Do you remember the negative definition of assumption?  You know the
definition invoked, usually after some sort of disaster, in which if you are
holding the bag your superior says, “How could this have happened?” and you
say something like you assumed. and then they say, “Assume stands for making
an ass out of you and me.”  Now do you remember? 

Well, you’ll be a long way forward in this turbulent world if you consider
strategy to be hopelessly riddled with assume.  It’s like they are bed partners,
and you can act like it isn’t true, but every strategy is built on assumptions.

What should you do? 

Some people give up on strategy, just keep doing whatever works, or whatever
their hunch or proclivity is, and hope the “river doesn’t rise” until they make
enough money to get out of the  game.

What should you do?

Yea, what should you do, especially if you would like to be strategic, and not
just do what worked last year, or chase after the opportunity of the moment?

The McKinsey Quarterly produced an article entitled Just-in-Time Strategy
for a Turbulent World, which suggests you can’t know the future, so the best
strategy is to hedge your bets with a portfolio of strategic goals. 

Hedging your bets makes sense anytime you are betting on assumptions, but
when I read this,  I know what most corporate leaders do with this message.
That’s right, they assume, they’ve got the risk managed with multiple options.

So let me be clearer about what dealing realistically with the reality of assumptions
being in bed with your strategy.  It’s all about the need to check.  The article
in McKinsey describes it with the phrase, “Rigorous monitoring is crucial”, but
I don’t think that gets to an emotional level that connects.  So let me frame
it a different way.

Imagine if you are a guy, and you’re wearing pants that have a zipper that
has been previously known to slip, in fact it has already slipped once today
and someone snickered.  Would you check?  Of course you would.
Regularly.

Or if you are a woman and you’re wearing a low cut top, do you check to see
that everything is in place and not slipped?  You bet.

So we are used to handling some risks by checking regularly, especially if there’s 
a risk of personal embarrassment.

Transfer that same feeling, that same sense of possible embarrassment and sense
of exposure, to your strategy and suddenly you have a whole new perspective
on what it means to have a strategic plan.  It’s something you need to check
on repeatedly and respond if something has slipped!

That’s the correct perspective to have when it comes to strategy.   That’s
my translation of McKinsey’s statment, “The hallmark of this approach
is the willingness to change direction continually as more and more distinct
knowledge appears.”

BTW, the McKinsey article has a few suggestions worth reviewing, but for a
specific “do these four steps” grab my simple ebook on how to create and
manage a strategic plan.  You can get it here -http://rodneybrim.com/info/ebooks 
and find out why the 4 key components are 1. Relevance, 2. Actionated,
3. Reviewed via Metrics and 4. the Right technology to link strategy to
the front lines.

Bottom Line:
A strategy is at best a set of assumptions about an uncertain future.  Reduce
your risk of having the wrong strategy by diversifying, and by repeatedly
checking with the willingess to shut down and start anew, when the results
aren’t there.  For most of us the biggest change is to form the habit of checking,
and then checking again.  Just think about zippers and you’ll get better at
checking in 2012.

Links:
Reviving Your Strategic Plan
Strategic Planning Leadership

I was talking with a board member last week and they said the strategic
plan came back from the offsite and the consultant, but it wasn’t that helpful,
and the Chairman didn’t know what to do with it.  Sound familiar?
From my perspective, it was dead on arrival, and in fact your strategic
plan for 2011 may have the same status, whether you just created it,
or it got put together 6 months ago.  So what do you do?  Give up on
strategic planning?  Hopefully not, so here’s three quick suggestions
to help you revive a dead plan.

1. First go through your existing plan with a big stamp and a set of
pruning shears and check each strategic goal for the following criteria:

The stamp says, each strategic goal has to be:
1. CRITICAL (to our growth, survival, mission, management of risk)
2. ACTIONATED (and have supporting action plans)
3.  SCORED (and being measured monthly or quarterly)

2. Be ruthless.  If it doesn’t meet the first criteria, throw it away.  If
it isn’t critical to your business, to your organization’s growth or
survival, it’s more likely a “nice to have” or what politicians would
call pork barrel or congressional earmark for special interest groups.

3. If you don’t know what’s critical, join the club.  Most people
don’t know either, because we don’t have enough data or perspective.
Better get both.  In fact, often we passionately pursue
placing our ideas and plans in the strategic plan mix based upon
gut instinct, “it seems right,” or proximity - ”its been on my mind recently.”
Neither are good substitutes for data and good critical thinking.

