Planning
Strategic objectives are the general areas in which your effort is directed to drive your mission and vision. With strategic objectives, the company moves from motive to action. Strategic objectives define what an organization intends to accomplish both programmatically and organizationally. Strategic objectives are articulated as broad categories that are non-measurable and continuous.
Strategic planning has a basic overall framework. Not to oversimplify the strategic planning process, but by placing all the parts of a plan into the following three areas, you can clearly see how the pieces of your plan fit together:
Where are we now? Review your current strategic position and clarify your mission, vision, and values.
Strategic Planning
You must know your customer well before you can develop a strategic plan to get and retain that customer’s business. To visualize your ideal customer, create a customer profile or detailed description of your target customer as part of your strategic planning process. Specifically, you want your profile to be so descriptive that you can visualize shaking your customer’s hand.
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