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This post is about strategic planning, and a preamble to a series on the subject. If leaders make the mistakes commonly made in planning, they waste the lives and fortunes of their stakeholders. This is an exploration of these pitfalls, and a look at a quantified strategic process that can change all that. The result: planning that has the potential to help organizations to perform their best, to maximize potential revenue, profit, market share, as well as lead to great satisfaction for investors, managers, employees and customers.
Before examining a best practices framework for strategic planning, let’s look at some common mistakes. There is a right way and a wrong way to go about strategic planning. Or more accurately, there some right ways and many wrong ways, which is troubling since most professionals tasked with planning (or tasked with executing without a plan!) will likely get it wrong without formal training or a methodology.
So let’s begin with wisdom from Peter Drucker: “Business strategies are a firm’s theory about how to compete successfully”
This may sound pretty straightforward. However, how many companies or corporate divisions are focused on a goal such as making more money? Of course making money is critical to profit, competitive advantage, business success, return on value, etc. But as a strategy, it leaves a business vulnerable to competitive threats and market demand blind spots because it doesn’t focus on how customers choose to buy. In other words, a strategy of “making more money” is not focused on the marketplace.
We need rules.
Ask 10 people what strategy is, and you’ll get as many answers. Strategic planning is not intuitive. Unless a set of rules can be established, understood and agreed upon, it is very difficult to get it right intuitively. Strategic planning becomes the domain of the few with the most forceful personalities, rather than of collaborative teams and rigorous process.
By following a clear set of quantitative rules and marketplace data, very accurate strategic plans can be developed. This is not to say that there is one and only one right way for a business to go to market. And of course a good strategic plan does not guarantee successful execution. But a strategic plan that satisfies critical structural requirements and disciplines is a superior platform for success.
To clarify Drucker, a firm’s theory of how to compete successfully is not about improving on one’s past. Successful competition comes from understanding need in the market, developing the ability to provide significant value, and helping customers to distinguish from among available (competing) options.
The pitfalls of the usual ways of developing strategy
“Offerings that are positioned as incremental modifications to the leader, using “er’s” and “est’s” are unfounded and unsupportable.” —strategist, Jeff White
So often, strategic planning begins with a discussion of aspiration: “What do we want to be great at doing?” This deductive process begins with a review of: “What are we good at now, what are we passionate about, and how can we get a lot of attention doing it?” The problem is that without a system, there is no test for the answers to these questions. A niche player may choose a strategy such as becoming “innovation-driven,” while ignoring the market leader’s much larger R&D capability. Or a market leader might get caught up in rebuffing challenges in the marketplace from number two or niche players, which distracts from their authority as the leaders.
Worst of all, companies often come up with strategic plans to add incremental promises to existing discussions: cheaper, better, faster, etc. This leaves the customer confused and uninspired, with no way to substantiate the difference or to evaluate the truth of these claims.
The risk of avoiding competition
Some business managers avoid framing the competition as context for their strategic plan and brand identity. There can be many reasons: they believe they compete against themselves; they feel competition is taboo; or they measure against their own past performance.
These companies want to play their own game, focused on great offerings and on making money. The risk: their customers are comparing them with the competition. If the company does not do the work of clarifying the differences, they are leaving it to the customer to distinguish. In such cases, customers often become confused about their value, and make no choice at all…or they choose the safest option: the leader. Such was the case in the cellular telephone marketplace in the late ‘90’s, where the offers from Verizon, Sprint and others became so complicated customers simply ended up reverting to the leader, AT&T.
An introduction
The above concepts are an introduction to The 12 North Strategic Planning Framework, which has been developed by strategist Jeff White, in the context of over 20 years of consulting and strategic planning for midmarket and fortune 500 businesses. In addition, I bring first-hand insights and examples from my own work as an agency principal providing brand marketing services for 18 years in a variety of industries.
In subsequent posts, I will introduce five dimensions of The 12 North Strategic Planning Framework:
- Dimension 1—Three types of strategy: corporate, business and functional strategies
- Dimension 2—The goal of competing and successful competition
- Dimension 3—The phases of market maturity and relative competitive positions
- Dimension 4—Category structure and evolution
- Dimension 5—Brand identity and category competition
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Until then, consider the bottom line of planning: committing to the wrong strategy wastes time, resources and opportunity. Disciplined use of the 12 North Planning Framework supports the development of accurate business and marketing strategies.