4. Ok back to the reviving process.  So it starts with pruning.
Prune everything away that isn’t verifiable as critical.  Then check to see
if it is actionated.  My term for whether it has supporting action plans
backing it up.  Then check to see whether it is being scored on a scorecard
and updated monthly or quarterly.  If either of those items are not in place,
fix it or throw that part of the strategic plan out.  Can you hear the sounds
of the shears?

5. Good, got that done?  You’re well on your way to reviving the plan.
Before you start re-energizing what’s left, remember what your
strategic plan’s role or function is.  Your strategic plan is in effect your
map of the world and checklist for how to get ahead of things so you
don’t lose a key opportunity or get run over by your competitor’s mack
truck or some other risk factor.   This is true whether you start with a SWOT
analysis, or a Balanced Scorecard, or your favorite strategic planning template.
It all boils down to a way of viewing and anticipating what is or can
happen out there, and a checklist of actions to get ahead of the process.

6. OK, one more thing in terms of reviving your plan.  Quick question.
A moment of introspection and truth telling.  How many of your
strategic goals for 2010 would have passed the inspector with the
stamp at the top of this blog?  I say that, because less is more and most
organizations aren’t prepared to actively manage and use a large,
multi-goal strategic plan.  If you didn’t do it last year, part of reviving
this year’s plan is to keep it really manageable.  Only include goals
in the plan for which you will do all three steps.

7.  Ok, final suggestion.  Make it singular.  Revive your plan one
goal at a time.  Pick one goal that’s critical and build an action plan,
create a scorecard and populate the scorecard with the relevant
data and thresholds based upon the last 12 months… before you
go on to the next goal.

Bottom Line:
Some organizations are just starting off their fiscal year next month,
some are looking at the 3rd quarter, but for each your strategic plan
may be in effect dead and in need of reviving.  Hope you find
these 7 steps helpful in breathing some life into it.  Remember
strategy is a bit like surfing, you can’t catch the wave unless you
get in front of it.

Links:
What is Strategic Planning Leadership
Develop a Strategic Plan Scorecard Service

Is strategic planning leadership a process, an evolved set of skills, a certain
type of leadership… of method of planning?  Do you know it by the outcomes,
or by the process, or by the structure of behaviors and systems being used? 
Maybe it’s like Supreme Court Justice Potter Stewart’s definition of obscenity,
“I’ll know it when I see it.”

One way to approach defining strategic planning leadership is in terms of
the images you operate with, and the images you plant in the minds of the
people you work with.

There are some tried and true images and constructs which may work well
for you.  You’ll recognize them from the images, but they are things like:

- Completing  a SWOT analysis,
- Defining your Mission and Vision,
- Setting short term and long term goals. 

However, I’d like to give you a few new images that may work even better to
keep you on track, as well as help you in the discovery and convergence
phases as you lead the strategic planning process.

 1.   Approach your market analysis, a cornerstone of strategic
planning, like Dorothy in the Wizard of Oz. 
Approach your appraisal of the market and how it interacts with your strategy,
with the willingness to follow the yellow brick road, and also the openness to
embrace a set of operating assumptions that isn’t confounded by believing we
already know how everything works.  The world is both the same and also
changing so fast, you can’t know everything… so go find out, dig deeply, get
really good data, ask tough questions, don’t rely upon first impressions or
initial confirmations of past experiences. 

What is the market really doing?  Who’s winning and why?  What’s likely
to be around the next corner?  Who knows where the yellow brick road is?…
You want answer to all of those questions.

2.  Avoid the sand traps of Comfort and Power.
Comfort and power tend to influence every discussion, including strategic
planning discussions, and you should avoid landing in them.   You’ll
recognize them as the tendency for people to lapse into the comfort of
repeating old stories, old assumptions,  repeating what the last person said,
and other forms of the sand trap.  You also recognize the power sand trap,
by the way individuals or the group capitulate or defer to the most
powerful person, the most liked, or however else power is defined
in your group.

Btw, just exactly how do you do that?  A couple of suggestions, keep your
head down, slow your back swing… oh you mean in strategic planning. 
The best tips I have for that are to clarify before hand and then enforce
some important engagement rules, such as: the two minute timer rule to
wrap long winded statements; call out and identify repeating comments,
actively question and support “outlier” comments that have merit, and
ask the Why? and How do you know that?  Ask the tough questions often
enough that it creates some discomfort.

