A strategic plan should NEVER be created in a vacuum, inside the confines of your conference room! So, get your heads out of your, ahem, offices and out in the market.
MISTAKE #1: Failure to start fresh each year
Instead of using zero-based planning, many companies simply rework the previous year’s plan — causing them to miss new thinking and opportunities. While there is value in consistency of the long term plan, don’t miss the valuable signals the market is giving you. You just need to stop and look at them and develop valuable insights from them to use for your new plan.
Many managers pull out their plans from last year and merely update numbers. This “cloning” method of planning can cause the company to overlook changing circumstances, competitive happenings, trends, and new opportunities. Even if you’ve followed essentially the same plan for the past three years (or even the past twenty years!), don’t automatically assume it’s the best plan for next year. In any twelve-month period, much can change about your company, your competition, your customers, your market, your industry, and the overall economy.
MISTAKE #2: Failure to develop contingency plans
One of my managers used to call this contingency planning the “Oh, crap!” process. When you hear this expression, you know something has gone wrong that you didn’t expect. I recommend developing contingency plans for both negative and positive “Oh, crap!” scenarios. On the negative side, plan what you would do if you lost, say, 20% to 35% of your revenues.
- What actions would you take in your channels, geographic markets, product mix, and organization to regain the right amount of business?
- How would you adjust your business if this decrease was going to be the new norm?
Then plan for the positive contingency — if your business grows 20% to 35% over forecast. Most companies don’t do this, and it’s critical to think through what additional people and resources you would need and how you would get them. Having these contingency plans already in place on paper for both positive and negative scenarios will give you confidence and allow you to react quickly (before your competition) to emerging trends and unexpected events. Contingency planning, like other types of planning, empowers you to be proactive instead of merely reactive. A contingency plan costs money to develop, but before you allow this to deter you, I challenge you to consider the risks and potential costs of not having one ready to execute quickly.
Contingency planning, like other types of planning, empowers you to be proactive instead of merely reactive.
MISTAKE #3: Failure to conduct scenario planning
Scenario planning is probably the most underutilized strategic planning tool. As your team sits around your conference table crafting your plan, be aware that your competitors are doing something very similar. Since companies in the same industry are typically 99.9% identical, it’s very likely they are creating similar new products and exploring similar growth opportunities, while plotting how to take share from you. When you attempt to execute your plan, don’t assume they are just going to sit still and simply allow you to execute your strategy. Every major action you take will spark a reaction. Great strategic plans assume the reaction that will happen and have a pre-determined plan for addressing it.
Prepare a comprehensive scenario plan at least annually that considers how each of your competitors will likely react to your plan’s proposed actions, and attach this plan to your strategic plan assumptions. Scenario planning will teach you a great deal internally and externally and put you in a much stronger position to succeed.
For example, if you plan to grow by 5% in some segment of your market, your team should do comprehensive scenario planning about how your competitors might react. What market segments will they try hardest to protect? Which ones are they likely to care less about? When we think through competitive scenarios as part of the strategic planning process with our clients, we turn a conference room into a war room and fill the walls with decision tree diagrams. Taking a page from Sun Tzu’s The Art of War, we use this process to make us more knowledgeable and effective in leveraging new trends, battling our competition and serving our customers.
Doing it Right Is Hard Work, But It's Worth It
Many employees feel the creation of a plan is merely a mandatory, “going through the motions” part of every year. The most successful companies treat strategic planning as the critical foundation to how the whole organization will focus. Crafting a comprehensive and differentiated strategic plan is hard work, and it should be. Assign your best strategic thinkers to the task of crafting a strategy that leverages your brand’s uniqueness and builds on a deep understanding of your industry, insights, your competition, and relevant trends.
Creating a comprehensive plan is just a start; it doesn’t guarantee success. The next step is getting your ENTIRE team to understand and ultimately own the plan. Rally your whole team around your common focus by sharing your vision with them early and often, especially whenever you enhance your vision to fit changing market conditions.
For help with your strategic planning process, contact us. And for more insights on strategic planning and differentiating your business, get a copy of Bill Rossiter’s book “DIVERGE.”