For almost three decades, I have served as a business coach to executives around the world in companies of every type and size. It’s one of the favorite parts of my job because our work together can have such an immediate and dramatically positive impact on their organization. However, I have a somewhat different approach to coaching and see it as a process of learning together with my clients and rather than telling them what to do—as many coaches/consultants do—I serve as what I call a “Learning Partner,” where we work through issues together. As part of that process, when they are facing a challenge they want my help with, I start by writing a memo with all of my thoughts on that specific area to then use that memo as a foundation for our discussions. Over the next several weeks, I’m going to post actual memos that I have sent to my coaching clients in hopes that you might find the ideas I shared with them helpful to you and your business.
Below is a note I put together for a client I have been working with for many, many years. It’s a $50 million-plus company that is extremely well run and has recently acquired two new businesses. The challenge was to develop an overall strategy that would encompass the core business and these new additions, and I wanted to assist their senior managers in being successful in creating that strategy.
Bill and Brian, we have discussed that you are getting ready to go into another round of strategic planning, which will include two new businesses you’re taking control of, so I thought I’d send along some ideas to help you have the most successful planning retreats you possibly can. As you know, I have been a guest lecturer at the Wharton School of Business for the last 12 years, delivering a class on strategy and strategic thinking at the Securities Industry Institute, and also led well over 100 strategic planning retreats, so this is a subject I’ve given a great deal of thought and study to. Having said that, here are some of my key ideas around strategy, strategic thinking, and strategic planning.
I can boil my entire Wharton class down to one key sentence:
Successful Strategy = Valued Differentiation x Effective Execution
This equation is deceptively simple and extremely powerful. Let me take a moment to explain it more fully.
In order to build a winning strategy, you must bring something to the marketplace that is…
- Unique and compelling
- That your target customer sees great value in and is willing to pay any reasonable price that you ask
- Is difficult or impossible for your competition to copy
- You can consistently deliver it superbly
Another key idea around being a great strategic thinker/strategic planner is understanding that unless the ideas and information you put into the strategic planning process are of value, then you can do the “process” extremely well and still come out with a flawed plan.
People often get wrapped up in the SWOT analysis, value chain analysis, branding and positioning strategies, customer analytics and all sorts of very important processes. However, if you don’t put good strategic thinking in at the beginning of the process, you can go through all these wonderful tools and still develop a plan that will run your company into the ground. So it’s critical that the people involved in strategic planning within your organization are investing the necessary time to build a solid foundation of business acumen, great ideas, innovations, new and creative ways of looking at things so that they bring superb information into the process. There’s an old computer term that summarizes this perfectly: GI = GO (garbage in = garbage out).
Several years ago, I was asked to deliver a workshop on leadership and strategy at Cornell, and in an effort to up my game and try to bring some new information to the table, I really went back and did a deep dive around the topic of strategic thinking. During this effort, I had an epiphany of sorts when I realized that one of the most important things a great strategic thinker/leader does is figuring out when to say “no.”
All strategy is the allocation of limited resources into the areas that create the most leverage for the organization.
What strategies will we not pursue, what products will we not develop, where are areas we will stop investing, what parts of the business are no longer working? These are really tough questions, and many business leaders are afraid to ask them. But great strategic thinkers/leaders understand that they are the ones that must have the courage to figure out what the company will no longer do, directions it will not go in, areas will not compete.
One of the biggest challenges with this is getting over the realization that sometimes you’ve got significant sunk costs into a product or project and see that it is no longer viable, but can’t bring yourself to walk away from the money you have already spent. This leads to many companies to throwing good money at bad initiatives, only digging a bigger hole when the answer was clearly to say “no” and have the courage to walk away.
Now let’s take a look at some of the tactical elements of effective strategic planning.
- Be exceedingly well prepared and do your homework – I have been in far too many strategic planning retreats where people are just “guessing” at critical information that will have a major impact on the success of the plan. Make sure that the data you use to build your strategic plan is recent, real and reliable.
- Have a very clear goal – Know exactly what outcome you want before you go into the strategic planning retreat. These things can get ugly fast, they can get off track quickly, so build a very explicit set of expectations about what outcomes you want and then follow that agenda with discipline.
- Don’t waste time – If you bring a bunch of talented people together and spend the day putting sticky notes all over the wall, what are you achieving? It is my strong recommendation that you do the SWOT analysis and a lot of other analysis BEFORE the planning retreat. I typically send out an electronic SWOT analysis survey a few weeks before any planning retreat, and then compile all the information into an “Executive Report.” Instead of spending several hours doing a big group SWOT analysis, I simply hand out the report, break people into small teams and ask each team to list what they feel are the five most important internal strengths, internal weaknesses, external opportunities and external threats from what they read in their reports. This allows us to gain consensus very quickly and get moving on to the more important part of the retreat, which is setting strategy.
- Follow your strategic objectives – To me, if you’re going to gather a group of your high-level people for a day or two to create an updated or new strategic plan, the main outcome of that meeting should be a handful of very focused and clear strategic objectives with some recommended metrics/measurements under each that would determine if you had successfully met the objective. I then take that list of key strategic objectives and recommended metrics and give it to the people that will be held accountable for actually implementing it and ask them to create detailed and specific tactical plans that they feel will allow them to reach the objectives and meet the metrics required. This way the people who are closest to the real work are the ones creating the tactical plan of how they will reach the goals that have been sent to them, rather than having some unreasonable plan handed down from on high.
- Make sure to execute – It is also my very strong belief that you should spend at least an equal amount of time working on a “strategic execution plan” as you do on creating the actual strategic plan. I cannot count the number of times I have been at a strategic planning retreat where we spend two or three days coming up with some bold, innovative, highly creative strategy that never gets put into action. Every year I get 100 and 120 senior executives in my class at Wharton and I ask “What percentage of companies that have a good plan, that know how to win in the marketplace, that have a truly great strategy … effectively execute that strategy?” The answer for the last 17 years has been: 10% to 15%. Think of the amazing amount of money left on the table, of all the wasted time and energy to put together a really good plan and only execute 10% of it. If you’re going to be great strategist you absolutely have to become superb at strategic execution.
- Consolidate your strategy – People ask me, “How do you make the strategy into a living document?” Here’s what I’ve done in all the companies that I have run. I try as hard as I can to get the entire strategy down to 10 pages or less (Many companies I work with now try to get it down to a single page). I then put that it into a handbook (we called it the Red Book at the Rockefeller foundation I ran because we bound it with a red cover) and I would tell everyone to bring the Red Book to any meeting where we were going to make strategic decisions. I would also tell them that if they came up against a decision and they weren’t quite sure what to do, open the Red Book and take a look in there, and if it matched the strategy it was probably a great idea; if it did not, it was probably a good idea to get some feedback and input before they went forward.
- Make your team accountable – Another big factor in being able to effectively execute strategy is to create a strong culture of accountability for people consistently deliver the required business results. It’s also important to note that there is no such thing as “group accountability,” there is only individual accountability which then contributes to a high level of accountability across the entire organization.
This is not everything I know about strategic thinking and strategic planning, but I believe if you keep these key things in mind you will alleviate a lot of pain, stress, and wasted time and effort. I hope you found these ideas helpful; as always, if you have any questions at all, please do not hesitate to send me a note. I’m here to assist you in any way I’m able. Good luck – John