Strategic Planning

One company I worked with on strategic planning was so proud of the previous year's plan, it was bound, had a fancy cover and was a document they were eager to show everyone.

Once I started breaking it down, I soon realized how this fancy document was essentially hollow and with even further exploration found barely any of the goals and objectives had even been attempted. The executive team and board of directors were much more focused on creating a document than in creating a tool. We had plenty of work to do to really get a strategic focus that went beyond the creation of a fancy notebook.

A strategic plan as a tool is focused on taking a realistic vision and mapping out the steps to accomplishing that vision. Those steps should have a specific intent, an action or tactical plan complete with due dates, accountabilities, and a person (a champion) in charge to drive this plan toward completion. Each area should also have a form of measurement to ensure everything is on target, is progressing well and most importantly -- to identify when success is happening!

Simplified strategic planning is less about a fancy document, or a convoluted plan only someone with a doctorate in finance could understand. It's more about creating a simple, functional tool that everyone can understand, support, and dive into to make your vision a successful reality.

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Are You Proactive or Reactive?

One executive I tried to work with had pretty much given up on his organization. How did I know he gave up? When something negative would happen such as bad quarterly financials or a new competitor came to town, he would always have the same response: "Whatcha gonna do?"

He went on to say he only needed to make a few more years to retirement, and besides, the world is just a different place than it once was. Then he would shake his head, tell me he had no need for my services because he wasn't sure he could afford them, and even if he could, it wouldn’t make any difference.

He was right about one thing: the world is a different place than it once was, and he had been CEO of that company for over 40 years. Times have sure changed.

Because of so much going on it's easy to fall into reactive mode or heaven forbid, "victim" mode as this gentleman had allowed himself to do. Waiting to see how things shake out and then reacting to that is waiting too late. Opportunity can be lost. Also, since you waited for everyone else to start going the same way, you are now just an option in a commodity market. Most industries find their environment has changed, and those getting ahead are those taking a proactive stance on planning for the future with a specific vision in mind. When you are proactive in your vision and plan, it rallies people behind your direction, it gets people excited to buy-in and you become more in control of your vision.

Not to mention, employees respond better to an executive who takes a proactive stance instead of waiting for the opportunity, then makes a reaction. Would you rather be in control and design your results or wait and hope for the best? You are in charge -- you call the play.

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Don't Just Define Your Market: Dominate It!

One of the areas many executives misunderstand is market segmentation. You don’t just want to be a player in the market you want to dominate a segment of the market.

Important point: You don’t want to satisfy every customer and you don't want every member of the general public as a customer.

I'll bet you read that at least twice because you couldn't believe your eyes. You can't be all things to all people successfully. I've seen companies offer multitudes of different products and services, no doubt in an effort to try and satisfy every need of every possible customer. This is a wonderful idea in giving great customer service but it begs the question: How can you be great at all of those things? The real answer is you can't. It's best to decide which products and services you can excel at and hit the market hard in those areas.

Which is better, to be an adequate option on a wide range of products thus making you a commodity, or to be the best at a select number of options where everyone sees you as the best at those things?

If your customers shop for what you offer as a commodity, then they have little or no loyalty and will shop everyone else as well, which means you are only seen as an option.

When you dominate a market segment through proper positioning as the best in those products, people will seek you out as the best in this area. Loyalty is high when customers seek you out for specific services. This is how you get to be the only option for those people.

Good market segments are usually made up of people who think about and buy your products and services the same way.

Ask yourself the following questions:

What are they buying?
Who is buying?
Why are they buying?
How do they buy?
How will they use what they buy?

How you answer these questions will point you in the direction of market segments you may want to hone in on so you can be the dominant player in the market.

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3 Important Questions to Answer in Preplanning

In many of my training classes with financial institutions I ask, "How many products and services do you offer?" Typically even the executives don't even know exactly. A few months later when I come back for another training installment they are quick to tell me how many they offer. I've heard from 30 to roughly 80 products and services. My next question is this: "If you offer 50 products and services, how will you ever have a good sales culture expecting your employees to know how to talk about all that you offer?"

Trying to be all things to all people usually ends up making you nothing for nobody. A strategic plan needs to be focused, not arbitrary. Ask three specific questions to guide your planning process.

1. What are you going to sell?

Just because you can offer a product doesn’t mean you should sell the product. It's better to effectively sell fewer products than to offer many products and services your staff is not equipped to properly inform prospects about their benefits and features.

Knowing what you can sell effectively, that meets the needs of your market, is the key to knowing how to structure your approach to maximizing those offerings. Your preplanning homework should involve product analysis to determine what are your most frequently used products, what are your best margin or moneymaking products, and what are the products you want to be known for as the best in the market.

2. Who are your target customers?

It's easy to fall into the trap of trying to serve everyone. The first determination you must make is whether you want to be a commodity or a specialty organization, best known for a specific couple of products that are the best in the marketplace.

