1. Strategy Stat: Many Firms Lack List of Strategic Priorities
2. Topic: What is Strategy?

• What is the difference between strategy and tactics?
• What are the different types and levels of “strategies” that exist in organizations?
• What is strategy and how is it articulated in a strategic plan?
• Checklist to assess your plan

Download PDF (slide deck)

Other resources shared during a Q/A section of the live presentation, but not included in the recording:

• Harvard Business Review article – Blue Ocean
• Harvard Business Review article – Is It Worth Doing?
• www.IBISworld.com

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Source: Booz & Co Article & HBR Daily Stat

This is a great stat and we support it 100%.  I will also add that as a strategic planning best practice, we typically recommend four strategic objectives (a.k.a. strategic priorities).  Too many and the plan will simply fall apart as resources (time, money) are limited.  Without enough, the plan can lack a holistic approach and cause its own problems. When we recommend four strategic priorities, we also recommend that one be in each perspective of the balanced scorecard (Financial, Customer, Process and People).

We often hear a similar response by those newer to strategic planning and looking for assistance with how to write a strategic plan.  They often want to start smaller or have a simpler plan.  We support that and believe it is a great request.  The stat above validates this request.  However, before simply focusing on that two (or three) strategic objectives, make sure it is the right one.  Take the time to do the upfront work in the discovery phase of the planning and identify the whole elephant.  That is identify all four – six strategic objectives.  Then, step back and decide which one or two are going to be the focus.  Now you can eat that elephant one bite at a time and be assured you are attacking the initiative (implementing strategy) in a successful manner.

You have to crawl before you can walk and you have to walk before you can run in strategic planning.  Even then, there is great wisdom in having very few firm wide strategic priorities to drive greater success.

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• Where are we now?
• Where are we going?
• How will we get there?

Each part has certain elements to show you how and where things fit it.

Where are we now?

As you think about where your organization is now, you want to look at your foundational elements (mission and value) to make sure there has not been a change. More than likely, you will not revise these two areas very often. Then you want to look at your current position or your strategic position. This is where you look at what is happening internally and externally to determine how you need to shift and change You should review your strategic position regularly through the use of a SWOT. These elements are as follows:

• Mission statement: The mission describes your organization’s purpose — the purpose for which you were founded and why you exist. Some mission statements include the business of the organization. Others explain what products or services they produce or customers they serve. Does your mission statement say what you do? Why does your organization exist?
• Values and/or guiding principles: This clarifies what you stand for and believe in. Values guide the organization in its daily business. What are the core values and beliefs of your company? What values and beliefs guide your daily interactions? What are you and your people really committed to?
• SWOT: SWOT is an acronym that stand for strengths, weaknesses, opportunities, and threats. These elements are crucial in assessing your strategic position with your organization. You want to build on your company’s strengths; shore up the weaknesses; capitalize on the opportunities; and recognize the threats.

Where are we going?

The elements of the question Where are we going? help you answer other questions such as What will my organization look like in the future? Where are we headed? What is the future I want to create for my company? Because the future is hard to predict, you can have fun imagining what it may look like. The following elements help you define the future for your business:

• Sustainable competitive advantage: Sustainable competitive advantage explains what your are best at compared to your competitors. Each company strives to create an advantage that continues to be competitive over the time. What can you be best at? What is your uniqueness? What can your organization potentially do better than any other organization?
• Vision statement: Your vision is formulating a picture of what your organization’s future makeup will be and where the organization is headed. What will your organization look like in 5 to 10 years from now?

How will we get there?

Knowing how you’ll reach your vision is the meat of your strategic plan, but it’s also the most time consuming. The reason it takes so much time to develop is because there are a number of routes from your current position to your vision. Picking the right one determines how quickly or slowly you get to your final destination.
The parts of your plan that layout your roadmap are listed below:

