The Planning Imperative

Happy New Year! Now that all the holiday fun has passed and companies are gearing up for 2017, it’s a great time to do some reviewing of the past year, thinking about the business results you want to achieve over the next 12 months, and planning how to turn those goals into reality. Many people consider planning a waste of time. Business plans takes a lot of time and energy to produce a document that sits in a binder on a shelf without being looked at for 12 months or longer. I respectfully disagree. The act of planning forces you to intentionally think about your business in a critical and systematic way. Most of us aren’t lucky or gifted enough to pull off an ad hoc approach to making important business decisions about our target customers, the competition, and the actions we must take to be successful. Here are 8 steps for getting your business headed in the right direction for 2017.

Step 1 — Gather Information
Begin with gathering as much information about your business, your customers, and the operating environment as possible. Internal information will come from your Finance and Accounting system, including your standard financial statements and records concerning all your transactions for the previous year. It will come from your people system, including employee arrivals and departure and the reasons for each, climate surveys, program participation, and other metrics. Don’t forget your logistics system, including on time delivery rates from vendors to you and from you to customers. Gather as much information as possible about every aspect of your business you can think about. Pay attention even to trifles, because a trivial fact can turn out be the tip of an “ice berg” issue just hiding beneath the surface of daily operational noise.

External information includes everything you know or can discover about your customers, your competition (not only direct competitors selling similar goods and services but those offering alternative ways for your customers to satisfy their needs), and external forces, including political (e.g. the new Trump Administration), economic, legal, demographic, and technological trends. Again, look for patterns and linkages. Form and test hypotheses about what it all means, with a view toward determining your firm’s position in the market and identifying opportunities and threats.

Step 2 — Analyze Your Business as a System of Systems

Think of your business as a system of systems. As Figure 1 illustrates, every business has two major systems: the customer acquisition system and the client fulfillment systems. Supporting systems include the people (i.e. talent acquisition and management), finance and accounting, logistics (i.e. ensuring the right stuff is at the right place at the right time), infrastructure (physical plant, etc), information technology, innovation, and leadership. The list of supporting systems may vary from business to business and from expert to expert. Review the information about each of these systems, and look for patterns and linkages. Form and test hypotheses about what patterns and trends might mean for the overall health and future of the business.

Figure 1 – Your Business is a System of Systems

Step 3 — Accurately Describe the Present

Using the results of your analysis, make an assessment of your business’s position in the market. Include an unvarnished appraisal of the company’s strengths and weaknesses. Keep it judgment neutral, without finger pointing. The purpose is not to fix blame for any problems, but an accurate understanding of the truth, no matter how ugly.

Step 4 — Assess Where “Drift” Would Take You over the Next 12 Month

Take into account all the external forces that impact your business, and describe what your business would look like if you allowed the company to be carried along by the currents and didn’t do anything differently from what you did in 2016.

Step 5 — Confirm the Vision

Have a discussion about the vision, the statement of the organization’s higher purpose. The leader must articulate the vision by answering the questions: where are we going, what will we look like when we get there, and why is it important that we go there together? This word picture of your desired future state becomes the compelling narrative of your organization’s shared journey. It is the touch point that helps people to understand the purpose of the organization and the importance of their contributions. This is the time to review the vision and have the members of the organization reconfirm their commitment to seeing it become reality.

Step 6 — Choose a Strategy

Six words describe what you can do with respect to a target market: enter, expand, maintain, contract, milk (minimize investment while maximizing cash flow), or withdraw. You must make this strategic leadership decision for each market segment.

There are four primary competitive strategies to employ for each target market: low-cost/low-price, differentiation, focus, and Blue Ocean.

requires that you rigorously control costs and keep your margins low. The way to be successful with this strategy is to maintain high sales volume.

Differentiation requires that you cultivate a positive image for your product or service that separates it from the competition and creates a perception of higher value in the mind of the customer. Your communication with the customer must focus on benefits and features rather than price.

Focus requires that you find the appropriate price-quality-features-benefit mix for a specific customer or niche market.

Blue Ocean, according to W. Chan Kim and Renée Mauborgne (2005), requires that you pursue both differentiation and low-cost by reconstructing market boundaries, focusing on the big picture, reaching beyond existing demand and getting the strategic sequence right. This highly innovative strategy combines features from various offerings to meet customer needs while jettisoning any costly features that don’t really add value.

Step 7 — Set Your Course

Once you have decided your strategic approach, it is time to establish objectives that will serve as way points on the road to turning your vision into reality.

One helpful approach comes from the Harvard Business Review and uses strategy maps and the Balanced Scorecard. This approach requires you to think about your business from four perspectives: learning and growth, internal process, customer, and financial. The strategy map provides a visualization of the organizational context of intangible assets such as customer relationships, employee skills, knowledge, information technologies, and corporate culture and how these assets work together to create value for stakeholders (employees, customers, suppliers, community, and owners). With a for profit enterprise, financial perspective goes on top, followed by customer perspective, internal process perspective, and learning and growth perspective. Graphically depict the major factors contributing to growth in revenue and in productivity, then move down to the product/service attributes, relationships, image, and other customer-related factors that contribute to your financial results. Show the linkages with arrows. Next examine how your internal processes contribute to satisfying your customers. Next examine how learning and growth within the organization build the foundation for internal processes.

Creating a strategy map enables you to construct a balanced scorecard (BSC), which contains the objectives, measures, targets, and initiatives within each of the four perspectives. These are all tied together by the vision and support turning the vision into reality. They translate commitment to the vision into actions and measurable results. Monthly or quarterly reviews of the BSC will enable you to evaluate how the business is doing and afford you the opportunity to make necessary adjustments.

Step 8 — Align Resources and Actions

Finally, put your money, time, and people where your mouth is. Examine the available resources and allocate money and people to those areas and projects that will most help to achieve the stated objectives. Commit to spending most of your time on the few tasks where only you, as the leader, can make the critical difference for your company. Delegate the rest to well chosen, competent deputies. Then codify these commitments in an Action Plan for each major goal, showing the who, what, where, and when the resources will be applied to achieving the objectives related to each goal. Check progress on a regular basis, keep communicating the Vision behind the strategy at every opportunity at every level of the organization, hold people accountable for accomplishing their tasks in the Action Plan.

Go Beyond LLC helps companies align objectives, resources, and business functions behind a clear and compelling vision to maximize value for all stakeholders.

Go beyond what the world expects.