No one has an unlimited budget for marketing and even if you did would people believe you are good at doing everything? McDonald's has a huge marketing budget and have been in food service for decades but that doesn’t mean I'm ready to order a NY Strip Steak at their drive thru if they offer it. Why? Because great steaks isn’t what they are known for in the marketplace, no matter how much they market it.

Target marketing provides you with a narrow niche to maximize your investment of your marketing dollars and products you offer. It also makes research easier to determine what their buying habits are and what the best way to reach them is.

3. How can you beat the competition?

This is the big question, isn't it?

It's time to explore ways to out-serve the competition in specific products and services, with locations or with marketing savvy and uniqueness.

To learn how to beat the competition you have to study the competition and the marketplace. Research into leverages, market gaps, under-performing products and find the weakness that presents the best opportunity to beat your competition.

These three basic questions will provide your executive team with clarity of the vision you have for the organization and the strategic plan you expect to implement with resounding success. The upfront work on these questions will make the entire following process simpler and more focused.

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3 Critical Components of a Strategic Plan

For a while strategic planning sessions spent an inordinate amount of time on mission statements, vision statements and core values descriptions. It became an exercise in semantics and took the focus off the three most important areas of a strategic plan: operations, finance, and the market.

1. Operations -- how you take care of the company, your employees, and your customer experience -- is an area that must get total attention. Without solid operations you can lose good employees, inefficiently operate internal processes, and lose customers because your technology is old, your prices and fees are too high or you just aren’t fun to do business with anymore. What are the cutting edge ideas in this area you need to be incorporating? How are you planning on retaining your best talent? Who is trying to "steal" your customers? Those are just some of the questions to be researched and addressed under operations.

2. Finance is also a critical area for in-depth planning to ensure safe and sound business practices, to comply with federal or state regulations, and to have sound financial ledgers, which allows better services to customers. better benefits to employees, and better positioning for future growth opportunities. What would it take to have every customer consider you their supplier for life? Could you handle it if it happened?

3. The market is also a critical area for strategic planning for the simplest of reasons: you do not operate in a vacuum. A shift in the economy, a shift that impacts your particular market segment, and a new competitor in town can all have an impact on shaping your future strategic vision. The market is where you touch your customers through advertising, with a sales culture, and with the products and services you offer. The right mix can have you flush with sales growth; the wrong mix can have you in a dire situation.

The planning and decisions in these three areas should be the foundation to making any organization's visions a reality.

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Boutique Branding

Boutique branding is appealing to the customers who are going to give you the best returns on services offered. The big question is how do you attract those customers? Create the club within the club because they love to be part of the status by being an insider.

Airlines have designations such as Platinum member, or Diamond status for their most frequent users. Specialty retailers have private shows for their best customers. Rental car services have preferred services for their insiders. Nothing creates status for the elite members like when you belong to the club within the club. This creates loyalty and attracts more people like them.

Brand your company for the type of customers you want to attract. If you are a restaurant that wants to attract young families, you have to appeal to their interests with reasonably-priced kids' menus, servers who cheerfully mop up and collect dropped toys, and an atmosphere that allows kids to make a little noise without driving the diners at the next table batty. Or for another example, a Pontiac is a piece of transportation. A Porsche is an experience of transportation. Both will get you from Point A to Point B. Which is a more profitable car to sell? How do the dealerships differ? How does the show room floor staff differ? Which vehicle owner feels more part of a special club? One sells to the masses and one sells to a boutique niche. One has status and one surely does not. What do your preferred customers drive? Are they getting the same level of attention at your place?

Setting a strategy to attract a special type of customer requires a focus, a niche approach and an atmosphere that has a "Wow" factor to it.

What "Wow" factors are you currently branded for? What services do you offer that would attract the elite customer who wants to be treated special? Strategically, companies need to embrace the proper branding to attract the customers they desire.

Measuring your success by the number of your customers and total sales is commodity thinking. No longer is a new customer something to rejoice over; in fact, some customers can actually cost more in staff time and energy than they contribute to the bottom line. It's more important to have better quality customers than to simply have lots of customers.

Long-term customer loyalty is no longer yours just because "I've always shopped here." Define the niche of the customer you want to serve, give them the feeling of being part of a special club, and hold onto them for generations.

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Lean into Your Strengths

What is your company really good at? I mean the one thing you really can slay the competition at?

I find that companies often look toward their weaknesses first in the planning process in order to make improvements and shore up areas they may not be doing effectively, and this is a mistaken approach. I’m not saying ignore weaknesses, but be careful if you find yourself making them your main focus for your planning process.

We should be spending our time focusing on what we do well, and work on making it even better. For example, I’ll talk with executives about customer service training and I hear the response, “Our service is great, we don’t need to worry about doing that type training anymore.” The Ritz Carlton also has great guest service; in fact, it is one of their defining strengths in the hospitality industry, which is why they spend an inordinate amount of training dollars to maintain that strength and look for ways to make it even better. They are leaning into their strength, not taking it for granted until it disappears and needs refreshing. That’s waiting for your strength to turn into a weakness, and that’s too late.

