IS YOUR STRATEGIC PLAN A GEM OR A DOG?
With 2018 around the corner, it’s planning season for many organizations. Some will update existing strategic plans; others will start from scratch.
What does a good plan look like? I’ve seen both dogs and gems. I’ve collected several as part of working with organizations to help write their plans. Interestingly, some of the dogs worked really well. And some of the gems failed miserably.
Here’s a gem that failed. I worked with a company, a custom sheet metal fabricator, whose leader put off planning for several years in a row. The company had a proud history producing quality custom parts for aerospace and high tech industries. His employees were so loyal they would seemingly appear out of nowhere to pitch in when demand peeked. Past customers repeatedly sought him out for new assignments because of the company’s production quality.
Now the company is gone. A year before it closed, I was called in to do a strategic visioning project. The project itself was a success. It outlined several areas for attention from updates in machinery to an overhaul in sales. In the months that followed, the owner realized the changes he needed to make to stay competitive were daunting. Too daunting. Rather than step up, he stepped out. He closed the business.
Here’s a dog that succeeded. It’s the plan drawn on the back of a cocktail napkin, the one for Southwest Airlines. In 1967, founders Herb Kelleher, a lawyer, and Rollin King, a pilot, were sitting in the prestigious St. Anthony Club in San Antonio finishing paper work for King’s failed regional airline. King had an idea for another airline. On the back of a cocktail napkin, he drew a triangle with Dallas at the top point and San Antonio and Houston at the bottom points. Four years later, Southwest Airlines got off the ground. Today, it’s worth $33 billion. I talked to Kelleher and King about it for a lengthy magazine article I did for Southwest’s 15-year-old birthday.
Why are some plans gems and others dogs? My experience is similar to Roger L. Martin’s, a former dean of the Rotman School of Management at the University of Toronto. Writing in a 2014 Harvard Business Review article, Martin said good strategic planning is not the product of days of careful research and modeling leading to a perfect future view. It’s the result of a simple process of thinking through what it will take to achieve what you want and to assess whether it’s realistic to try.
Comfort traps – as Martin calls them – that executives fall into when doing strategic planning: Strategy and planning are different, but executives often conflate the two. Planning gives executives the feeling they have control, especially over the numbers, when, in fact, revenue is driven by customers and customers are unpredictable. And emergent strategy – revising strategy as the environment changes – leads executives to wait until the future unfolds and so postpone tough decisions on unknowable and uncontrollable things.
To escape the traps, focus energy on revenue. Specifically, on which customers to target and a compelling value proposition to connect with them. It’s the customers who will bring in the revenue. Also, strategy is not perfect – ever. Strategy makes success more likely but not certain. Finally, it’s critical to know what you believe about your customers, the evolution of your industry, your competition and your capabilities. Write it down. That’s how you’ll be able to recall months or years later how you made your strategic bets.