3.  Take the rose colored glasses off,  and be ruthlessly honest
about what you do well and don’t do so well. 
It’s not as important as understanding the market, but the more accurate,
the more grounded in data points, the freer you will be to move beyond
conjecture and do something innovative. 

There are a couple of keys to knowing this accurately:
- Know it from your customer’s perspective
- Know it from a critical look at past mistakes, opportunities lost,
   things that didn’t turn out as expected
- Know it from comparisons with competitors

4.  For any entrepreneurial organization, treat your strategic
planning like placing bets at the horse race. 
By that I mean, treat your strategies as horses, and the strategic planning
process is ultimately deciding which horses to bet on to win the race. 
You want to bet because there’s some compelling reasons to believe that
horse is going to win, make you money. 

What are those compelling reasons, and why will that “horse” or
strategy, be better than others?  Be very clear about what is going to get
rewarded in your market.  Get that defined and verified as much as possible
before you expend resources, e.g. lay your money down.  And for future
reference decide how you will measure the horse race outcome.

5.  Be really clear that you have the right people on the bus,
and in the right seats.
Jim Collins said it well, “In fact, leaders of companies that go from good
to great start not with ‘where’ but with ‘who’.  They start by getting the
right people on the bus, the wrong people off the bus, and the right
people in the right seats.”

It’s funny but many people don’t think to include this as part of their
strategic planning, and it’s absolutely foundational, even if a bit un-nerving. 

Do you have the right people, the people with the right expertise,
the right attitude, the right values…?  Perhaps you need a certain level
of openness to innovation, maybe it’s just the right attention to detail
and consistency, maybe it’s a real feel for systems, or maybe it’s just
the right intuition for dealing with customers.   Can you define what
you need based upon your strategic plan?  Is having those people in
place part of your strategic plan?  It should be.

Whatever the combinations are, you need those people, doing the right
things.  The right people, not just based upon past performance basis, but
also from the perspective of what it will take to accomplish the strategic
objectives you set forth.   Get really clear about this.  It’s a key question
that is a corner stone to good strategic planning.

 
6.  Use Convergence to reduce it to simplicity. 
Your strategic planning isn’t finished until you’ve made it simple,
converging down to just what’s critical.  Keep it so clear you could
communicate it to 6^th graders.  It’s all part of ensuring you can successfully
carry it forward.  Here’s some key questions you want to be able to answer
with single, simple but powerful statements as part of your strategic
planning effort.

-  What is it exactly that we do? How do we create value?
-  How do we make money in this market?
-  How do we lose money, while thinking we’re doing our best?
- What are we betting on will be the winning value proposition to
    take to the market? … or 
- What’s the plan?
- What are 3 ways we will know if we are on track or not within the next
    90 days?

7.  Give it some legs, use technology that gets everyone involved.
Your strategic planning isn’t functional or doesn’t have legs on it, until you’ve
got it planted in a technology that makes it accessible to everyone. The
technology needs to make strategy just as in focus as to-dos, month end
quotas and whatever else is on the horizon. The technology needs to give
you easy transparency on follow-through.  If following-up requires lots of
preparation, some might say an arm and a leg, then you’re using the wrong
technology, and impairing every-one’s ability to keep the strategic plan in
focus and executed.

Until you can easily see exactly what’s being done to enact each strategy,
until the plan makes sense logically, until you’ve got a means of
measuring progress that takes advantage of information that’s
available… you don’t have the right technology.  And in fact you’re
probably trying to manage something as important as your strategy
with word documents or power points.

Bottom Line:

Leading a strategic planning workshop or process, can be much easier
if you use certain constructs that are anchored by images.  I’ve given you
7 images representing some of my favorite tools to ensure a strategic
planning effort will be successful.  Do great things.

We provide strategic planning facilitation. 
Call us to set up an appointment today at (877) 487-3001.

Links:
3 Confessions of Strategic Planning

The Difference between Strategic Planning and Financial Planning

Strategy, Lessons Learned and KPIs

Software for Planning and Delivering on Strategy

Have you ever noticed when you talk to people about their strategic plan,
that within just a few sentences they start talking about stuff that isn’t
completed yet?    Often it centers around tracking, metrics, scorecards,
verifying that the strategy is correct, that it’s a good bet, an accurate predictor.

