How much would you pay to get a treasure map showing the exact location where one million dollars is buried?
There’s a big “X” on the map where the exact location of the
treasure is—guaranteed! Sounds like that map would be worth a lot of money,
doesn’t it?
Oh, there’s one more bit of detail about the map I should
tell you about. The only detail on the
map is that “X” for the treasure. The
rest of the sheet of paper is completely blank.
Without any other details or reference points on the map, it
is impossible to know how to reach that “X”.
Now how much do you think that map is worth? Is it even worth anything at all?
THE ANALOGY
A key part of strategic planning is determining a desirable future position—a place where the company can win and succeed at a high level. That desirable future state is a lot like a hidden treasure. It is desirable and valuable once you get to it and make it a reality.
The problem is that just knowing what you want that desirable
future position to be is not enough. You
have to achieve it in order to gain its value.
In the story, we know of a treasure, but the map does not
provide any detail on how to get to it.
That makes the map worthless. In
the same way, having a strategic goal, but no specifics on how to reach it, is
worthless.
Strategic planning needs to be more than just writing down
an idealized vision on a piece of paper.
Like that X on a map, you need to flesh out the plan by showing a path
on how to get to the X. Discovering and
managing the path is just as important a part of strategic planning as setting
the goal (if not more so). That is what
adds value to the goal, because it creates a way to make the goal a reality.
THE PRINCIPLE
The principle here
is that strategic planning does not end when the goals are set and the pro
formas are saved in an Excel spreadsheet.
In many ways, that is just the beginning of the journey. You still have all the work of taking and
completing the journey.
It is like planning
a vacation. You may decide to vacation
in Paris. But just choosing the location
is not enough. You need to pick a date,
arrange to get time off from work, determine how you are going to get to Paris,
and how you are going to pay for it.
Otherwise the idea of vacationing in Paris is just that—only an
idea.
Just holding a
business meeting to announce a strategic goal is like just announcing you are
going to Paris. There is absolutely no
assurance that a large and diverse organization will automatically reach that
goal. There are too many forces at work
to get in the way.
In particular,
the journey typically requires parts of the organization to abandon the
familiar and work together in coordinated ways which they are not used to. That will not happen by accident or natural
consequence. It has to be proactively
managed. It has to be planned.
For the rest of
this blog, we will briefly look at some of the areas to consider when building
that path.
1. Commitment
Getting people to
change and work in new ways is difficult enough when there is high desire to
get it done. It is virtually impossible
if significant factions in the organization are resistant to the change. Therefore a key part of the planning path
needs to be concerned about finding ways to get people fully committed to the
plan.
Don’t just assume
people will drop everything to bring the plan to life. The change may hurt their power base or
career plans. The plan may interfere
with maximizing a bonus. The plan might
require working with people they don’t like.
Or they may just think the ideas behind the plan are silly.
They may not be
very vocal in their opposition. Instead
they may just quietly and subtly sabotage the efforts during implementation.
Therefore, part
of the strategic plan needs to find ways to gain commitment and deal with
people who resist. A little planning
around this up front can eliminate a lot of grief later on.
2. Competency
Once you have
everyone emotionally committed to the task, one needs to determine if they have
all the skill-sets and tools necessary to succeed. After all, even the most committed
individuals will fail to achieve the goal if they lack the competencies needed
to get there.
Technologies and
processes can quickly become obsolete.
Being the best at an obsolete skill does not guarantee that you will
automatically succeed in the transformed environment.
Is training a
part of your strategic plan? Is
acquiring new people with new skills embedded in your plan? Does the plan have a methodology for dealing
with people falling behind on competencies?
Do you have the tools in place to apply those competencies in the best
way possible?
An even more
basic question: Do you even know which competencies
are critical to success with the plan?
Do you have an internal assessment of where you stand today on those
competencies? Do you know where to get
what is missing in your assessment (acquisitions, joint ventures, key hires,
etc.)?
3. Capacity
Good intentions
with smart people can still fail if you have not built an infrastructure
capable of supporting those efforts.
There’s an old saying that an Army is only as strong as its supply
chain. If you cannot get sufficient food
and ammunition to the troops, they cannot succeed.
Your
infrastructure must have sufficient capacity to support your business to the
magnitude of its vision. For example, if
your vision includes a major push into selling to China but you have only one-tenth
of the selling capacity in China to meet those goals, then those goals will not
be met. You need to add more selling capacity.
Capacity can be
critical in many areas, such as manufacturing capacity, supply chain capacity,
sources of critical supply elements, and information technology. If you cannot find a way to achieve the necessary
capacity, then the strategy is severely flawed.
I remember
hearing stories of how capacity issues creates major changes at McDonalds. For example, they had a great strategy for
Shrimp McCocktails, but they determined that there were not enough shrimp
available on the planet to supply projected demand, so the plan was
scrapped. When McDonald’s enters new
regions, it often has to plan many years in advance to ensure there are enough of
the proper cows and potatoes in the area to support the expansion. Capacity has to be built before that
expansion can occur.
4. Connections
Usually a plan’s
success depends on the actions of others outside your direct control. This can include suppliers, distributors,
governments and customers, among others.
You need to find a way to make sure they have the proper commitment,
competencies and capacities to achieve your plan as well.
Think about
health care. For a plan to work, you
often need to get the cooperation of government to approve your approach,
doctors to prescribe your approach, insurers (or governments) to pay for the
approach, and patients to accept the approach.
Lose cooperation in any area and the strategy fails.
In a competitive
world, it is often necessary to create stronger connections within your network
of partners than the connections in competing networks. You need to prevent defections.
SUMMARY
A plan does not magically come into being just because the
leaders want it to. To ensure that a
strategic vision is more than just a wild dream, you need to proactively determine
and control all the steps necessary to get there. Otherwise the forces of inertia and
self-interest will keep the vision from becoming a reality. Areas to consider in this plan include
commitment, competency, capacity and connections. Without these considerations, all you have is
a treasure marked with an X on an otherwise blank piece of paper—a goal without
a means to attain it.FINAL THOUGHTS
One of the biggest criticisms of strategic planning is that all those fancy plans never become reality. Maybe if we spent more time proactively trying to manage the path, we’d have a lot more success in achieving the goal. That will quiet the critics and increase our value.
Thanks for another edition in your blog. Awesome.
ReplyDeletemy in my treasure. I invite you in
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