Is there a best practice for strategic planning?

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I’ve done a lot of research into the subject of strategic planning. There are many theories about what is the best way to develop a plan. There is the “basic” method, scenario planning, organic planning, and bottom up planning, among others. There are even software programs to “self develop” your strategic plan.

So what is the best practice?

After studying the subject and developing literally hundreds of plans both for my businesses and client organizations I think I can say it doesn’t matter what method you use as long as you follow a basic roadmap and think it through.

As I said in my writings you need to start at the end. You need to agree upon a vision for the organization. Any journey begins with an end in mind. You simply have to determine where it is you want to go in the next three to five years. This is a key first step that many if not most organizations don’t do. I’ve heard things like if we decide on a specific direction we might miss opportunities in another direction.

My response to that is if you don’t decide on a general vision, you waste time, energy and capital resources chasing tempting diversions that may of may not fit. Scenario planning mentioned above can be used as a supplement to a plan, but overall you need to decide what your organization will look like in the future. You may plan for various market or competitive influences but only to the degree of how they may impact your overall vision.

After deciding where it is you’re going you need to clearly understand where you are now. A thorough S.L.O.T. analysis looking at internal strengths and limitations as well as external threats and opportunities is essential for step three. You wouldn’t begin a road trip without knowing where you want to go and then developing a solid beginning point, why is a roadmap for your organization any different?

Step three is clear, crisp, timed, goals designed to get you from where you are to attainment of your vision.

Having a clear vision makes decision making, investment, management incentives all easier. You simply ask your self does this decision, investment or program move me closer to or further away form attainment of my vision?

The most difficult portion of any planning process is establishing and agreeing upon a vision. It’s difficult to put a stake in the ground for the future of your organization with so many fast occurring variables in today’s marketplace. But my view is you can decide your future or have it decided for you. Like the old saying goes, “which would you rather be the wind or the weather vane”?

Whatever method fits your organization I have just a few hard suggestions:

1. Begin with the end in mind
2. Document the plan
3. Communicate the vision and the plan
4. Implement the plan (studies show over 90% of organizations don’t)
5. Review progress to the plan on a regular basis
6. Align people, processes and incentives with the vision in mind
7. If you can’t be objective about internal and external analysis get outside help

You can sit back and react to circumstances or you can invent your organization’s future. 

Invent your future with better strategic planning

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I read a quote somewhere a few years ago that really made me think. The author said “the future is an invention anyway, you might as well invent a good one”.

If you stop and think about it, it’s really, true the choices and decisions we make throughout life accumulate to determine where we are and what we’re doing.  How many times have you hard someone say, if we knew then what we know now.

Well what if we did know then?  What if you actually had a vision of where you wanted to be in five or ten years, and made decisions and choices based on attaining that vision? You really would be inventing your future. Many successful people employ goal setting as a regular part of their lives. Goal setting focused on a clear vision.

Most people just don’t do that. They spend more time and effort planning a two-week vacation than they do determining what they are going to do with their lives. You wouldn't begin a road trip without a map, why would this be any different? 

Many of us look back one day and realize life just happened and they are where they are by _______________. You fill in the blank, luck, fate, breaks, whatever word you choose.

Well experience has taught me that organizations function in much the same way. The choices and decisions they make everyday accumulate to determine where they are in their market, and how well they’re doing. If those decisions are made with reference to a clear vision and direction, they would find that they are indeed creating their own future.

Chapter two of my book, “Bottom Line Focus” is entitled “Start with the end in mind”. It’s aimed at helping organizations and leaders develop a better strategic planning process, drive execution, and ultimately produce better bottom line results. The point of the chapter is before you start a planning process, sit down with all of the stakeholder and determine exactly where it is you want to go.

I don’t mean some vague statement saying I want to double sales, or double margins, but a clear crisp vision of what your organization will look like in five years. What businesses will you be in, what market share, what your market differentiator will be. It should be clear enough you can articulate it to everyone. Next step is sharing it with stakeholders often.

Once everyone understands the vision clearly, all decisions, processes, incentives, investments and other resources should be aligned to attain that vision. It makes decisions easier by simply answering the questions does this take me closer or further from my vision.

If you think about it you are inventing your future. You are clarifying what you want, and taking measured steps to get there. Of course it takes a few other things like honestly and objectively determining where you are now, and developing crisp goals to get from here to there. I could put a plug in here like hiring a great business coach to facilitate the process is a great help.

The point is, invent your future by making it happen rather than letting it happen.

Better strategic planning drives bottom line results

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I’m reading an interesting book titled “How Toyota Became Number One” Leadership Lessons From the World’s Greatest Car Company by David Magee.  It discusses the Toyota strategy process in detail from their first introduction into the United Sates until the present time. It also talks about how their strategic thinking and customer understanding differs from the U.S car companies.

It points out that Toyota isn’t perfect and have made some market and strategy mistakes, but they recognized them quickly and corrected them just as quickly.

There are several major differences between domestic manufactures and even the other Japanese manufacturers and Toyota, but they all start with better strategic planning.

Toyota develops strategies based on recognizing what the customer needs and wants, and then executes to that strategy. How do they know what the customer wants? They ask them. They don’t guess and build large quantities of what they think will sell and push the units into the dealer network they study the customer. The book talks about the development of the Lexus brand in the U.S. Toyota sent a team to Laguna Beach, CA in 1985 to “live a life of luxury” and study the habits of luxury car buyers. They learned what the customer wanted and the shortfalls of the other luxury cars on the market. The result is Lexus, the largest luxury car brand in the United States selling over 300,000 cars per year.

Toyota’s strategy isn’t to be the number one car company in sales, it is to build the best car on the market and give the customer more value than he or she pays for. They believe that holding to this strategy and keeping a long-term focus rather than short-term results will drive sales.

The book talks about how Detroit automakers rode the SUV wave throughout the last decade. They were the highest margin cars ever built and they built them bigger and bigger up to and including the Excursion, the Suburban and the Hummer. Toyota offer SUV’s as well in the Highlander and the Land Cruiser, they didn’t go after the SUV market in a big way. They instead spent nearly $1 billion on development of the hybrid Prius. GM put nearly as much money into development of the Hummer Because SUV’s were the current fad and they were very profitable. One doesn’t have to look hard to see which company planned for the future and which one went for short-term profits.

The messages I got from reading this book complemented nicely with what I had written in my book, “Bottom Line focus”.

1.  Understand your customer’s needs and wants.
2.   Deliver value.
3.  Develop a strategy that drives your vision
4.  Execute to that strategy.

This isn’t intended to be a commercial for Toyota cars and trucks, it’s a roadmap for long-term viability and profitability from a company that seems to have done it right.

There are other examples of excellent quality, customer service and best value for the customer’s money you just have to look for them.

I will say they are more rare than companies that don’t have a clear vision, and strong execution.

Better strategic planning and vision provides better bottom line results because the best marketing strategy is word-of-mouth from loyal customers.