Let’s assume you have defined your company's greatest strength as customer service:

What standards of excellence do you hold every employee to when delivering customer service?
What are the measurements you use month to month to monitor your strength in this area?
Do you have employee turnover? If so, what is the training process every new employee receives to achieve those standards of excellence before being exposed to the customer?
When asking customers what they like best about doing business with you is the first response always your customer service?
What ways can it become even better in order to stay in front of competition trying to match your service level?
Are you the buzz of the industry as the standard for customer service?
Are you the buzz in your market?
If people within your market both customers and non-customers were asked who offers the best customer service in your industry in your area, would you be the name on everyone’s lips?

Southwest Airlines is routinely the standard in airline customer service, Ritz Carlton is the standard for guest service. These are names known throughout the industry for their strengths and they are constantly looking for ways to improve on their strength as you want to do with your strengths.

This is leaning into your strength. Taking what you do well and making it even better. Making your strength your defining factor in the minds of competitors and the customers and prospects you can serve. The planning process is the best time to make the steps and objectives to keep the main thing the main thing.

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How Do I Sell and Serve Remote Customers?

A question I’ve heard recently as we become a more decentralized, computer-driven society: Most of our customers are remote and don’t visit us at our locations. How do we service and sell to those customers?

The simple answer is "With the same approach you’ve always used in serving customers, just using different technology and tools." If bank customers are not getting the face to face time with tellers as they once did, then they must be connecting with the bank through drive through traffic, on the phone or online.

What are the demographics of your customer base? Do you find the more senior customers still walk in, the middle aged customers drive through and use the call centers, and the younger customers are all about online services? (Anybody order a pizza from Domino's online? You can actually track who is making it and when it goes in the oven and when it's out the door with the delivery driver. Beats the old days of waiting on hold until a harried part-time employee can take your order and you guesstimated when it would arrive.) Once you find the breakdown of these demographics, you can then approach them in the ways they are connecting with you.

Do the research. List the reasons why each group chooses their point of contact with you. Why do senior citizens prefer to do business in person? Who does the phone service appeal to? Once you understand their reasons for that method, then you know why it is appealing to them and how to use that to your advantage.

Blogging and YouTube will not be the best approach for some customers, yet others may find that their preferred method of getting information. Get to know your customers by the products they use and the way they access your products and services.

Bottom line, providing good product information to the customer, maintaining common courtesies, and speaking to the customer about the specifics they are interested in hasn’t changed. It’s only the method and where the information is best placed has changed.

To maximize your marketing efforts, strategically know the proper channels to reach a target audience with a specific initiative. This will guide you in the direction of better returns for your efforts.

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Sustainability

One of my clients wanted to do some brainstorming during a rebranding process. The process was designed to give them a fresh look, a fresh image and an opportunity to reemerge in the community as they pursued a new group of customers.

The process lasted pretty much the entire day and fresh ideas were popping all over. Toward the end of the day names were getting whittled down to fewer options, and it suddenly dawned on a couple of participants that a new name and image was going to be arrived at. Immediately, feet got shoved into the dirt and the resistance happened and the big shift in image and name became stalled. In fact the board finally voted on simply using the initials of the previous name for the “rebranding.”

To get significantly different results you have to do something significantly different.

When you find you are losing customers and market share and the competition is becoming a more preferred provider, some significant shifting has to occur. You can’t just dust off what is already in place and hope it produces different results. You have to make some shifts.

Sustainability is key. I find when companies are in difficult times, people run around in a panic trying anything they can to change results. As soon as those desired results become more visible the natural tendency is to slide back to the comfort of old habits. In other words, no sustainability to the changes, no real shifting has taken place, so any change in results are temporary.

Well thought-out management strategies are not reactionary, temporary or easy to slide back off of. They have measurements, accountability and sustainability. Strategies that have been designed to create proper changes will be better accepted by the staff, have better implementation and be treated as less of a fad where employees expect to slide away from after a few weeks.

In your planning process look for ways to create sustainable changes, not just knee-jerk reactions that only panic staff and have no lasting result.

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Be Honest With Yourself

Looking in the mirror and being honest is always a difficult thing. It's hard to admit weaknesses and I find people embellish their strengths.

This can be an obstacle to strategic planning. Effective planning requires honesty so you know where your strengths are and how strong they really are so you can set objectives to make them even stronger. In evaluating weaknesses it helps to have an outside perspective who can ask the tough questions. As one of my clients said, "Sometimes you have to ask someone outside of the family whether your baby is ugly or not." Weaknesses are naturally difficult to face, and in some cases even recognize depending on the management team dynamic.

It's easy to put the best spin on the situation and believe you are the best in customer service and product offerings. However, in the final analysis you are what you are, and if you are having a net loss in customer accounts, and your profits are decreasing, then something is obviously amiss.