• Strategic objectives: Strategic objectives are long-term, continuous strategic areas that help you connect your mission to your vision. Holistic objectives encompass four areas: financial, customer, operational, and people. What are the key activities that you need to perform in order to achieve your vision?
• Strategy: Strategy establishes a way to match your organization’s strengths with market opportunities so that your organization comes to mind when your customer has a need. This section explains how you travel to your final destination. Does your strategy match your strengths in a way that provides value to your customers? Does it build an organizational reputation and recognizable industry position?
• Short-term goals/priorities/initiatives: Short-term goals convert your the strategic objectives into specific performance targets. You can use goals, priorities, initiatives interchangeably. In this book, I use goals to define short-term action. Effective goals clearly state what you want to accomplish, when you want to accomplish it, how you’re going to do it, and who’s going to be responsible. Each goal should be specific and measurable. What are the 1- to 3-year-goals you’re trying to achieve to reach your vision? What are your specific, measurable, and realistic targets of accomplishment?
• Action items: Action items are plans that set specific actions that lead to implementing your goals. They include start and end dates and appointing a person responsible Are your action items comprehensive enough to achieve your goals?
• Scorecard: A scorecard measures and manages your strategic plan. What are the key performance indicators you need to track to monitor whether you’re achieving your mission? Pick 5 to 10 goal related measures you can use to track the progress of your plan and plug them into your scorecard.
• Execution: In executing the plan, identify issues that surround who manages and monitors the plan and how the plan is communicated and supported. How committed are you to implementing the plan to move your organization forward? Will you commit money, resources, and time to support the plan.

Use our plan

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How do you grow if you’re doing what you’re already doing now? Here’s how:

• Increase present customers’ rate of use: You achieve this goal by
  • Increasing the size of purchase
  • Maximizing the rate of product obsolescence
  • Finding new uses for your product
  • Advertising other uses
  • Offering incentives for increased use
• Attracting your competitors’ customers: You lure customers away from your competitors by establishing differentiation between yourself and them, increasing advertising efforts, or cutting your prices. Look at Chapter 5 to find ways to differentiate yourself from other companies.
• Attract nonusers to buy your products: This process can be done by offering trial uses of your products, adjusting the price up or down, and promoting other uses to attract these customers (check out the following Example icon for details).

Is market penetration right for you? Next up, product development.

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After the mission, goals, and objectives are clear, establish how you’re going to achieve those items. A strategy provides the vehicle and answers the question “How are we going to get there with the resources we have?”

The goal of your strategy is to establish a guide that matches your organization’s strengths with market opportunities to position your organization in the mind of the customer. Does your strategy match your strengths with how you will provide value and be perceived by your customers?

A good strategy focuses on efficiency through:

• Achieving performance targets
• Out-performing your competition
• Achieving sustainable competitive advantage
• Growing your revenue and maintaining or shrinking your expenses
• Satisfying customers
• Respond to changing market conditions

Basically, strategies keep your whole company acting together while strengthening the company’s long-term competitive position in the marketplace.

In the 1980 classic Competitive Strategy: Techniques for Analysing Industries and Competitors, Michael Porter simplifies the scheme by reducing it down to the three best strategies. They are cost leadership, differentiation, and market segmentation (or focus). We’ll elaborate on the different strategies next.

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So, you’re right about to begin crafting your strategic plan, but you don’t know the difference between all the different components. Especially your mission, vision, values or principles? Do we really need so many different statements? Are they just something to get everyone to memorize? Are they different from each other? What are they really supposed to do?

Yes, they are all different. Do you need them all? Probably not all of them, but you need to know what they do. Not only do the statements that you craft have immediate effects, but they also work to guide the rest of your plan.

Mission Statements: What you’re here to do

Your mission statement is a declaration of an organization’s core purpose. A mission statement answers the question, “why do we exist?” They are essential for your strategic plan. Your mission statement needs to be easy to remember and it needs to provide actual direction. There’s nothing worse than a mission statement that is just a jumble of business speak.

Once you have your mission figured out, you have the core that all of your objectives will be drawing their direction from. Your employees will know, “this is what we do.” Additionally, your public will know what to expect from you.

Vision Statements: Where you’re going

A vision statement is a declaration of where you are headed – your future state. To formulate a picture of what your organization’s future makeup will be and where the organization is headed. We always explain your vision as “knowing what mountain you’re climbing,” and your mission as “how you’re going to get there.” Your vision is the ambitious future Point B to your current Point A.

Having a clear vision in place tells your employees where they’ll be if they stick around. If you want to craft a powerful vision, first ask, what will your organization look like 5 to 10 years from now?

Values Statements: What you will or won’t do to get where you want

Your values statement should explain what you stand for and what you believe in. Organizations that want to stick around can’t be heartless, money hungry institutions- they reflect the priorities of those who lead them, so it’s important to take the time to examine your own principles- and lend them to your organization.

