Further, we often see leaders tire of the management tool or methodology before full adoption has occurred. As managers and executives, if we determine the organization is in need of XYZ change to improve performance, we need to commit to see the change through completely – meaning the tool, process or approach becomes part of the “way you do business.” Obviously, my post is a little self-serving because we are often on the receiving end of repairing yet another failed strategic planning effort. The reason this occurs is because the leadership did not fully operationalize the strategic management process. The focus was only on pulling off a good annual offsite and not taking it one step further to put in place the process pieces needed to “keep the plan alive.” So then leadership comes back around 12 months later and beat themselves up for not using the plan to guide their work.

My mantra and plea to all leaders and managers out there, don’t implement the next “best practice” because you feel like you are supposed to. Have the managerial courage to only adopt those management practices that your organization needs now and you will commit to full utilization.

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Uncovering why your customers buy products from your company or use your services is essential to be successful.  Ultimately, the value you provide is only as good as the benefits the customer receives.  Your strategy excels or fails on that perception or lack thereof.  If you ask companies what they sell and then turn around and survey their customers to ask what they buy, you’ll most likely hear two different answers.  Generally, customers give you a different answer or express it in a different way that the company.  Quickly query a handful of your customers to see whether this trend holds true for your organization.  Here are some questions to ask, crafted to your company specifically:

• Who buys our products or services?
• What do they buy?
• Why do they buy?
• When do they buy?
• How do they buy?

Take Netflix, an online DVD rental service, for example.  Employees may say that Netflix sells a service that allows customers to check out and return DVD rentals through the mail or by streaming DVDs online.  Conversely, customers may say that they’re buying convenience.  In order to see your business through the eyes of your most valuable customers, you have to understand what your customers think they’re really buying from you.  You have to think like your customers.

Answers to these questions can be found in information and feedback all around you.  Some of that information is easy to get and some takes a bit more work.  There are many methods you can use to find out why your customers are your customers.  The Net Promoter Score, which we talk about in this newsletter, explains how your NPS score can help you gain insight into what your customers think about you.  Whatever method you choose, any insight into your customers is worthwhile.

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The business model consists of eight key building blocks that deliver your value proposition.

On the right-hand side of the model, you identify your target customer segments, how you develop relationships with those customers and the channels by which you reach them, supported by the revenue streams generated from that interaction.

On the left-hand side, you think through what key partners, key activities and key resources you need to deliver your value proposition to your customers and the cost structure to do so. Putting value in your value proposition is key to organizations differentiating themselves from the competition. According to the sales performance Miller Heiman, “to survive in this experience economy, businesses must orchestrate memorable events for their customers; and that experience itself becomes the product.”

Alexander Osterwalder is a guru in business model generation and provides concrete descriptions and questions for each building block below.

• Customer Segments – Defines the different groups of people or organizations a company aims to reach or serve. Which customer segments will you be targeting? What problem will you be solving for those customers? For whom are we creating value?
• Value Proposition – Describes the bundle of products and services that create value for a specific customer segment. What value will you deliver to your targeted customers? What package of products and services will we deliver? Why will customers buy from us?
• Channels – Describes how the company communicates with and reaches its customer segments to deliver the value proposition. How will you reach your customers? Through which channels do our customer want to be reached?
• Customer Relationships – Describes the types of relationships a company establishes or wishes to establish with a specific customer segment. What type of relationship does each of our customer segments expect us to establish and maintain with them?
• Revenue Streams – Represents the cash a company generates from each customer segment. What will customers pay for? How much will they pay? How will they pay?
• Key Resources – Describes the most important assets required to make a business model work. What are the key resources required, to deliver and execute your value proposition?
• Key Activities – Describes the most important things a company must do to make its business model work. What key activities does our value proposition require?
• Key Partners – Describes the network of suppliers and partners that make the business model work. Who are our key partners? Who are our key suppliers?
• Cost structure – Describes all of the costs incurred to operate a business model. What are the costs of your business model? Which resources and activities are the most expensive? Are your costs less than your revenue?

Assessing and possibly redefining your business model, no matter what type or organization you are, can be a powerful and enlightening part of your strategic management process. Many organizations today are redefining how they deliver value to customers yielding unprecedented success.