Declare an amnesty day where your team can "confess" openly to their concerns and views on the strengths and weaknesses. It's always better to be solution-focused rather than blame-focused, and honesty in this process will get you to better solutions quicker.

It's better to be honest when preparing for your planning process, than to work hard on spin control when the competitors or regulators are knocking on your door.

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Competitive Strategies Define Direction

Take a look at last year's strategic planning document. What was the direction of your competitive strategies? Were you aiming for a niche market that although had low volume delivering high margins? Or were you trying to compete as a commodity to get high volumes even though the margins were low? Or did you take the time to research and develop ideas that created differentiation to your organization where you can have high volumes along with high margins? You achieve this by delivering premium products or services at premium prices.

All three of these strategies can make your company sound, but your actions must align with your competitive strategies and your competitive strategies must align with your approach to leading the organization.

Niche Market

To reach a niche market you have to segment your market and offer special features for a specific type of customer. In some cases customization is required along with a good bit of research to understand the needs and proper approaches for this market. Obviously, if you want to attract young white collar customers to use a particular product, then you must find ways to rise above the competition and reach that customer or prospect in the correct manner based on their buying habits.

If a blue collar customer is the niche you want to serve more, research the products that best fit their needs and still fit the proper margins for the credit union. Learn their buying habits and develop strategies to directly reach them. Needless to say, the different market segments used in this example are going to have different buying habits and have different product needs. The organization needs to strategize which niche they want to be the expert in and work to deliver for that niche.

The Commodity Strategy

Some organizations accept the fact they are not well positioned to serve a niche market and prefer to hold the course they have been on for decades by being another commodity in the marketplace. Although I don’t agree with using this as a long term approach to be competitive, it can be a stopgap approach. Let's say you want to make some shifts over the new couple of years to better position yourself but you don’t want to just sit without any strategies until you get a better definition of who you want to become, so you want to at least maximize your current situation.

A commodity strategy accepts you are one of several options for prospective customers, and you want to attract high volumes with lower margins. This is a strategy that can be profitable, provided you have an economy of scale. For example, the large banks in this country have hundreds if not thousands of branches across the country to serve their large numbers of customers. They have an aggressive approach to grow by acquisition as well as with service. Their profitability is based on their size! Their size allows them to offer slim margins because of the volume they can create. How does a credit union or smaller community bank compare? Most have an advantage in offering slightly better rates and lower fees but the commodity shopper is mostly looking for convenience followed by best rates. Wal-Mart has become expert in their ability to use their economy of scale to drive out smaller competitors and those competing in commodity-focused arenas could face the same fate.

Differentiation

By differentiating your organization from the rest of the pack, you are able to have the best of both worlds with high volume and high margins. How is this possible? When current and prospective customers must be part of your organization you have the ability to operate from a greater position of strength. Differentiation is all about uniqueness and brand recognition. Apple has been able to create this with the iPod and now the iPhone. Apple is creating must-have products where price is of much less concern to the buyer than the uniqueness of product and the brand of Apple. Obviously, Apple had to work hard to establish the brand with effective advertising and build the uniqueness in the mind of the potential customer where price was an afterthought.

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It's All About the Research

Think about your strategic planning brainstorming sessions you have with management team, maybe even including the board or other managers. The facilitator poses the question: "Where do you want to be in 5 years?" For the next hour everyone offers their gut feelings, the ideas get written on the flipcharts, and after a break the team comes back and as a group decides what the future should look like.

This is all by gut feel with no empirical data to support these conclusions which is why most companies are fearful of taking bold steps. They don't trust the process, and frankly, they shouldn't.

Let's say for example you wanted to invest $100,000 of your retirement funds and you decided to make this decision without any research or expert input. You just decided one day watching television you liked the ads for Burger King and you felt in your gut that with the new ads, their stock will rise and you would be making a good investment. How sound of a decision is that? How comfortable are you with that decision-making process when $100,000 of your own money is on the line?

Strategic planning maps out the process of how an organization can go from Point A to Point B. Simply a gut feel on a Saturday morning at a retreat center just isn’t enough information to be planning that navigation to the next point.

When using the Simplified Strategic Planning process everyone involved in the planning must do their share of research on the specifics they have been assigned before the actual planning steps happen. Good information gathering makes for better choices, and better choices make for a smoother ride through difficult transitions. Companies failing to properly research the necessary information are gambling with their future and their customers. Today is a completely different era than even only 7 years ago. Now is the time to focus like never before.

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The Next 15 Years Are Only 5 Years Away

It’s 1992. The internet is barely in the public eye, cell phones are still for the rich and famous, the youngest president since Kennedy is taking office, and the recession is about to give way to a booming era of commerce. Looking back 15 years, how much has your business changed?

What shifts have you seen in your marketplace, technological leaps, your customer expectations, your employees’ need for information? I think most of us would agree the years since 1992 have brought about a huge amount of change in how we do business. Many companies made the correct decisions and projections to still be able to be in business and some didn’t. Some companies are barely hanging on to their position they held against the competition fifteen years ago and some companies have risen to the top of their fields, commanding respect and getting increased market share and profits. How did those companies do it?

