Business and vacations are alike in one way: once you’ve established where you’re going, a plan and a map to get there are very helpful. While even the best-laid plans require adjustments you are better off forging ahead with one than without one.
When asked to rate their planning process on a scale of 1 (poor) to 10 (excellent) executives from companies headquartered in the Pacific Northwest showed varied results. The average rating was under 6 and scores ranged from 2 to 9. Developing a planning process is an important step to the growth of any company. A process where mediocre shouldn’t be good enough.
As the second step in the strategy process, Planning takes the market intelligence and concepts gathered in step one of Preparing A Strategic Plan and converts them into a map for future business activity. Understanding the strategic platform your company is positioned for will help you leverage the information gathered earlier.
Michael Porter’s 3 strategic platforms for competitive advantage is a great place to start with your planning step. Porter wrote that companies can compete well in only one of three generic strategies:
- Innovation – concept and product development
- Superior Service – relationship driven
- Low Cost – volume or operational efficiencies
A mistake some companies make is to develop a strategy that is dependent on being successful in more than one of these platforms. For example, a company making luxury products that attempts to operate on a low cost platform may lose quality, eroding its customer base. It’s not often a company can straddle more than one of these strategic platforms. Your plan should identify and focus on being world class in only one of these platforms.
Once leaders identify the right platform for their business it becomes much easier to develop plans to leverage that platform. Imagine the difficulty a company who aspires to be the leading innovator and the low cost producer in their industry has in implementing their plan. The conflict between the two platforms is more than most companies can overcome.
Ask Some Simple Questions
Once you have determined your strategic platform use the market intelligence you gathered and develop a list of questions whose answers will make you focus on improving your position the marketplace.
- How can our low cost (or innovative culture or customer service) advantage expand
- Market share?
- Operating margins?
- In what ways does our strategic platform allow you to create value in the market?
- How can our organizational strengths or industry weaknesses be exploited to create benefits for our business?
Develop your plans around answers to questions like these.
Like marketing intelligence, sound planning involves capturing and analyzing information. This analysis will help assess how your plan is working and give insight into what adjustments must be made. Determining your key performance measures should be done during the planning stage so data capture and analysis systems can be weaved into the fabric of the strategy.
General industry information related to growth and other trends is essential to remove the “market impact” from individual company performance.
Company specific performance measures should target business drivers, company return requirements and other appropriate information to help assess the effectiveness of the strategic plan.
Tailoring a set of clear plans with performance measures to meet your strategic business needs will take some time. However, it will make it easier to move forward when your whole team is on the same page with a complete picture of your objectives and plans to achieve them. It will also mean you’re ready for the next step: Execution.