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• Past history–lessons learned
• Current products and services attractiveness and profitability
• Financial performance to assess the health of your organization
• Industry structure to uncover underlying dynamics

Naturally, all issues aren’t created equal. To focus your efforts, pare down your list to the select few that you think have the potential to have the biggest impact on your organization during your planning period. Typical strategic issues include answers to the following questions:

• How will we grow, stabilize, or retrench in order to sustain our organization into the future?
• How will we diversify our revenue to reduce our dependence on a major customer?
• What must we do to improve our cost structure and stay competitive?
• What is our new value proposition given that our customers are buying substitute products and we have new competitors?
• How and where must we innovate our products and services?
• Our industry is moving toward commodization; what should we do?

Gain consensus with your planning team around the short list of strategic issues. After you have agreement, identify when you’ll address the issues during your planning process. Where necessary, review and update your planning schedule.

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We’ve all been there. Trapped in line at the DMV. Or stuck on hold while trying to call a city agency. It’s easy to complain about government bureaucracy. But it’s the rare person who sees such inefficiency as a business opportunity.

Meet Adam Humphreys. He lives in New York City, and he wanted to travel to China for a vacation. His bureaucratic hassles with the Chinese consulate launched a whole new business.

It started simply enough. Adam found out he needed a visa to travel to China. He went online. Filled out a long, complicated form. And Adam showed up at the Chinese Consulate only to find out that he had filled out the wrong form.

“Can you help me?” he said.

“No.”

“Do you have a printer I can use?” he tried.

“No.”

“Where’s the nearest Internet cafe?” he asked.

“At the Burger King.”

Apparently there is an Internet cafe a half-mile away from the consulate in the dining room of a Burger King.

So Adam walked over.

“And I saw inside the Burger King,” he says, “that every single one of their computers was dedicated to the same Chinese PDF.”

Everyone, it seemed, was facing the same problem he was. And this is when Adam Humphreys had his big idea. He called his buddy Steven Nelson. And they rented a van.

A large Penske cargo van.

And they parked it in front of the Chinese consulate. Right in front of the exit door, where frustrated visa applicants wandered out into the sunshine wondering what to do. These lost souls, like Adam a few days earlier, would now be greeted by a sign on the van: Lucky Dragon Mobile Visa Consultants.

Inside, Adam had tricked out the van to be a mobile solution to Chinese bureaucracy. There are a couple of Mac laptops and a printer, plus an old couch, Christmas lights and bamboo mats. It’s as cozy as a dorm room. And confused visa applicants line up outside.

“The embassy changed the form and I didn’t know,” says Jimmy Tong, who needed a passport for his wife. “Luckily this guy was here to help.”

At first Tong was a little unsure about getting into a rental van parked along a busy highway, but he took the chance.

“As long as it’s not a robbery,” he says.

In minutes, Tong has his proper forms, all filled out, with the correct photo stapled at the top.

And it’s clear that Adam Humphreys and Steven Nelson have stumbled on a viable business. In a van. On the street.

Which was strange for the two. They were both freelance artists. They never thought about being entrepreneurs. And they had the most basic questions about business. What do you charge for a service that you just made up?

They thought about the Internet cafe at the Burger King. Those guys charged between $10 and $20. So at first Adam and Steve started charging $10.

They were overrun with customers. So they jacked the price up to $40, but then they lost too many people. So they dropped the price, and gave themselves a promotion. They called themselves consultants.

” ‘Cause you can consult anywhere, right?” Adam says. “You can consult in a coffee shop, you can consult on the side of the highway.”

They settled on the flat rate of $20 a person. Buddhist monks get a $5 discount to keep the karma flowing.

The two now take credit cards. They have a small-business license. They hired two fluent Mandarin speakers. And they even put on uniforms: blue pullover fleeces that give the van an Apple Store vibe.

Adam says he can make almost $500 a day, but he’s a little cagey about giving up the exact details of what they are raking in. They are afraid someone else will park a cargo van with a printer alongside them and start a price war.