Three basic factors determined their success and those same factors will impact the success of companies over the next 15 years, which will happen in the next 5 years.

1. Accurate projections

The ability to project future trends of the marketplace, customers and employees is to have an upper hand on most competition. Typically, when working with companies unions on their strategic plans I ask executives to project fifteen years out what the industry will look like. what changes are required to be successful. And, those projections usually come true … in five years.

The key to effective market projections is to be tuned in. Some CEO’s focus their energies on the day to day, getting caught up in the problem-solving of the organization and lose the bigger view. Therefore thus projections are short-sighted and inaccurate because they are not focusing in the correct area of their role as lead executive.

What cutting-edge knowledge are you listening to, accessing, and learning through seminars that keep you in tuned with future trends? Executives need to be retooling their knowledge every bit as much as the front line supervisor does to work with the new generations of workers. Proper projections give you advanced notice (although not nearly as much as you think) to prepare and make the proper developments for the new trends once they arrive.

Making accurate projections, even if they happen in one third the time you think they will, give you the opportunity to be proactive and make advances on your competition.

2. Taking the risk

Once a CEO has confidence in his or her team’s ability to make good projections, action has to be taken in order to make those accurate projections to pay off. This is the gut check. I’ve heard many executives talk about their abilities to make things happen, yet when it comes to putting up the money to make it happen, their confidence heads south and they are filled with excuses for not taking action. Executives need to decide if they are playing to win or playing not to lose.

Assume your projections of an industry shift in fifteen years will dramatically affect your business. Knowing that it most likely will take only five years for this shift to happen, are you ready to take the risk today to be proactive and prepare for that shift? Is your board of directors supportive of this action? If not, do you care if your job is on the line if you are wrong?

The “corner office” is no place for the weak at heart. Confidence is required to take risks. Risks are required to be proactive. Being proactive is required to be at the top of your industry. Take the risk based on confidence your projections are accurate and reap the rewards while the excuse makers continue to play safe and fight fires of their own making just to survive.

3. The luck that comes with preparation

Every successful business has been blessed with a lightning strike of luck at some point along the way. There is no doubting the lucky seem to keep getting luckier. Without going into the whole law of attraction tangent (which I do believe in by the way) the reason luck comes to those who are lucky is because they expect it and they are ready for it. Preparation for the big windfall is critical in making the windfall a success. Some companies can actually grow too fast when hit with the lucky break to the point of bankruptcy because they weren’t ready for their good fortune. Some companies don’t get the luck because they never saw it coming and never say it pass them by.

The TV show Friends made superstars out of its six main cast members. Were they simply lucky? What about the actors who turned down the opportunity when those roles were offered to them? Simply unlucky or were they unwilling to take a risk for a new type of programming? Those that accepted the roles were prepared to grab at the opportunity. They projected it would be good, were willing to take the risk and were prepared when the opportunity was presented.

Success as an individual or as a companies requires these three elements to work in harmony to achieve the best you can become. They used to say it takes fifteen years to become an overnight success, at the pace of today’s world; it’s only five years away – if you are ready to make it happen.

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Why Do You Sell What You Sell?

When I ask this of my clients and their executives, I see a few blank stares, I get a moment of two of silence and then I hear generic justifications. I don’t want justifications, I am asking for you to look at your product and service line and one by one explain why these items are being offered to your customers.

This exercise should cause other questions to be raised. Such as:

When did we start offering this and why?

How does this fit with our future direction?

Is this a profitable product or actually a drain of resources?

How well do we sell this?

How well can our front line staff explain the features and benefits?

What percentage of our customers actually use this product or service?

Do we want more customers using this product?

If yes, how do we make that happen? If no, why are we still offering it?

Sometimes in the evolution of a companies products should be dropped and new ones added. I see many companies holding on to products because back in 1982 it was a hit and some of the board members or managers remember those days. That product may no longer apply to the markets you are currently going after.

There is no advantage to offering everything. Strategically, it is much better to offer fewer products and services you do extremely well, than to divide your efforts too thin across areas with minimal return.

One client doing this exercise realized of the 80 products and services they were offering only about 35 really were of benefit to enough customers that made it justifiable to keep. Streamlining your products and services not only help your focus, but makes it easier for your front-line employees to be better acquainted with what you are offering so they can more comfortably sell it to help those who need them.

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Define Your Strategic Competency

A strategic competency is rarely if ever a single thing. It is usually a mix of three elements:

Skills: A skill is any manual or mental activities that result from talent, training or practice.

Process: A process is any manual or mental systematic series of actions that are directed toward some end. Include any significant "know-how" resident in your credit union.

Knowledge: Knowledge includes any information, data, or understanding of facts, or principles resident in your company.

A strategic competency must be strategic in nature. For example, if you are the best at how to hold an employee birthday celebration, it doesn’t have much strategic value, because such celebrations are not going to directly improve your relationship to your customers or your competition.