For more on these subjects, check out our other articles on the topics:

• Vision
• Mission
• Values

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So, you’re starting to get the hang of all this competitive advantage hooey. You understand that in order to know what to do, you’ve got to know why you’re in business, and you’ve got to be able to explain it succinctly. But how will you write this into your strategic plan? In order to communicate why you’re best to your employees and customers, you need to figure it out first. As part II of our competitive advantage posts, we’ll show you how.

We will cover:

• Know: what activities set you apart from your competition
• Figure out: how to develop and sustain your competitive advantages

Knowing What Activities Set You Apart

A competitive advantage isn’t just something you do well, you’ve got to be able to sustain it, and protect it from imitation. If your competitors can just pick it up and start doing it tomorrow, it’s not an advantage. Your competitive advantage should meet the following requirements:

• Consistent difference: Customers must see a consistent difference between your product/service and those of your competitors. This difference needs to be obvious to your customers and it must influence their purchasing decision.
• Difficult to imitate: Your competitive advantage must be difficult to imitate.  You want to have an advantage that your competition can’t easily duplicate or don’t understand how to copy. Often this comes in the form of people, proprietary knowledge within your organization, or business processes that are behind the scenes.
• Constantly improved: The first two bulleted items in this list must create activities that can be constantly improved, nurtured, and worked at to maintain an edge over your competition. The comparison of Wal-Mart over Kmart is a great example of how one continued to improve its supply chain management and purchasing whereas the other didn’t.  Unfortunately for Kmart, it lost its edge because it didn’t constantly improve. Wal-Mart invests in ever-refining its product selection and processes.
  • Use your competitive advantages in your marketing material. Turn it into a tagline. Use it in a press release. Add it to your corporate About Us page on your Web site.
  • Communicate the advantage daily. Include your competitive advantage in your signature line on your e-mail. Add a line in your voicemail message or your automated voice attendant.
  • Tell your employees. Post it in common area. Add it to your internal blog.
  • Refine it by obtaining feedback from your customers. Ask a few of your best clients if they agree with your list of advantages. Improve or add to it based on their responses.
  • Make it better. Develop a handful of 30-day actions that you and your staff can start

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Semantics aside, let’s get started…

We will cover:

• Determine: unique strengths that are the basis for your strategic plan
• Identify: what activities are core to your company’s growth

Why?

When you really have it nailed down, it helps you and your staff recognize the following:

• Which opportunities to pursue and which to pass by
• Where to allocate resources and where to cut back
• How to do what you already do well, better
• Know the difference between an opportunity and a distraction
• When to outsource (to another department or externally) and when to keep it in house

Determining your Competitive Advantage

You need to determine why you’re in business. I know, I know, your business needs to make money, but that’s not WHY you’re in business. Your business makes money because it serves a purpose and provides value to your customers. Why, in particular, does your business exist? Ask yourself why you started your business. Take a look at what problems your business solves for people. That solution is why customers keep your business in existence.

Need some help? Here are a few examples of reasons that a few random companies gave to answer why they are in business:

• To solve the growing diabetes crisis
• To capitalize on a real estate growth trend
• To work for myself
• To provide quality window and door products better than anyone else
• To make fitness a way of life for everyone by making it fun, easy, and accessible
• To make my community a better place to live, work, and recreate through publicly accessible open space
• To provide people with a great place to work
• To be the perfect clown

Why not ask your employees? We’ve got a free questionnaire you can download, print and distribute to your employees to ask them their ideas on why you are in business.

In addition, ask your customers to help with this- you’ll get valuable feedback about what kind of value you’re bringing them. And yes, we’ve got a questionnaire for that too.

Identifying Core Activities

Here’s a 30-second test to determine if you know your competitive advantage.  A test? I know; you feel like you’re in school again, don’t you? Don’t worry — it won’t hurt. Ready?

You attend a local networking event and you introduce yourself.

“Hi, I’m Bob Jones with ABC Company.” “Hi Bob. Nice to meet you. Tell me a little about your company. What is your company best at?”

You have 30 seconds to tell me what you’re best at. If you don’t know, you don’t know your competitive advantage. Look below at some companies who know what they do best, and then jot down what you do best, and be sure to be able to recite it in under 30 seconds.

