The Whiteboard: Strategic planning is a living, breathing thing in business
Some business owners and managers treat strategic planning as an event.
They wait until the third or fourth quarter to hold a one- or two-day offsite meeting and presto, a new strategic plan is produced just in time for the annual budget. But best-in-class strategic planning is not an event. It is a continual, adaptive process.
Strategic planning is continual in two ways.
First, leaders who excel at strategic planning and execution constantly gather intelligence about the economy, markets, competitors, suppliers, customers and the regulatory environment.
Second, the execution of the plan is continually monitored to ensure the initiatives are on schedule and to determine whether they are working as expected.
There is a sound, common-sense reason to make strategic planning continual in this way. The world is constantly changing and the pace of change is accelerating, so plans built on static assumptions can quickly become obsolete, might fail to produce expected results or might lead to outright disaster. This is where being adaptive comes into play.
There is no reason to plow ahead blindly with a plan that is clearly not working simply because a fixed, end-of-year planning cycle has not been reached. There is no reason to plow ahead blindly with a plan based on assumptions that are proving to be incorrect. And there is no reason to spend several months doing nothing because an initiative has been scrapped and there is no alternative from the last planning retreat to take its place. Businesses with best-in-class planning processes continually adapt and modify strategic plans to align them with reality.
Adaptation might take many forms. Strategic initiatives might be scrapped outright if they were based on bad assumptions or if changing conditions make them untenable. Entirely new initiatives might be created or priorities might be changed and resources reallocated to accelerate implementation of existing alternatives that have become more attractive.
Nimble adaptation is the name of the game today, but adaptation cannot take place without the continual gathering and synthesis of information.
Economic performance indicators, which track trends, and leading economic indicators, which presage future activity, are published monthly by the federal government, state governments, foreign governments and numerous organizations and institutes. Monthly forecast reports are produced by banks, investment brokers and others. There is no excuse for operating on the basis of obsolete economic assumptions.
Ask yourself this question: “What are the key economic reports and indicators that our leadership team reviews monthly to guide our strategy execution?” If you don’t have an answer, you are not alone. This is a good place to start gathering facts because it is so easy to get started and once the reports and indicators are identified, it takes very little effort to stay updated monthly.
Buyers and procurement managers, if asked, can be great sources of intelligence about supply and pricing trends for raw materials, commodities and services. Good ones can often learn what and how much competitors are buying.
Systematic gathering of that kind of intelligence with periodic analysis and reporting does not happen by accident. It happens when procurement managers or buyers are given intelligence-gathering responsibility and are expected to write monthly reports analyzing the information. Otherwise the odd anecdote might be reported but not the big picture.
Similarly, intelligence on competitors can be gathered, analyzed and reported systematically, but some group or person must be given the assignment and the reporting responsibility. It must be given priority.
Today, many companies brag about new orders on Facebook, post videos of their operations on company websites, encourage key employees to set up LinkedIn profiles and tweet endlessly about things better kept away from the prying eyes of the competition. Those that don’t can be monitored by direct observation, through customers and suppliers and through legal filings.
Good customer intelligence is both the most important and the most difficult to gather. It requires surveys, interviews, focus groups, complaint systems and a determination to understand changing customer needs and perceptions. It takes a desire to learn the unvarnished truth and the ability to deal with it without rationalizing.
When I ask business owners and managers about customer intelligence, the response is often that gathering information from customers takes too much effort. Or they already know — by osmosis or other magical means — what customers think. Neither attitude is a good example of strategic thinking.
Understanding customer needs and perceptions and how they are changing is critical to any strategy, especially an adaptive one. Pretending to be a customer or to think like a customer is a big mistake.
A strategic plan is a roadmap for a long journey through a changing landscape. Traveling with an old map is a good way to get lost or miss a new superhighway. Check the landscape and update your map.
Richard Randall is founder and president of management-consulting firm New Level Advisors in Springettsbury Township, York County. Email him at email@example.com.