So why do so many of us never get around to creating a strategic plan,
or finishing off the strategic plan, updating it, verifying it, measuring against it?

Ok, I’m going through a checklist in my brain from past history.  Maybe
your are as well.  Let’s see, it’s not because of:
1.  lack of interest, or
2. because people think it’s a waste of time, or…

In fact if you interview yourself, you might uncover that you “started”
working on the strategic plan, or even “thought about it”… several times
during the course of last year… you just didn’t finish. 

Why not?

Actually there’s a couple of pretty good clues, I’ll be brief and try to
be entertaining so you can get through it with me.

Hey did you catch that?

The first reason we don’t finish and maintain a strategic process is
because it’s not something you can do in a brief period of time, nor
does it necessarily provide a lot of entertainment value, or a direct
connection to the satisfaction of crossing one more task off your
list, responding to more email, etc.  That’s a big one.

Even back in the 1960′s, when time seemed to be moving a little slower,
Drucker was talking about the need for working with bigger chunks of time,
“most of the tasks of the executive require, for minimum effectiveness,
a fairly large quantum of time.” (1967, The Effective Executive).  

My point is that we need a big chunk of time to complete strategic
analysis, planning, tracking and review, and big chunks of time are in
short supply.  

In fact, if you even think about generically working strategically,
let’s say the first part of the day, and you’re wanting to focus on
playing heads-up, focus on what would create the most value, etc… 
look at what happens.  If you’re like me you get tempted to focus
on tasks that start popping into your mind, phone calls that just
came in, someone walks into your office, with a “got a minute?”,
or the incoming email barrage. 

Working strategically regularly gets overwhelmed by multi-tasking. 
It also gets overwhelmed by our attention span and calendaring habits.

Just think about how we approach the task of reading.  We want to
read a brief.  We want a summary.  We want to manage by exception,
“just tell me where to sign.” 

Here’s another example.  Think about how we approach the task of
research.  I bet for most of us, we use something like Google or Bing,
and we stop after the first page or two if we’re not finding something
“quick.”

So strategy gets in a fight with our schedule, it wants to consume a big
chunk of time and we’re only handing our 15 – 30 minute chunks.  So
we are likely to think about the need to do some strategic planning, or
to start on the process, just not finish or keep it current.

By-the-way, Derek Dean and Caroline Webb from McKinsey, wrote a strong
article pointing out that our multi-tasking coping style for information
overload isn’t effective, entitled Recovery from Information Overload,
in case you are interested.

Bottom Line:
Creating and maintaining a strategic plan, or just the process of focusing
on working strategically invokes a fight with our multi-tasking, short
attention and calendaring habits.  For most of us strategy loses, if you
don’t lend it a helping hand in the fight and protect time to be strategic.
Which side of the fight is going to win for you this week, this month…
this year?

Links:
Strategy, Follow-up and Visiting Relatives
Strategic Management Software – Use the Technology that helps you win the fight

Your strategic objectives, what I like to call your placed bets, can be
right or wrong, tuned in, or wildly out of sync with the market… but
ultimately only as good as the follow-up.

Let me say that another way.  Your strategic plan can be bad for lots of
reasons, but it can only be as good as your follow-up.  Lack of follow-up
ultimately strands every good idea. 

So here’s a quick blog about follow-up.  First of all, no self abuse
allowed, 99% of us can all follow-up a bit better. Everyone is in the same
boat.  So having said that, take a look at strategy and follow-up for a
moment, you might find something pretty interesting, even help yourself
in 2011.

Here’s my first premise.  Most of us aren’t naturally good at being
strategic.   We don’t intuitively think that way, and what’s more, even
if we do, we don’t hang onto or revisit the thought nearly often enough to
make something happen.  We’re better suited, in fact we even seek out, a
daily regimen of something more immediate, whether that’s the next
email, task or phone call.

If you checked back on 2010 would that fit you?

Did you have a strategic plan, maybe you were assigned to one or
more strategic initiatives?  How often did you focus on them, and
when you did, why?

Here’s my second premise (I promise this will get better in a moment),
The Visiting Relatives phenomenon is alive and well when it
comes to strategic planning.  Most of us, after the first 30 days following
inception, pay attention to strategy  with a frequency that’s directly tied to
how often we have  to generate a report for a meeting.  It follows what I
call the “Visiting Relatives”  effect.  You know, that behavior we all do
when relatives are coming to visit, we clean up the place.   Well that
looks a lot like how most people treat strategic plans.

