The concept of business planning and strategy today seems to have become obsolete. After all, with globalization and technology, how could anyone believe that a five-year, much less a ten-year plan, has any relevance? New competitors arise, markets morph, and customers mosey on to greener pastures.
My view is that this mindset is much more an excuse than a reality. If anything, the notion that you can dispense with a plan in favor of some skeletal initiatives is usually a cop out for a CEO who isn't secure, or a management team that would rather obfuscate the unpleasant truth of their strategically-challenged position.
Five core questions are at the heart of any sensible strategy, and all of them can be quantified and forecast. First, are there factors to indicate that the market being served will grow, stagnate, or decline? Second, are the needs of customers being satisfied or not? Third, are your competitors serving those customer needs better or worse than your firm? Fourth, are your business economics attractive and sustainable in serving the customers? And fifth, do you have the human and financial capabilities to remain competitive, if not to lead the pack?
Every company should be able to assemble reliable data over two business cycles to answer the first two questions. For the final three, the time frames may be shorter but some longitudinal data will be available or can be developed. Ignore anyone who claims the data cannot be obtained. Disregard those who argue that it's an exercise in futility. With today's data gathering capabilities, harnessing this information is only a matter of effort and expense.
Then, before moving to the planning stage, the next priority after gathering the information outlined above is to work as a team to wallow in it. Understand the realities and the consequences of maintaining the status quo. Probe and argue. Examine from every angle. For folks who have never before subjected themselves to this business form of a colonoscopy, it can be brutal. Even for those familiar with the practice, it remains brutal. As well it should. You are the fiduciaries of your business. No one ever said getting paid the big bucks would be a walk though the tulips.
After convincing yourself that you really know the lay of the land, you are ready for part two. This is figuring out where to take the organization. Perhaps it's aspirational, and you follow a high-aiming path similar to the one blazed by John F. Kennedy's famous call to put a "man on the moon within this decade." Or maybe it's more practical, and you resolve to have a specific number of items accomplished within the next six months. Whichever, the facts will lead you to the right timing.
The whole point of strategic planning is to make certain you have a clear understanding across the organization as to what you want to achieve, and the means to measure whether you are on or off the mark. Ignoring this simple, but proven and powerful, process is done at your peril. I have been at too many meetings where a gifted business executive with a silver tongue has stoked the attendees to a white heat on some opportunistic event, and which in no time results in burst bubbles.
In the present general environment of lower growth, business leaders need to be thoughtful but still willing to take risks. On one hand, now is the greatest business opportunity of a lifetime. Investments are possible at the lowest cost of capital you will ever see. On the other hand, if you hold out for the glory days to return, a more aggressive player will steal your thunder. Information is too rampant, transparent and accessible for anyone to play it cautiously too long with impunity.