As any entrepreneur with a brilliant idea knows, you only have a little time before the market catches up with you. Before that happens, Adam and Steven want to expand into a retail space. Or, at the very least, a bigger vehicle. Like an RV.

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• A strategic plan is primarily used for implementing and managing the strategic direction of an existing organization. A business plan is used to initially start a business, obtain funding, or direct operations. The two plans cover different time frames as well. A strategic plan generally covers a period of 3 to 5+ years, whereas a business plan is normally no more than one year.
• A strategic plan is for established businesses, organizations and business owners that are serious about growing their organization. Whereas a business plan could be for new businesses and entrepreneurs who are start-ups.
• A strategic plan is used to provide focus, direction and action in order to move the organization from where they are now to where they want to go. Whereas a business plan is used to provide a structure for ideas in order to initially define the business.
• A strategic plan is critical to prioritizing resources (time, money and people) to grow the revenue and increase the return on investment. Whereas a business plan is critical if the business is seeking funding.
• A strategic plan focuses on building a sustainable competitive advantage and is futuristic in nature. Whereas a business plan is used to assess the viability of a business opportunity, and is more tactical in nature.
• A strategic plan is used to communicate the direction of the organization to the staff and stakeholders. However, a business plan is used to present the entrepreneur’s ideas to a bank.

Another way to grasp the difference is by understanding the difference in ’scale’ between a strategic plan and a business plan. Larger organizations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental plans and marketing plans that work down from the Strategic Plan. Smaller companies and start-up companies typically use only a business plan to develop all aspects of the business on paper, obtain funding and then start the business. Many smaller companies – including start-ups never develop a Strategic Plan.

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Companies committed to executing strategy are equipped with advantages over their competitors. Because managing strategically matters to the life of your business, our guide on the Benefits of Strategic Planning (on the right) will show you what you can gain from strategic planning and how it will improve your team’s results.

Strategic planning ranked highest in a 2011 study of the 25 most popular management tools, as shown in the figure below (Bain & Company, “Management Tools & Trends 2011”). While forward-thinking companies once used strategic planning to develop long-range goals and stable growth, they now need it to effectively short-term plan.

Strategic planning has become a vital tool in this business climate because it focuses an organization’s ability to respond successfully to changes and plan for sustainable viability. Additionally, companies that never thought of strategic planning—like small businesses and non-profits—are discovering they need to think about it in order to survive. Download our brief guide on the benefits of Strategic Planning featured on the left.

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I came across this article on the American Express Open Forum and had to share it with our followers and clients.  Murray Smith gives a quick 11-step list for creating a business action plan in this article.  In our system, MyStrategicPlan, we use Action Plan Reports to show a person or department’s goals and action items, due dates, and status.  Like Smith says, the Action Plan Report is a great way to, “help measure progress toward your goals.”  Smith also says how, “in business, your action plan is the key to focusing on the right information in the right order.”  We could not agree more with Smith and his take on the Action Plan.  Below is the article, The 11 Step Business Action Plan, by Murray Smith.

Many people don’t like planning. But in business, your action plan is the key to focusing on the right information in the right order—much like the combination to a safe—and it helps measure progress toward your goals.

Here’s how you should use an action plan to accelerate growth and increase your revenues and income.

1. Create a revenue plan: Identify your sources of revenues, the product or services that you offer, how many you plan on selling, and the price you will charge. This will let you know if it’s possible to achieve your financial goals.

2. Map your gap: This is the distance from where you are to where you want to be. This includes your financial, non-financial and personal goals—revenues, profits, volume of sales, number of customers etc. It’s a snapshot for you to decide if it’s the journey you want to take, or change it.

3. Know your customer: Make sure you know who your ideal customer is, because it’s often not who you think it is, or who you are currently selling too. Knowing the profile of your customer will help you save time and money when it comes to acquiring them. This is the foundation for every business.

4. Document how your prospects/customers think and behave: Specifically, you should think about why customers decide to purchase—which is the key to making the sale. Every decision starts with a desire created by internal emotion or external influence. If you follow the way they think and act then you can place your product or service right in front of them at the point of decision.