Strategy for most of us functions like a shelf in the back of the guest
bedroom, and we only clean that area up, and dust it off, when
prompted by the onset of guests visiting -  or in the corporate world,
when we have to generate a report.  You get the connection.

We all agree follow-up is important.  The David Allen, “Getting Things Done”
community frames it as a fundamental tenant and describes it as
the “Weekly Review“. 

What would happen in 2011 if we did a weekly review of strategy, progress
to date, whether or not it still fits, if not, what to do next, etc…? 

You and I would probably agree that if we focused on it weekly, good
things would happen, right?  So why don’t we?  If it works for getting
things done, why don’t we use it for being more strategic and all the
positive outcomes that we expect to follow?

The answer to that is probably locked in your childhood, and anyway
would take too long to cover in this blog.  Would I would like to close
with is to address one suggestion for helping to become more
regular about working strategically this year.

Here it is… Use the Visiting Relatives effect.

That’s it, what?  What do you mean?

I mean make it a scheduled event.  Calendarize it.  Make working
strategically or reviewing your strategic plan and ensuing results, a scheduled
(recurring) meeting… go even further and get yourself to require a report
for the meeting.  Label it in your calendar, ”Relatives are showing up,” if it
helps.  Get someone else whom you respect, to agree to meet with you
(it helps the VR effect).

Putting it on the calendar and requiring a report can go a long ways
toward helping you work more strategically in 2011.  Be good to yourself,
and the firm you work for, Get it Done!

Bottom Line:
Working and keeping your strategic plan active is only as good as your
follow-up.  What drives follow-up for most of us is preparation for a
presentation.  Use that phenomonen, the Visiting Relatives effect, to
help you work strategically much more consistently in 2011.

Links:
Strategic Planning and Execution Software to help you in the review process.

Strategy usually gets a big benefit from accurate hindsight and lessons
learned.  By-the-way, what did you pay for the lessons learned in 2010? 

If someone delivered the “lessons learned from 2010″ to you in a folder…
and you looked at the cost of those lessons as a sum of unexpected costs
and the delta between projected and actual sales in 2010, would you feel
like you paid a fair price for the lessons learned?  Did you get a good deal?
Or do you need to dig deeper into this past year to get more value for
the dollars spent, the dollars that never came in?

One of the ways I get more value from what happened in the past
year, and turn those experiences into “lessons learned” is to view
it as a reverse engineered KPI (Key Performance Indicator).
Let me explain, its a fairly simple process.

First, look back at the last year and split the effort spent into two
buckets; one bucket is the development of products and service,
the second is your customer life cycle, from prospects to long term
customers and drop outs.

Second, take either bucket, let’s take customers, and imagine that the
past 12 months was intentional and focused on creating exactly what
your results were.  It’s a form of reverse – engineering and it sounds
something like this:

“Last year we were successful in accomplishing… ” and then accumulate
whatever happened during the year and frame it as intended. In fact,
you’ll help yourself if you go even further and score it as a KPI that you
successfully achieved 100%.

To help your analysis, you might want to use Geoffrey Moore’s work in the
area from his book Living on the Fault Line.

It might sound something like,
“In 2010 we bet on operational
excellence as the best choice to
spend our resources on , and were
100% successful in achieving … (a loss
in sales, a flat year in sales, a 125%
increase in sales).”

You get the picture.  Once you frame it that specifically and intentionally,
it’s a lot easier to derive lessons learned.   You paid all that money
last year, you better get something for it.  And, your strategic thinking
in 2011 will be appreciably better, the more factual and aware you
are about what happened in the past year.  What was emphasized
in your organization and what the market actually responded too.

BTW, here’s a quick definition of Moore’s 4 quadrants:
1. Operational Excellence (differentiation based upon productivity and
     ultimately price)
2. Customer Intimacy (differentiation based upon matching customer
     expectation with offer fulfillment)
3. Product Leadership (superior design and performance)
4. Disruptive Innovation (create a new source of competitive advantage)

Also if you are struggling with examples of KPIs to use in looking at
2010 or for strategic planning in 2011, you can find a spreadsheet
of examples broken down by business type on our website at:
http://www.ManagePro.com/KPIsbyBusinessGroup.xls  

Bottom Line:
Before you start thinking about strategy for the coming year, think
about getting more value from lessons learned in 2010… a lot more
value.  Treat last year as entirely intentional, targeted on your
accumulative results as a KPI.  And then ask yourself was that
a choice that the market responded well too?  You’ll be surprised
at what pops up a lessons learned.  We all inevitably pay, the
question is did you learn anything from it.

