May 25, 2011

Writing Your Strategic Plan

Mary MahoneyBY Mary Mahoney

J. Robinson Group Blog

Pick a school of thought, and you’ll find “the definitive method” for writing a strategic business plan. Truth is, you can adapt an existing model or build your own by picking and choosing the elements that best suit your circumstances.

One element, however, is not optional: the element of time. Your plan must be executed over a defined period, typically from one to five years, depending on the dynamics of the industry and segments in which your company competes.

Let’s compare personal computer manufacturing and steel-making.  For the last quarter century, we have witnessed the relentless advancement of new features, benefits and underlying computer technology.  Each year, new computers and software were introduced that made earlier models obsolete.

Consequently, customers came to expect major new features and benefits with each new model of computer, whether it was a faster central processor, greater capacity for random access memory or a more robust video card.  Those manufacturers therefore faced a very short time horizon in their strategic plans.

Case in point is data storage. Five years ago, we all yearned for hard drives that spun faster and held more data: 500 GB, 750 GB, 1 TB and more. Now we look to “the cloud” for virtual, web-based storage, making on-board hard drives nearly passé.

For steel-makers, five years isn’t necessarily long at all.  It can take at least that long for a such a company to raise the capital investment, design and procure equipment and prepare plant infrastructure to facilitate a major production upgrade.

Long or short, the duration of time specified in a strategic plan represents the deadline by which success or failure will be measured.  Time holds everyone in the organization accountable.

The website Small Business Notes suggests strategic plans include the following five components: 1) business purpose, 2) organizational goals, 3) strategies for reaching each goal, 4) action plans to implement strategy and 5) monitoring plan implementation.

The business purpose is akin to a mission statement, which I explored in an earlier blog.  A mission statement states why the business exists and what it seeks to achieve.

Organizational goals are endpoints, known in corporate-speak as “deliverables.”  Defining goals involves making hard decisions to focus the organization’s energy around limited, finite objectives.

Frederick Nickols and Ray Ledgerwood developed what they call The Goals Grid to help establish strategic goals.  The grid seeks yes-and-no answers to two basic questions for every goal: “Do you want something?” and “Do you have it?”

If you want something that you don’t have, your goal is to obtain or “achieve” it. If you want something you already have, your goal is to keep or “preserve” it. If there’s something you don’t want and don’t have, your goal is to “avoid” it.  If there’s something you don’t want but have, your goal is to get rid of or “eliminate” it.

An alternative process is to prepare a SWOT analysis, which I discussed in an early blog, to identify your company’s strengths, weaknesses, opportunities and threats. (You can conduct SWOT analyses both for your business and your competitors.)

The process of establishing strategies for each goal involves explaining what the organization will do and how it will do it.  This part of the plan is subject to on-the-fly revisions as different ideas are tested and either succeed or fail.

(Donald Rhodes of the Georgia Small Business Development Center Network urges companies to integrate “feedback loops” into their strategic planning process to ensure a “continuous flow of information to facilitate the evaluation of the goals of the company so that corrections may be made during the appropriate timeframe.”)

Action plans describe specific, measurable activities that will be employed to implement each of the above strategies.

Monitoring implementation can be as rudimentary as putting checkpoints on a calendar or as sophisticated as evaluating multiple metrics.  The purpose is to track progress toward implementation of each goal.  Missing a deadline or checkpoint should signal the need to re-evaluate the strategy and action plan.

According to the website Small Business Resource, the completed strategic plan should be visionary, conceptual and directional.  The company’s operational plan, on the other hand, should address the short term and be tactical, tightly focused, implementable and measurable.  A strategic plan must be realistic and attainable, the site says.

The Center for Management & Organizational Effectiveness urges companies to involve their strongest employees in the plan’s development as a means of establishing an internal constituency.  The rollout should be followed by biannual employee meetings to clarify the plan’s direction, make adjustments and respond to questions.

For additional reading, the U.S. Small Business Administration offers a 25-page primer entitled Strategic Planning for the Growing Business by Scott Safranski.  An 89-page book, Strategic Planning: Fundamentals for Small Business by Gary May, can be downloaded as an e-book from Amazon.com or Sony’s Reader Store.

J. Robinson Group helps clients assemble custom strategic business plans, navigate the process and monitor effectiveness for the duration. Our expertise, objectivity and impartiality enhances planning credibility across varied constituencies.