A strategic competency is something that can be used over a long period of time, and it usually knowledge based. It is something that should elevate you above the industry norms and provide an advantage in the marketplace.

A strategic competency must pass four specific tests:

Is it a combination of skills, process and knowledge?
Does it differentiate the credit union from the competition?
Does it create strong value for the customer?
Is it difficult to copy?

If you don’t get a resounding "yes" to each of these questions, you should be skeptical that you have a strategic competency.

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Assumptions are a Necessary Part of the Planning Process

Assumptions are temporary estimates about some probable future event or development over which you have no particular control. When you make an investment in a stock you assume it is going to give you a positive return. Maybe you based that assumption on the historical track record of that stock. Maybe you based that assumption on a reliable tipster. Either way you are making an assumption about the future.

Some assumptions are as easy as assuming the sun will rise in the morning and others are as complex as predicting the economic outlook for the next ten years. If it is so difficult to make accurate assumptions, why even bother? Because assumptions are necessary for a good plan, and better assumptions make a better plan.

You have to make assumptions of future trends in order to prepare for those trends now. Because the marketplace changes so rapidly, some companies choose not to make any assumptions and maintain the status quo, each year refreshing the same game plan over and over without making any significant changes. This doesn’t solve their problems and leaves them exposed for a number of negative possibilities.

Assumptions built on experience, awareness and research are the guide for actions and strategic initiatives. For example, if access to capital is becoming quite restrictive, how will that impact your growth and expansion plans over the next 18 months? How should you shift your actions today to prepare for those assumptions becoming a reality?

Wishful thinking is different from assumptions. A CEO can be so excited about the new store he is building that he is convinced everyone in the area will stop shopping at their familiar stores and only shop at his beautiful new store. When confronted with the response by the competition who are vigorously working harder to retain their customers, only then does he realize he was thinking more along the lines of wishful thinking that a proper assumption of the situation.

Drill down into the details when making assumptions. Proper assumptions are based on solid facts. The deeper you get into the details, your instinct and historical information will form a clearer assumption of future activities.

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Who are the Competition and How Do They Impact Us?

You are not alone. You have competition all around you. Some you readily recognize and some you may have forgotten about, or not even known about. A common mistake is to try and copy the competition and offer the same products and services they do -- just cheaper. You want customers and prospective customers to find a reason other than lower prices for choosing you.

You want to understand competitive strengths and weaknesses, and a solid knowledge of other factors affecting the business environment at a national, state and local level. Figuring out the competition is knowing where to avoid stepping toe to toe in their strengths and exploiting their weaknesses. It’s all in how you want to position your company. In some cases you will attract customers because they prefer you and where you’ve positioned yourself; on the other hand, you may also drive some customers away. Both results are ultimately good for everyone involved.

Right now the market is becoming even more volatile than ever before. The credit market is shifting, causing all kinds of ripples for executives to be in tuned to. As this situation continues to shake out and foreclosures and bankruptcies level off, everyone is going to be looking for the opportunities that have opened up in this shifting landscape. In some cases this will level the playing field and provide a short-term window of opportunity. Be ready! The more you understand your competition and the climate of the financial world, the less energy you will have to expend and the greater the opportunity to grow market share will be.

Information is power and that has never been more true than in the strategic planning process. You need good reliable information in order to win the battle for market share.

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What is Your Strategic Focus?

The key word here is focus. Ever work with an organization that seemed scattered and each day felt like you were heading a new direction? This is not uncommon in the knee-jerk reaction times we see today in business. Sometimes we forget, it is possible to very good at one thing if you stay focused on it.

A friend of mine was a phys. Ed. teacher in an elementary school. He put the entire class on one side of a tug of war rope, and he stood on the other side. He thought he’d have fun and play with the kids pulling against him before finally winning with a good pull. Much to his surprise the kids were very focused on winning and with each of them pulling with focus he couldn’t beat them! The same goes for companies; when we focus and have a team that is focused we can beat a much bigger opponent.

We win by gathering talent, focus and intensity to an issue critical to customers, and do it better than anyone else in the market. This is how to become a specialist in certain areas and escape from the commodity mentality.

Two important questions to be answered when establishing your focus will guide your management team on where the company needs to be heading and focusing.

What do you sell? Who are your targeted customers or prospective customers?

By taking the time to delve deeply into these questions you will find the focus you need to be taking as you plan out your strategies.

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Be Sure Your Strategies are Supported by Commitments

A company wants to take on an aggressive approach on target marketing toward the teachers in their area (a large market segment.) The marketing people work up a campaign, begin verbally designing ads for print and other media, and then they find the board has trimmed their marketing budget to unusable levels for any type of meaningful campaign.

The year hasn't even started and spirits are dampened and an opportunity is lost. Sound familiar? Strategies are not just good ideas and wishful thinking. They are components of a well-planning and established vision that needs the proper financial support and commitment.