You’re probably thinking, “What opportunity”? 

Many people we talk to aren’t seeing many opportunities and echo the
perspective that there is less cushion, things are tight and not only don’t
they see an opportunity, but in fact are searching for two things as the
year comes to a close.   Those two things, those opportunities, are:

1. How to find more sales (or budget) dollars?  and

2. What to do now to ensure 2011 is different than 2010?

Does this sound like you?  If so, let me save you some time and money,
and show you how to use ManagePro to do both.

Finding more sales dollars

Typically you’re going to get 80% of your dollars from 20% of your customers. 
One way to maximize this is to make sure that list of the top 20% of your
customers is created in ManagePro (use it like a CRM), and then put a
todo on each to remind yourself to call them this week and ask two questions:

   1. How did you do in 2010 in serving them and what can you do
       better to assist their business in 2011?  and

   2. Is there anything that you can assist them with in these final days of
        2010?

Be sure to put together an action plan under each of your customer’s records
when they tell you what they need differently in 2011, and get those action
items assigned to the right person with a todo to yourself to followup with
your customer within 30 days.

Getting Ready in December to Ensure 2011 Really is a New Year

Edward Burke in the 1700′s said “Those who don’t know the past
are destined to repeat it.”  My take on that is slightly different,
my version of that quote reads:

“We are bound to repeat the past unless we learn from it.” 
Do you think that’s true?  Because if it is, even a little bit, you need to pull
more learning out of this past year to avoid repeating 2010 in 2011.

ManagePro offers you a couple of different options for improving your learning:

   1. Create a record entitled “Lessons learned” and go back through
the past year and enter a progress update for each of the past 4 quarters
and write down what you learned and/or thought you knew at the end
of each quarter.  Conclude the last one with a concrete section on next
steps for 2011.  Then convert the next steps section into an action plan.

   2. In hindsight, define the primary things you worked on this
past year as goals and create a record for each one.  Then score
your progress for achieving that goal through the year and complete
it with a progress update that summarizes:
              - Lessons Learned
              – Obstacles Encountered  and
              – Next Steps

Hope you generate lots of benefit from both suggestions.

Links:

Starting your Strategic Plan on the Right Foot

Is working Strategically that Important… People in the US don’t seem to think so

The past couple of weeks I’ve worked with 4 different organizations on
strategic planning.   They represented the gamut from for-profit, to charities
to government.  Each represented a confession of sorts.  The type you
might make if questioned about your own strategic planning process.
I thought you might be interested in listening in on 3 of the confessions.

1. Everyone is light on research and quick to substitute discussion for
knowing the facts.

Here’s some of the questions that I need data on when working on a
strategic plan.  Not only does it make the strategic plan a much better
predictor of the outcomes you are shooting for, it makes the strategic
planning process go much quicker.

Okay, here’s some of the questions I use:
1) What kind of market are you in? What’s it emphasizing? (innovation,
brand, standards…)
2) What’s driving the sales/money funnel and the associated value proposition?
3) Where do customers come from and why?
4) What’s the best practice for delivery of the product/service?
5) What’s the best practice for retaining customers?
6) What does an analysis of your top 3-6 competitors reveal about your
market analysis and understanding of the competition

2.  Everyone needs to focus on the money funnel and the
relationships and criteria that drive the funnel.

What emerges here at every stop, is that your strategic plan is incomplete,
one could even say missing the point, if it doesn’t address how you are going
to get (more) funds in.  Where’s the money coming from and where is more
of it going to come from, whether through sales, funding, donations, or legislation.

The strategy needs to have a very clear plan for how you’re going to
maintain and grow your money funnel.    You may be thinking this is
only for profit oriented businesses, but it’s not.  Charities and government
agencies have just as many concerns about “where’s the money.”

By the way, the money funnel is an important area in which to get the facts
straight.  Without facts, the planning tends to drift in favor of who
carries the most weight at the discussion table, the relative comfort
with discussing money, assumptions, favorite jokes, you name it.  Or
the focus takes a sudden veer towards the latest “shiny factor”.