5. Create a unique positioning in your market: In a world of clutter, what gets heard is a simple message. Identify the biggest problem in your marketplace and then tell people how you solve that problem and say it in less than 1 minute.

6. Know what sets you apart: Write down the biggest benefit that you offer your customers (a benefit that your competition doesn’t offer). It doesn’t have to be a coherent statement, it just has to have impact.

7. Take action: This is what is missing from the book The Secret which talks about using The Law of Attraction to bring abundance into your life. You cannot attract abundance without taking action. Affirmations, visualizations and meditation all work together when you add action to the formula.

8. Success starts with the belief that it’s possible: Your current belief system may not be helping you achieve your goals. Old paradigms (beliefs) are the number one reason for holding us back from achieving what’s possible. Click here for a copy of Chapter 7 from my book The Answer to help you change your paradigm.

9. Determine which distribution channels you will use for your business: A distribution channel is simply the place where the transaction takes place between you and your customer—otherwise known as the Point of Sale. The seven distribution channels to choose from are: retail, online, direct sales, events, mail order, phone sales or agents.

10. Select the right strategies: These should get people to the Point of Sale identified in step No. 4, and there are about 130 strategies and tactics to choose from (i.e., advertising, direct mail, copywriting, tele-marketing, Internet marketing, etc.).

11. Create a 90 day sales and marketing schedule: This will help you plan the strategies, tactics, timing and who will be responsible for implementation. Once you get your thoughts on paper (or excel spread sheet) you will feel less overwhelmed that you now have some direction to follow or action items to delegate.

These 11 steps are not intended to represent a complete guide to creating a detailed Action Plan—they are intended to help you get started. Now you have something to measure against and you can review things periodically to see if you are on track. Ask yourself every day if you are on track or if something needs to be adjusted.

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This business climate has dramatically increased the use of strategic planning, and it has become the most popular management tool according to a 2011 survey (Bain & Company, “Management Tools & Trends 2011”). Companies that never thought of strategic planning—like small businesses and non-profits—are discovering they need it in order to survive. And those who have done strategic planning before, are now using those same tools to move beyond “just subsisting” to growing. It’s become an increasingly vital tool because it focuses an organization’s ability to respond successfully to changes and plan for sustainable viability.

In the newly published Strategic Planning Kit For Dummies, 2nd Edition, author Erica Olsen explains how organizations and entrepreneurs can make strategy a habit and, in turn, improve efficiency, focus, and competitive edge.

The new edition includes:

• A new CD/digital component, complete with downloadable spreadsheets, charts, checklists, and video links.
• New and updated content on planning for both short and the long-term
• Crucial information on how to successfully execute against your strategic goals
• Help preparing for the unexpected using scenario planning and agile strategy
• Strategies for implementing change and integrating strategic plans successfully by involving all staff members

If you’ve read our book, please share your thoughts here on Amazon.com.

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• Relying on bad information or no information: A plan is only as good as the information which it’s based. Too often, teams rely on untested assumptions or hunches, erecting their plans on an unsteady foundation.
• Ignoring what our planning process reveals: Planning isn’t magic: You can’t always get what you want. The planning process includes research and investigation. Your investigation may yield results that tell you not to go in a certain direction. Don’t ignore the information!
• Being unrealistic about your ability to plan: Put planning in its place and time. It takes time and effort to plan well. Some companies want the results but aren’t willing or able to make the investment. Be realistic about what you can invest. Find a way to plan that suits your available resources, which include your time, energy, and money.
• Planning for planning sake: Planning can become a substitute for action. Don’t plan so much that you ignore the execution. Well-laid plans take time to implement. And results take time to yield an outcome.
• Get your house in order first: Planning can reveal that your house isn’t in order. When an organization pauses to plan, issues that have been buried or put on the back burner come to the forefront and can easily derail your planning efforts. Make sure that your company is in order and that there are no major conflicts before you embark on strategizing.
• Don’t copy and paste: It’s easy to fall into the trap of copying the best practices of a company similar to yours. Although employing best practices from your industry is important, other organizations’ experiences aren’t relevant to your own. Organizations are unique, complex, and diverse. You need to find your own path instead of following a cookie-cuter approach.

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