Another commitment needed by all portions of a strategic plan is the commitment to make it happen. I've worked with companies that have a great planning document and it rarely gets looked at again until the next planning retreat approaches. This is a bad idea and a waste of time. The plan must have the commitment of those responsible for getting things done and executives actually taking on the action plans as a meaningful part of their daily work program.

College football teams like to start with a first game patsy, to get off on the right foot with a convincing win, build some confidence and gather momentum in necessary commitments for when the tough opponents come to play.

The same approach can be used when building commitments to your planning process. Start with the easy victories first. Demonstrate progress by accomplishing action plans and showing quick results. This gathers momentum for the staff to support and make commitments to the plan, the board seeing success, and progress becomes easier as long as they know good progress (winning) is happening.

What are the easy victories? Small projects and visible projects are the best early wins. One nonprofit client of mine wanted a new marquee that was programmable and had lots of active motion as an attention getter. The budget was approved, and it was quickly purchased and installed. As a "test" of the programming, the first couple of days ran a scroll of a thank you to the board for their foresight to approve the project. The marquee was a piece of a larger marketing initiative to be more visible. Did thanking the board the first day help? It didn't hurt at all!

Commitments from the board and executive team for the proper funding and the proper work output is critical to giving your strategic plan a fighting chance for victory.

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Action Plans: The Work of Successful Plans

The strategic planning document has been written, the vision established and the mission statement agreed upon; now it's time for the work to happen. It's easy to understand a vision, objectives and goals, but the real meaning of a strategic plan, the part that determines whether the plan is a success or not, is how it is implemented. And, this is where most plans fall apart.

Research shows that American businesses typically meet one-third of their objectives in a strategic plan. Adding in action plans to the strategic planning process increases that accomplishment rate to about 60%; however, if you closely follow the strategic planning process being outlined here and utilize the implementation process being layout out, you should achieve 80% to 90% of your quality, service, financial and strategic objectives.

The action plan should be no longer than two pages in length with fewer than 30 action steps. The heading of the plan should have the full description of the objective, date of last revision and list all parties involved in the action plan. This is mapping out the road to success for this objective. If you have 6 objectives you will have 6 action plans. The worksheet of the action plan should be divided into columns like a spread sheet. Each column should be clearly labeled. Such as, Action number, Priority, Action step description, Who is involved, Estimated time to complete this step, Money, Starting date, and Completion date.

Be sure action steps don't turn into ongoing activities. A step has a beginning and an end and moves the objective forward. Be concise. Instead of saying "monitoring on-hold wait time," write "establish on-hold wait time monitoring system."

Everyone has a full plate of work and adding a full set of action plans and a list of action steps can appear to be daunting. They frequently get shuffled down the priority list. Using an action plan system is the best way to incorporate this body of work seamlessly into daily activities. Thus, making it more likely items will stay on course and actually get done properly and on time.

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Beware of Bright Shiny Objects

On a recent board retreat held at a scenic resort we found it difficult to stay on task as it was easy for certain board members to get distracted. We would be discussing a topic of importance and in the middle of a comment a board customer looking outside would suddenly say “Look, a fish just jumped out of the water!” And, this was the person who actually had the floor before he was distracted.

We joked that he is easily distracted by bright shiny objects. So are managers.

Executives sometimes forget about the company’s strategic competencies and see a service or ad campaign or unique approach a competitor is using in the marketplace and they want to do it as well.

Bright shiny objects (BSO) are those things that distract you from your strategic focus, that take your drive in a different direction from the vision, that consume time that could be better used elsewhere.

The BSO effect happens even more so that we are all becoming somewhat afflicted with Attention Deficit Disorder (ADD). A common practice in companies with BSO syndrome is to constantly be adding products, finding the new and unique marketing campaigns regardless of the branding, and anytime a competitor adds a new service then we have to add that same new service. This diffuses efforts and focus and makes the company get away from whatever it is they do best in the marketplace.

I’m not saying never shift your product mix; I’m saying be sure it fits what you do best before chasing a BSO.

Strategic planning retreats are rife with BSOs. Most retreats are at nice places, with ancillary activities planned for the good time factor we feel we owe our volunteers. The problem with this set up is that most executives and boards are being distracted by the beach, the golf course, the fishing charter, shopping trips and what is happening out the window rather than focusing on the focus of strategic planning.

On one retreat a body builder competition was in town and guys in skimpy Speedo-type clothes we doing a pose down for pictures outside our windows. The meeting came to an abrupt halt, we lost momentum, and the BSO factor was high!

In your planning process be careful not to be distracted by what all services and products you can offer just because either they sound cool or the competition is offering them. Stay focused.

On your board planning retreats work to minimize the BSO factor so people are truly engaged in the discussion and know how important their focused energy is to making the company develop along its strategic competency.