Stay with the facts on this one.  Do the research to get the data before
starting the discussion.

3. If you’re using a Balanced Scorecard approach, you need to
translate it, otherwise its about as exciting, read ability to sustain interest,
as dry crackers.

Whether you use the Balanced Scorecard or not, its easy for strategic
plans to start looking stiff, formal, bureaucratic, policy-based.  They also
get into this format of a list, which conveys that they all are important.
And everyone knows they all aren’t equally important.  You get
the idea.  Your strategic plan may look the same.  It sucks the life out
of the plan… well at least the interest in paying attention to it.

One of the important steps I find to help in this process, is to break
the business down into meaningful chunks that represent business
or organizational realities if you were to walk the floor, and then
address each chunk in your strategy with priority.  Let me give you
an example.

The standard Balanced Scorecard perspectives are:
Finance – the strategy for growth
Customer – the strategy for creating value for the customer
Internal – strategies addressing internal business processes
Learning & Growth – strategies that support change, innovation & growth

Here’s an example of how I might reframe that if I were at your business:

Top Tier:

1. The money funnel: How are you going to get money/funds (restate
that, more money and funds) into the organization?  How are you
going to address directly what drives that funnel?

Second Tier:

1. Differentiation for Customers: What differentiation are
customer’s requesting (service, quality, price, status…) and
how are you going to give it to them?

2. Efficiency: How are you going to improve your processes such that
you meet your mission and objectives with less time spent on low value
time consuming actions?

3. Growth Acquisition:  What technology, expertise, change in staff,
knowledge and resources are you going to acquire to help you grow?

Bottom Line:

If confession is good for the soul, it’s also good for your strategic plan,
if you listen closely.   A couple of confessions revealed that you can
profit from include: a) the need for good data before you start planning,
b) the need to take care of your money funnel, and c) the need to break
your plan down into chunks that reflect your primary business realities,
including the priority of the money funnel and growing the business.

Links:

Strategic Plan; Thought, Actions or Write-up
The Difference Between Strategic Planning and Financial Planning

The question of what’s strategic versus a financial plan comes up often. 
In fact when reviewing strategic plans it’s easy to see that they overlap
and at times get confused.  Let me share 3 simple “rules of thumb” I use
to sort this out.

Before I go into what works for me, let’s go over a couple of examples:
1.  Here’s an example of a recent news blurb on Symmetricom.
“SAN JOSE, Calif. (AP) — Symmetricom Inc. slid to a loss in the most recent
quarter, hurt by a dip in sales and one-time expenses from paying down
debt and restructuring…

Stripping out $7 million in expenses related to paying off outstanding bonds
and $6 million for restructuring, the company would have earned 12 cents
per share…”

As you read that quote, can you determine if that was part of a financial
plan… or a strategic plan?  Was it strategic or reactive?  Was it on their
strategic plan for 2010, or did it become a necessary tactical move with
a drop in sales?  It’s hard to tell isn’t it?  It could be either or both.

2.  Here’s a few examples of initiatives that commonly appear in strategic plans:

- Improve sales by 20%
- Raise profit margins by 2.5%
- Grow EBITA by 12% over previous year

As you read the statements above, it’s obvious that they are financial
goals, but are they strategic?   I see them so often in one form or another
in strategic plans, so one might think they are strategic, by their prevalence
if for no other reason.   But most of the time, they aren’t really strategic.

Actually most of the time, the three financial initiatives not only aren’t
strategic, but don’t have a strategic plan to support them, and as a
consequence are not likely to be met.  

So let’s go over how I separate the two, financial and strategic, and how
you can too, because keeping them separate in your mind and planning
efforts will help you be a better strategic planner.

Here we go;

1. Growth vs Survival:
1. A strategic plan is a plan for growth, highlighting the goals and
action items that are being selected as the preferred route and emphasis
to drive growth.  It’s like saying, of the 43 different directions the business
could go this year, what are the 3 most promising efforts, that if resourced
will drive growth?

2. A financial plan is a plan to manage limited resources with priority and
ensure survival.  If you were a farmer, it would be similar to your water
plan.  You need to plan to have reserves to meet demands as well as
enough daily flow to keep existing production underway. 

Does the financial plan drive growth?  Yes, ultimately, but it’s not the
same.  One has to survive to grow, but survival isn’t growth.  In farming
language, securing water is not the same as strategically thinking ahead
and predicting where the market is going to go, and deciding which crops
to plant, where and when.

