Friday, May 18, 2012

Strategic Planning Analogy #452: “X” marks the Spot?

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?

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 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.

 Does your plan calculate the necessary capacity in key areas?  Does it have a plan to achieve the necessary capacity?  Is the timing of the steps in the plan coordinated so that capacity comes on-line at the proper time?

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.

 How strong is your network?  Are the strengths of your network connections specifically addressed within your plan?  Do you have a plan to make them capable of supporting your plan?  Do you need to add or change partners?  Do you need to acquire them?

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.

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.