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5 Choices for a Market Segment

Market segments fall into categories such as cash cow, dog, star, etc. Once you’ve identified where your market falls in these categories, you have five different options in taking action. Not every market you are currently involved in should have a strategy to grow and expand; in fact, some markets after close analysis might be best to completely leave. Select one market segment you currently serve and decide which of the following approaches you want to take.

1. Expand

Analysis of the selected market segments indicates this market has great net income growth potential, or could be an under served area with minimal competition. When you decide to expand you want to take an aggressive approach to market share growth and penetration. Expansion in a market means you want to grow your share of the market more so than the growth of the market itself. For example, your market share for this exercise is college students for the local university. You have determined that there is great opportunity to increase your student market share even though the student enrollment at the university is expected to be stable. The market itself is not growing significantly, but your presence and number of customers served can expand significantly.

2. Maintain

Maintaining market share does not mean ignore it and hope everything stays the same. In fact, market share maintenance might take a vigorous defense strategy if a new competitor has entered the market, if the market segment is shrinking, or if due to lack of effort in previous years your name in the market place isn’t top in the minds of the customers. The goal for this approach is to expect to hold steady the current position in the market and at least grow at the same pace as the market is growing.

3. Contract

Companies at times offer products and services with minimal benefits to the customer base or the profit margin. To contract would be to shrink product offerings yet maintaining more profitable products and services while increasing new income from the market. Selectively eliminating those products and serves is a scaling back yet still growing in net income.

4. Milk

To milk a market segment is to say you have reached your maximum growth potential, have a solid return on your investment in serving the market and you simply want to have minimal investment of resources while continuing to maximize your returns. Some markets that have been served for a long time and are going through the maturing process are best served by milking.

5. Withdraw

Withdrawing from a market is exactly what you think -- pulling away completely over a period of time. If you are involved in a market that no longer fits your company's long-term strategy, has no growth potential, or is shrinking fast then the best strategy is to look in a different area and begin the process of getting out. Companies are not required to go down with the ship, so to speak, and it is the wise leader who knows when its time to make a choice to withdraw before any significant damage is done to the organization.

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Bite Off Only What You Can Chew

In recent strategic planning sessions I've witnessed overly exuberant staffs and boards review a list of goals and objectives they had on prior strategic planning documents. Be careful not to try to overload your organization with too many goals and objectives, because too many of them will be given a less than desirable effort simply in order to check it off the list.

Depending on the size of the company, what has recently transpired, or will be forthcoming should be taken into account on strategic planning focus. One client had a terrible situation of executive theft which lead to extensive firings and court cases not to mention, the loss of revenue and write-offs for "friend" loans. Another client is pondering a merger and being acquired. These are significant strategic items that need complete focus and a check of where are we now and where will we be in 12 months.

I fully endorse a multi-year strategic plan and focus unless so much is dramatically going to change within the next few months it's hard to imagine have a healthy plan with many goals and objectives until the big issue becomes resolved.

If your company does not have those major distractions, if everything is in pretty good order, then this is the time for multi-year focus and aggressive goals and objectives. However, still keep in mind too many projects will not get done properly in a timely manner because the available resources of time and talent of your executives can only be spread so far.

If you are a company that isn’t as comfortable in your current situation, you still have a great need for a focused plan to build on the strengths you have in the marketplace. The focus on only a few items to dramatically improve will serve your customers better and your team will be able to generate greater success.

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From the Branch Office: It's Quiz Time

How well does your staff know your products and services? A client has been reviewing a series of products with his staff so they can better cross-sell them. I put them to the test. I put the employees in small groups and asked them to list the five products they had reviewed and what the main features and benefits of each were.

The groups struggled a bit and they decided to go get the manual. I stopped them right there. If you are going to serve your customers at your strategic best, the information needs to be well known and not recited from a manual.

It takes too much time, seems too insincere, and it becomes selling for the sake of the sale and not for the sake of helping out the customer with a need.

When all employees understand the most important products that fit the strategic focus of the company and fully understand the benefits and features of those products, then the company has a defined message, customer approach, and can really focus on what the strategic competency is.

Test your staff. Take your best-selling five products and ask them to list the benefits (what the customers get out of using the product) and features (what the product does for the customer) from memory. No notes needed. This will give you some insight to your sales process, your strategic focus on the front lines, and how well you are serving your customer's needs daily.

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Russell J. White, CSP,

President and Founder

Russell J. White has distinguished himself as one of America's leading growth experts. He has assisted companies across a wide spectrum of industries, including food service, lighting and electrical supply, air travel, equipment and party rentals and financial institutions set and surpass their goals for excellence in profitability, customer service and leadership excellence. Non-profit organizations, athletic conferences and governmental agencies have also called on Russell for strategic planning consulting, executive coaching, leadership academies and keynote presentations.

Russell has worked with CEOs in significantly improving net income, sales growth and customer service for companies of all sizes, from small family-owned operations to Fortune 500 corporations. The success secret is in his proprietary customized systems, not a one-size-fits-all approach. He listens to his clients and guides them to the point where they both want and must go.

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