A good business strategy:
1. Confirms what business a company serves;
2. Determines where a company can best deliver a differentiated benefit to a meaningful target market;
3. Decides what must be done to achieve/maintain success; and
4. Defines next steps, accountability, and key tracking metrics.
Tell me something I don’t know, you might be saying.
However, think of the places you have worked and maybe run. Has considerable time been put into annual strategy discussion/review and its written result?
Was there a thoughtful, written annual business plan presenting the year’s anticipated steps and goals, perceived challenges, and timing – to go along with the budget?
In most small- and medium-sized businesses the answer to these questions is a resounding no. Yet, it is amazing how many sacred cows can disappear when this discipline is enforced.
Legacy businesses suddenly may not make the grade. Pet projects receive the scrutiny they deserve. Goal setting gets easier, and BS gets more difficult. Disruptive personalities and unproductive team members become unmasked.
In short, vexing issues and foggy direction can receive the sunlight and transparency they require to make informed decisions.
Many companies take strategic planning for granted, instead being reactive and following sales wherever they may lead. This can be defeating, as income that appears easy often distracts from pursuit of stronger opportunities, premium service, and powerful messaging.
Alternately, strategic focus builds market understanding, and leads to increased credibility and better execution. Good written business strategies and written annual business plans keep companies on track.
Companies that make the effort to look inward have a big advantage. Formally contemplating product strengths, weaknesses, opportunities, and threats is essential to understanding a company’s competitive position, and a first step toward making responsive changes.
Strategic review should also include surveying key members of the team, understanding current revenues/expenses of each offering, analyzing the revenue potential of different paths, and reviewing the market: customers, prospects, and competition.
You may ask why I emphasize written strategies and business plans. The answer is important. Writing forces clear thinking, and an ability to easily review the perceived situation, issues, and proposed next steps, inviting more critical thinking and further development.
In addition, the less space you allow yourself for writing these plans, the sharper your thinking can become.
Procter & Gamble is well known for its enforcement of one-page memos (financial appendices allowable!). When I worked there, huge brand businesses were run by this rule, even for annual business plans and major initiatives.
But don’t think that made it easier. It pushed brand managers to think hard about every word they used and every concept they were recommending, leading to plans that were well conceived and easily understood/challenged. If it could not hold up in writing, it generally was not an idea worth presenting.
It takes some practice to be so concise, and it was not unusual for new associates (including Harvard Business School grads) to need 150 or more drafts for their first one-page memo before their recommendations were approved.
As you draft your plans, see if you can initially keep them to 2-3 pages, and continue to review, develop, and re-draft until you are really happy with them.
The other huge benefit of drafting strategic and annual business plans is the guide they offer for answering key management questions as they come up:
- What is the best use of my time right now?; and
- How should I judge a new opportunity/challenge?
Using written plans as a management template can provide clarity and remove emotion in the heat of the battle, making it easier to make good decisions and say “No!” when tempted by an off-strategy opportunity.
In conclusion, written strategic and annual business plans are an invaluable tool for small- and medium-sized businesses. Take the time annually to write/review your strategic plan, write an annual business plan, and update both more often if circumstances dictate.
Done correctly, strategic and annual business planning is likely to be some of the most profitable time you will spend all year. Plan to be successful!