Next Time…

in our next post we’ll finish off the process and show you how to sustain your advantage. For now, enjoy the downloads…

• Competitive Advantage Questionnaire: Employees
• Competitive Advantage Questionnaire: Customers

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In order to make sure your strategic planning process is a success, it’s best to check out some tips from folks who’ve done it before. In fact, even if you have done it before, it’s still a good idea to review best practices from time to time just to identify areas where you could improve.

Before you get too far into your strategic planning process, check out the tips below — your quick guide to getting the most out of your strategic planning process:

• Pull together a diverse, yet appropriate, group of people to make up your planning team. Diversity leads to a better strategy. Bring together a small core team — between six and ten people — of leaders and managers who represent every area of the company.
• Allow time for big picture, strategic thinking. We tend to try to squeeze strategic planning discussions in between putting out fires and going on a much needed vacation. But to create a strategic plan, your team needs time to think big. Do whatever it takes to allow that time for big-picture thinking (including taking your team off-site).
• Get full commitment from key people in your organization. You can’t do it alone. If your team doesn’t buy into the planning process and the resulting strategic plan, you’re dead in the water.
• Allow for open and free discussion regardless of each person’s position within the organization. (This tip includes you — the CEO.) Don’t lead the planning sessions. Hire an outside facilitator, someone who doesn’t have any stake in your success. When you do, people wonder whether you’re trying to lead them down the path you wanted all along.  Encourage active participation, but don’t let any one person dominate the session.
• Think about execution before you start. It doesn’t matter how good the plan is if it isn’t executed.
• Use a facilitator, if your budget allows. Hire a trained professional who has no emotional investment in the outcome of the plan. An impartial third party can concentrate on the process instead of the end result and can ask the tough questions that others may fear to ask.
• Make your plan actionable. To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, accountabilities, and specific deadlines. And everyone must understand the plan and their role in it.
• Don’t write your plan in stone. Good strategic plans are fluid, not rigid and unbending. They allow you to adapt to changes in the marketplace.  Don’t be afraid to change your plan as necessary.
• Clearly articulate next steps after every session. Before closing the strategic planning session, clearly explain what comes next and who’s responsible for what. When you walk out of the room, everyone must fully understand what they’re responsible for and when to meet deadlines.
• Make strategy a habit, not just a retreat. Review the strategic plan for performance achievement no less than quarterly and as often as monthly or weekly. Focus on accountability for results and have clear and compelling consequences for unapproved missed deadlines.

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By the time company managers get to the action planning part of strategic planning, many are tired and worn out from all the work leading up to this point. But don’t stop yet! Setting action items and to-dos for each short-term goal is essential, and now it’s time to connect those goals with people, deadlines, and costs.

You are developing an action plan for each goal. An action plan explains who’s going to do what, by when, and in what order for the organization to reach its goals. The design and implementation of the action planning depend on the nature and needs of the organization.

Although this may seem like a monumental task, here are a few ways to simplify the process:

• List the concrete steps or to-dos that you need to accomplish in order to achieve your goals. You don’t need to list every single action item for each goal — that might take all year.
• Focus on identifying large to-dos that warrant discussion at a team level. Stay away from big items that are so big that you don’t know where to start.
• Identify all the actions that need to occur in the next 90 days. Continue this same process every 90 days until the goal is achieved.

For every short-term goal, identify the following items. These items are listed in logical order and flow to make it easy to develop each one like the image below:

• Action item or to-do: Start the sentence with a verb to show the action that’s being done. After all the action items are listed, order them based on priority.
• Person or department responsible: If there’s shared responsibility, make one person the lead.
• Start and end dates: Start dates are important because they allow you to see the duration of an action. Without the start date, you won’t know if you are behind schedule until the end date passes. When establishing an end date, commit to the deadline.
• Expense: Identify an estimated expense if applicable.
• Progress or current status: Use this gauge to indicate what percentage of the action item is complete or to explain what’s happening with the action item right now. Update this field regularly for reporting and tracking purposes.

Don’t worry about writing action items for your financial goals. All your financial goals are achieved through the rest of the goals in your plan. For example, increasing sales by 10 percent is a function of marketing and sales reaching new customers or selling more to existing customers.

you can download an excel sheet of this action plan here.

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