Benefits of Strategic Planning
Strategic planning is the process of detailing and establishing a direction for the business—by assessing both where you are and where you’re going. The strategic plan gives you a place to record your mission, vision, and values, as well as your long-term goals and the action plans used to reach them. A well-documented strategic plan can play a pivotal role in business’s growth and success because it tells you and your employees how to best respond to opportunities and challenges.
Despite the benefits of having a strategic plan in place, a growing number of business owners are not focusing on the long-term strategies of their businesses. In a 2018 Constant Contact survey of 1,005 small business owners, 63% said they plan only a year (or less) in advance.
It Takes Time
The strategic planning process can take some time, but it is beneficial for everyone involved. As a business owner, you will have a better idea of the goals and objectives you want to accomplish and a path to do that. For your employees, the process can foster an increase in productivity—contributing to the success of the business.
The strategic planning process should involve your employees. Your employees are involved in the day-to-day operations and can provide you with a unique view of the company. Employees can share with you what they think is and is not working with the business today, which can inform your planning for the future.
- Increase Productivity
Involving your employees in the strategic planning process also means they receive a sense of accountability that can increase productivity. Whether they contributed to the process or were informed of the business’s goals and objectives after the strategic plan was created, they will be more likely to want to help you achieve those targets.
- Identifying Strengths and Weaknesses
As part of the strategic planning process, you will examine and analyze your entire business. You will be able to take a look at what your business does well and the areas where it still needs to improve. By identifying your business’s current strengths and weaknesses, the process gives you and your employees an opportunity to improve in the future and become a durable business by minimizing risks.
- Setting the Direction of the Business and Fostering a Proactive Business
By the end of the strategic planning process, you and your employees should have a clear direction of where you want the business to go in the future. These discussions and the planning process itself help put the business in the best position to succeed in the future.
A quite common question that often pops-up is – “Is strategic planning only for big businesses?” There are many strategic planning misconceptions, the before mentioned being one of them. From not having enough time or thinking it only benefits larger businesses, to fearing that you will put your business on the wrong path, there are a variety of reasons why business owners may worry of strategic planning. But do not be alarmed; strategic planning can help your business—big or small—and the benefits far outweigh any perceived negatives. Regardless of the size of your business, a strategic plan is beneficial. Whether you are a small business or a large corporation with hundreds or thousands of employees, strategic planning helps you make sure the company is headed in the right direction.
From Surviving to Reviving
Moving from “what is?” to “what if?” to “what’s next?”
There is an abundance of information published daily about the pandemic, filled with new statistics and buzz words. This tends to lead to many lingering questions, with so many unknown answers. The most prominent question being: how do you prepare for the future? One of the most detrimental things you can do during this period of uncertainty is to get paralyzed in survival mode by only thinking about the now. Focusing purely only on surviving the pandemic cripples your ability to proactively stay ahead of what is to come. Organizations must move through the brainstorming stage to understand the upcoming challenges, assumptions, and implications. Next, it is time to map out alternative strategies and solutions that will be profitable. Finally, shift the focus to think about “what’s next”. Although this pandemic could not have been predicted, now is the time to proactively shift gears and refine strategies because the decisions made, and the actions taken today will define your ability to revive and thrive in the future as we move forward out of crisis mode.
How to survive/revive – By creating a Plan-Ahead Team
Preparing for the future starts with putting together a plan-ahead team. The plan-ahead group is a small, nimble team with diverse perspectives, leveraging both internal resources across different functional areas like HR, Ops, Finance, and external consultants. This dedicated team understands the diverse needs of the business, while also understanding what the go-forward plan is. They meet daily to support the executives in short-term crisis management and quick decision making around Strategic Planning for the “New Normal” supply and demand, vendor relations, marketing, strategic planning, operations, org. structure and shifting government policies. In such uncertain times, the goal is not to lay out a long-term plan with 100% precision but to question assumptions, and review and refine scenarios and strategies over time to take deliberate next steps. This team will focus on setting the strategy that will satisfy customer and employee needs that are aligned with the new normal and consider how different scenarios may play out over time.
Planning Timeline -Shifting your thinking to shorter phases.
