In my last blog, I talked about the importance of strategic planning to drive effective execution within your organization. Done right, strategic planning is a natural part of how you manage your business, and can drive competitive advantage, particularly in complex markets like ours, where the water has been lowered over the last few years and we are all “feeling the rocks” now in our respective business models.
There are many great reasons to do strategic planning:
- It gives your team the direction and focus necessary to achieve success and market leadership.
- It aligns your organization and key resources around your most important objectives.
- It enables the broader resources and partnerships—outside of your company—to be effectively leveraged.
- In addition to providing the overall guidance for functional plans (sales, marketing, operations, etc.).
Great business and strategic planning is also often more about what you are NOT going to do than it is about what you ARE going to do.
As I mentioned last time, I am a fan of the 10-Step Business Plan. It is a proven model that guides you through asking the right questions to help drive focused execution. It is an iterative process; which means you will often find that you are “circling back” to earlier steps to refine your thoughts as you work through the steps. The first step is your Business Purpose. This may be obvious, but why does your business exist? This often is described as your Vision and Mission Statement.
Step 1 “sets the tone” against which you will measure the rest of the plan. For example, LMI’s Mission Statement is to provide market-leading, best-quality products, services, and solutions that leverage IoT, Cloud, Big Data Analytics, and emerging technologies to enable partners around the globe to deliver an array of market-leading Managed Business Services to business customers of all sizes. While it is a mouthful, all decisions we make as an executive team are within the context of this framework.
Step 2 in your plan is to lay out at least your three year objectives and key milestones. What success do you want to achieve over the next three years? Make sure it is written in terms the team will understand, and by time horizon (at least by year, if not semi-annually). In this second step, you should also include the assets (tools, resources) and competencies (knowledge, skills) by function the organization will maintain and/or develop over those same time horizons. At this step, it is also very helpful to list the assets and competencies you will partner or outsource that will nonetheless contribute to achieving your objectives.
Step 3 is about your market. First, describe the overall market opportunity for your business model. Then total the number and size of customers for your products, services, and solutions, current and new customer potential, local, regional, and national opportunities. Prioritize the target customers from this macro list. I recommend a rolling 3 or 4 quarter plan, updated at the end of each quarter based on results. And, of course have a mix of small, medium, and larger customers to prevent the team from only whale hunting.
In Step 4, you will describe your top competitors in the business and geographic market you’ve defined and prioritized. Who are the top competitors for your current customers and new target customers? What is their current offering, including programs, product lines, and partnerships? Develop a SWOT analysis (strengths, weaknesses, opportunities, threats) for each key competitor.
Step 5 is all about the products, services, and solutions you are bringing to your customers—current and new. Be specific about each area of offering. Again, by describing what you are specifically offering, it is easier to identify and eliminate activities in your organization that are not aligned to your specific offering. Describe the elements of your offering you provide, and which elements you intend to outsource or partner on to complete your solution portfolio. And finally, how does this offering differentiate from your competitors’ offerings?
In Step 6 of your business plan, you now describe specifically the resources and capabilities, over time, you need to develop and/or partner to deliver the portfolio in Step 5. As noted earlier, what are the assets (tools, resources) and competencies (skills, knowledge) necessary within each functional area? This is a key step in your plan, as this fully engages each functional and department head in a “good look in the mirror” to objectively look at the function or department’s capabilities and compare them to what is needed for success.
Step 7 of the business plan is designed to articulate the business network and interdependencies to achieve your business goals. What are the alliances and partnerships required to deliver the whole solution to the customer? How do they enable or maintain competitive advantage over time? How to they evolve to meet your needs as they evolve over the plan horizon?
Step 8 is all about the rubber meeting the road—the financials. You will want to describe your financial objectives, forecasts and resulting revenue and profit goals—by product, service, and solution categories as necessary. This step should describe these goals over time, highlight risks and sensitivities (a sensitivity analysis is key to quantifying risk), with the customer base stratified by product, service, and solution categories. This last element helps identify more specifically which customer sets are really paying the bills over the plan horizon.
Step 9 is for the naysayers in the organization. This step lists all of the issues and potential problems with this great plan you’ve put together. In short, what are the biggest risks to the successful implementation of the plan? And, what steps can be taken to mitigate or eliminate these risks?
Finally, in Step 10, you and the team pull together the first year tactical plan. This will include specific goals and objectives pulled from the overall plan. As I noted in my last blog, if this type of planning becomes just a natural part of the way you do business, you can have a rolling four quarter plan, updated based on results from the prior quarter.
That’s it. Simple, huh? J But worth it. Next time, I’ll discuss how to take the goals and objectives of the first year tactical plan and cascade them down through your organization to drive complete alignment.