Posted by Martin Harshberger on Mon, Jun 21, 2010 @ 02:00 PM
Strategic planning has gotten a bad rap, and probably deservedly so. If you believe the research more than 50% of organizations don’t have a documented strategic plan. My view is, of those that do the majority aren’t worth the paper they are printed on.
Why? Because most organizations simply don’t know how to plan.
There is usually a mission statement developed to please all stakeholders and to ultimately be placed on the company website and brochures for marketing purposes. After that there is usually some futuristic stuff based on revenue and sales forecasts that talk about growth. No real direction and not much talk about how the sales forecasts will be accomplished.
A strategic plan for the real world has to be better than that. It has to have clarity, goals and be used to drive accountability. Think of it as planning a vacation road trip. First decide where you want to go, determine where you are now, and then write down what it will take to get you from point A to point B.
Start with a clear vision, what will your business look like in five years? How many people and locations will you have? What markets will you be in? What will be your unique selling proposition? Take all of that and boil it down to a few sentences that you can keep in front of all stakeholders all the time.
Acme manufacturing will double sales from $10MM to $20MM in the coming 5 years and will be a world-class manufacturer of rubber ducks is not a vision statement. It’s more of a wish statement.
Acme manufacturing will develop a seamless sales and distribution network that will facilitate sales growth by at least 100%. We will be known as the highest quality on-time manufacturer of rubber ducks and other complementary bath leisure products in our industry.
Now this is somewhat better. It speaks about what you want to be, and what you need to provide to get there.
After developing the vision statement, you do an in-depth S.W.O.T analysis to determine where you are now and what’s keeping you from being the world’s top selling supplier of rubber ducks.
You boil the S.W.O.T analysis down into 5 or 6 critical goal categories, and develop clear crisp timed goals to be accomplished over the next twelve to eighteen months to get you on the road to your vision.
You meet on a regular basis and review progress to goals. Are they on track, if now what needs to happen to get them on track? Are the assumptions still valid? Does everyone understand the vision and buy into it? Regular review and reinforcement is paramount to execution.
When the goals are met in 12 to 18 months sit down and review the plan, you should be well on your way to achieving your vision. You are a perhaps a third of the way down your chosen path, is it still valid? Did your market assumptions for rubber duck sales hold true? What other products or services will be a good fit?
Do the S.W.O.T. analysis based on the updated information and start the goals process again.
Effective strategic planning is a process not a one-time exercise. Understanding that change may be necessary and leadership and accountability are needed to drive execution are key first steps to effective strategy.
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Posted by Martin Harshberger on Tue, Jun 01, 2010 @ 09:32 AM
I think strategic plans have gotten a bad rap. If you believe the research most companies don’t even have one even though it is said that over 75% of businesses that fail don’t have a plan.
When talking to people, especially those that don’t have a plan, I often hear, “strategic plans are useless, they are just guesses”.
In doing the background research for my book, “Bottom Line Focus”, I read a lot on the subject and I think I finally understand why plans are perceived as guesses.
Most people simply don’t know how to develop a meaningful plan.
They document some “goals” as to where they want to take their organizations, assign some actions based on those goals and then basically hope it all happens.
Before you can develop a meaningful plan for your organization you need to understand three things very clearly.
1. Where you want the organization to be in 3 to 5 years, in detail. What markets, what products, what your differentiator will be in that market etc.
2. Where you are now. A detailed look internally at your strengths and limitations, as well as externally at your opportunities and threats.
3. What small, timed and clear steps you need to accomplish to get you from step 2 to step 1.
Major organizational changes are accomplished by a thorough understanding of what needs to be done and where you want to go, along with clear accountability and buy in of all concerned.
Like the old saying goes you “eat an elephant one bit at a time”.
In order to get better strategic planning results, you need to spend some time developing a sound strategic planning process. My 35 years of experience has taught me most companies simply don’t know how to plan.
As I mentioned in my last blog post I just finished reading a book entitled “How Toyota Got to be Number 1” by David Magee. He writes in detail of how Toyota’s long-term strategy is based on the single goal of striving to build the best vehicle in the world, and to offer consumers more for their money. Everything they do is focused on that vision.
Most of us think that the Toyota Manufacturing System is the basis for their success; The truth is that is simply one of the many tools they use to achieve their goal of building the best vehicles. The real secret is the culture they create within the organization that fosters employee engagement, and maybe most importantly the expectation that every employee will immediately report problems and take steps to solve them. They strive to develop a culture where everyone’s input is valued and sought after.
This culture is part of their strategy and is found in everything from the hiring process to over a year of training for most employees. The point is their strategic plan states they want to build the best vehicles possible, and they have set goals for every function of the organization that focuses on attainment of that vision. Everyone in the company from production, to management, to engineering and including human resources develops goals that align with the strategic direction, and they constantly review problems that may interfere with attainment of their vision.
The bottom line is if you want better strategic planning results put effort into development of a better strategic planning process.
If you found this article helpful you may want to download our free whitepaper, "How to Recession Proof Your Business".