Unlike a typical strategic plan that focuses on planning one, three and five years in advance, focus must now be on creating plans that are more granular and in shorter, more manageable time frames. These plans are living and dynamic and will likely change as circumstances change weekly or even daily. Adopting a flexible and agile mind-set is critical in being able to pivot quickly and execute strategic plans accordingly. Each “front” or cluster of activity, as represented by the horizontal blue bars in, must therefore, be planned on multiple horizons, where integrated master plans are created for front-end, middle end and future-forward time frames. The plan-ahead team must then think through the initial state and context for each period to determine future strategies.
Assumptions Canvas and VUCA
Assumption planning starts by thinking about the “what if?”
Many businesses have had to shift dramatically overnight. Even though we could not have predicted the pandemic, we now have the opportunity to start thinking through the assumptions for what is coming next and understand the various factors that may influence the outcomes.
Companies should consider asking questions on several factors to shape their assumptions:
- Consumers – have the habits shifted permanently? How will reopening impact your demand? If you have increased demand, will this demand be sustainable?
- Suppliers – understand how resilient your supply chain is and if suppliers can meet fluctuating demands
- Creditors – what is your financial flexibility? Will creditors provide you with additional financing if required?
- Competitors – Understanding where you are in relation to competitors in the market
- Government Intervention – Policies are changing all the time. How will they impact your business?
- And very importantly your Employees – Are you over/under-staffed to reach your plan going forward? Do people work best remotely or on-site? Have you found an improved operating cadence and is it sustainable for the well-being of employees?
We are currently operating in a VUCA world, where the term VUCA is a term first introduced by the US Army War College that stands for:
- Volatility – things are frequently changing, so we must adapt to new circumstances very quickly
- Uncertainty – we do not know what each day is going to bring
- Complexity – there are so many unknown factors
- Ambiguity – at the end of the day, we have not had a precedent that we can rely on
This term is used to describe the new norm of a chaotic and rapidly changing business environment. In a VUCA world, we need to depend on dynamic scenario planning, where we can create the storylines around different potential futures by using an OODA methodology: observing the environment, orienting strategic assumptions to map out alternative scenarios, deciding on next steps and acting with speed and agility.
The key is not to get trapped in the vicious cycle of building a rigid plan that causes you to race to cut costs, lay off employees, and postpone or secure financing. During periods of volatility, variables are much more dynamic, therefore the ability to pivot quickly and act is key for surviving volatility. Depending on the situation, these scenarios may need to be planned daily or weekly, giving you the ability to dynamically shift as inputs change.
Where might this ‘new’ strategic planning go wrong?
Strategic planning is an ongoing commitment. Even if you go through an initial round of strategic planning and it leads to the development of your business’s first strategic plan, it is still not finished.
- The plan must be implemented.
- Strategic plans also can go wrong if the goals and objectives you set are unrealistic. Every business owner wants to see their business grow and succeed, but if you set an overly ambitious growth rate, it could discourage you and your employees.
- A successful strategic plan requires commitment. Your entire team needs to be focused on the business and carrying out the strategic plan. If the strategic plan isn’t being used regularly or as the foundation of the business, you and your employees can lose sight of the company’s direction and goals.
The top three reasons strategy implementation fails:
- Poor Communication
- Lack of Leadership
- Using wrong measures
Now more than ever, speed is one of the utmost importance. We need to be able to pivot quickly from one scenario to another and deploy solutions rapidly. In an uncertain and volatile environment such as the world we are currently living in, we need more optionality in our business operations than we ever had in the past. That is, have access to, and plan for multiple options so that rapid decisions can be made and acted upon seamlessly. It is not about optimization, it’s all about optionality.
Second, organizations that embrace trust and integrity in the corporate culture enjoy the foundational strengths that enable organizations to move quickly together and respond to dynamically changing environments. In the end, trust will be the key variable in driving high performance for your organization to make sure you stand out from your competition.
Lastly, one of the most important factors to remember is that recovery is not linear. We are in a changing environment and as we move into the new normal, speed and agility in decision making and taking action is critical. Your competitors will be planning out their assumptions and utilizing dynamic scenario planning and forecasting to make sure they are in a position where they can protect their business and recover stronger as they move into the future. Do not be left behind.
By planning ahead now and thinking through assumptions, scenario planning, and forecasting, you will protect your business and create the foundation to recover stronger as we move to the next normal.
Pinnacle Strategic Planning team is ready to take you through the process of well-defined strategy and business modeling which will enable you to simulate scenarios business results to choose the best. We help large and small organizations better fit into the future.