2. 90% of the time Financial Planning Aids Strategic Planning:
Financial planning and financial monitoring is vital to support your strategic
planning and execution.  Most organizations have a difficult time doing much
strategically if they slip into insolvency.  On the other hand many
organizations have financial outcomes listed as part of their strategic plan,
when they really should be outcomes based upon a strategic initiative or effort.

Don’t confuse the two – don’t list your financial goals as a strategic plan. 
Keep clear in your planning what is being chosen to drive growth, then
anchor that by framing it in financial outcomes.  E.g. you may decide to
drive growth by re-allocating 5% of your operating capital from Engineering
to CRM, but the strategy is to emphasize CRM over Engineering to drive
growth, not the budget amount or the increase in sales… those are just
resources and outcomes.

Here’s another way to look at it, financial goals, are outcome targets,
but they don’t address the vital strategic questions of:
How are we going to achieve that goal, what specific approach? and
Why do we think the market will respond?

3. 10% of the time, Financial Planning is Strategic Planning:
Financial planning becomes a part of the strategic plan when it moves
beyond “keeping the trains running,” balancing the books, paying
the bills, maintaining cash flow, etc.  and moves into how do we use
or shape finances based upon what it does to growth? 

Returning to the first quote regarding Symmetricom above, their
pay down of debt may have been part of a strategy to reallocate
resources to achieve a strategic initiative… who knows, maybe their
strategy is to be acquired and they want to reduce debt to make themselves
more attractive… or it simply could have been part of managing cash
flow and tactically using available cash… because it was there. 
Finance moves can be a fundamental growth driver or primarily
a support function, and most of the time they are the latter.

Bottom Line:

The difference between strategic versus financial planning on a very
basic level is rooted in placing the emphasis on growth vs. survival
or maintenance.  They are both critical, both need to be managed.
But when financial planning (and goals) is mis-identified as a strategy,
most of the time it is a result of a lack of clarity or in-site into what
are the drivers for growth within the market.

Let me know if that helps.

This week I read a blog from Fred Nichols, discussing whether most of the
value is in a strategic plan, or in the process of creating one.  It got me
thinking about how to define what really is a strategic plan, hence this
blog and a question (well actually several) to you:

If the strategic plan is essentiallythe plan to get ahead at the business
level, is it something that’s written or stored in a software program?

Or since most people in an organization don’t know or can’t remember
the strategic plan, is it really how and what we think, our
assumptions about what it takes to get ahead?

Or since we all don’t act consistent with how we think, or what we read,
is the strategic plan really defined by how we act, what we spend
time on, what we prioritize or repeat?

If you redefine the strategic plan as simply the plan that defines how to
get ahead, it really makes you realize for most people it isn’t what’s written.
What if ultimately the strategic plan is always something internal that
drives the choices we make.  Now that internal plan may be based upon
a written plan or thought process somewhere, but that internal plan
could also be quite detached from any formal process.

While you’re thinking about that, let me also suggest that maybe,
for most of us, the internal plan is based primarily on one core
assumption that fits with our personality more than anything else.

I have a unique way of combining Myers-Briggs scores that seems
to match up well against brain research, and if I were to put it in
a matrix, the personality types and their one core strategic
emphasis would look like this:

Back to the strategic plan question.  Is it external, internal, or a connection
between the two?   I’m thinking the strategic plan is primarily internal,
and you have to work pretty hard to connect the two.  It takes some
work to connect an external plan to people’s internal assumptions. 

To Fred’s discussion of the whether the process or the value is the
value add, I’m thinking neither if the plan people are working from
is primarily internal and not impacted by whatever formal plan got
developed or the process to develop it. 

What if the process for developing strategic plans emphasized
connecting people’s inner world of assumptions and preferences,
with the external business question and reality of “how to get ahead.”?

Bottom Line:

I think most of us work off of an internal strategic plan, not an external
one.  Secondly our internal plan is shaped more by our personal
preferences than business needs or process.  Third, if you look at
personality profiles, you realize the standard approach to strategic
planning is structured for only one personality type,the Analytic
Thinker/Builder.  Looks like we need to redesign current approaches
to strategic planning to incorporate the styles of everyone
in the organization, not just a minority… especially if you want to
create an external plan that will impact everyone.

Links:
Is Strategic Planning an Oxymoron?