May 6, 2011

Strategy: Where Do You Want to Go?

Mary MahoneyBY Mary Mahoney

J. Robinson Group Blog

“I’d rather prepare my taxes than write a strategic plan!”

Can you relate?

Aversion to strategic planning is the one trait that entrepreneurs and small business owners most often share.  For some, the exercise is too time-consuming, bureaucratic or boring.  Others consider it redundant to a business plan.

Are strategic plans really necessary? Absolutely, positively.  Gary May, author of Strategic Planning Fundamentals for Small Business, puts it this way:

“Strategy is simply your game plan for gaining a competitive advantage and earning higher profits. Just like a football coach, you need a game plan to win. Strategic planning will help you win in the game of business.”

Moreover, small businesses that follows a systematic strategic plan reap many other benefits, he said, including :

  • Sharper focus on creating value for customers, making better use of management time and limited resources
  • Less time wasted managing crises because the company’s staff works together from the same playbook
  • More effective communication with stakeholders, including customers, investors and employees
  • Increased ability to manage sustained, profitable growth

Conversely, running a business without a strategic plan would be like setting out on a family vacation without a destination — to say nothing of maps, clothes or money.  It would give new meaning to the refrain, “Are we there yet?”

“Strategic Planning is a change-oriented process that allows businesses to perform a periodic reassessment of where they are and where they are going with respect to their business operations,” said David Rhodes of the University of Georgia’s Small Business Development Center Network. “The outcome of this process will provide a plan of action to respond to changes in the business environment.”

Another way of illustrating the importance of strategic plans is to examine what happens when companies fall victim to market dynamics because they either have ignored their strategic plans or failed to update them.

Cisco, the famed technology firm, announced in early April that it was dropping its line of Flip handheld video cameras, citing competition from smartphones that feature high-definition video.

“Now that every smartphone on the market comes with an HD video recording capability, and even the ability to share wirelessly to the web, who needs a dedicated device for cheap video?” said David Rogers, writing for BNET.

The announcement followed back-to-back quarterly reports that disappointed investors and caused Cisco CEO John Chambers to apologize for the company’s poor performance.

Why didn’t Cisco see the smartphone threat to the Flip?  The failure is particularly ironic, considering that the Flip’s introduction five years ago upended the market for traditional camcorders.

Clearly, Cisco’s strategic plan was stuck in time and failed to track consumer demand for easy-to-use, multifunction devices that eliminate the need to carry a separate cellphone, camera, music player and camcorder.

“Cisco didn’t even try to make the Flip compelling to the millions of HD video smartphone users, so its fate was sealed months ago,” said Damon Brown, also writing for BNET.

Meanwhile, Research in Motion, manufacturer of beloved Blackberry smartphones, seems to have lost its way in pursuit of the hot tablet market blazed by Amazon’s Kindle and Apple’s iPad.

Incredibly, RIM’s new PlayBook cannot deliver email without being tethered to a Blackberry phone — an unthinkable inconvenience for a company that bases it value proposition on delivering easy-to-use email service to millions of users.

“RIM has just shipped a BlackBerry product that cannot do email; It must be skating season in hell,” wrote David Pogue of the New York Times in his April 13 review of PlayBook.

As if that shortcoming weren’t bad enough, AT&T — one of the three cellular providers that sell Playbook — just blocked free tethering, forcing users to purchase upgrades to their already pricey data plans.

“The only way executives could have run into this blindly would have been to close their eyes to the rest of the world and make plans in a bubble,” writes Erik Sherman in BNET, who compared RIM with the ailing smartphone maker Palm, which pioneered smart handheld devices known as PDAs.

“RIM must have channeled Palm in its strategic planning and marketing,” he said.  “That combination of cluelessness with the arrogance of the former market leader is distinctive.”

It boils down to this: Strategic plans serve two critical purposes, to help companies grow and prosper on the one hand, and to avoid potentially devastating errors and missed opportunities on the other.

It is important to note that strategic planning is different from writing a business plan. As described in Small Business Notes, the purpose of a business plan is to lay the groundwork for a new product or service.  Business planning looks to beginnings while strategy looks to growth. A strategic plan may call for a new product line, but that line should have its own business plan.

In my next post, I’ll explore the different elements of a strategic plan.

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