Business Strategy: Part 2 - Forming your own destiny...
About the Author:
Paul Wilton (editor)
CA with degrees in commerce, accounting and information technology. Paul worked overseas in the “Big 4” accounting firms and served as a director at Audit New Zealand before setting up his own consultancy. Author of A-Z of New Zealand Business Law, Paul has over 20 years of experience as a business owner and consultant. He joined FBA in 2004 and is totally committed to providing excellence in quality and value to our subscribers.
Part 2 of a 3-Part Series on Strategic Thinking. Click here for Part 1, Click here for part 3
“You see things; and you say 'Why?' But I dream things that never were; and I say 'Why not’?”
George Bernard Shaw
You have a choice in business, as in life. Either you can create your own destiny or you can watch it unfold, and perhaps look back and wonder what happened and why.
Almost a century ago, William Jennings Bryan summed it up when he said that destiny is a matter of choice, not a matter of chance. It is a thing to be achieved, not a thing to be waited for. So, if forming your destiny is about achievement, it makes sense that it starts with a plan.
The destiny of an organisation is conceived in its strategic plan. This is a brief high-level document and is not to be confused with the business plan that provides the detailed “roadmap” for the business to follow. The purpose of the strategic plan is to lay down the key parameters that determine the direction, priorities and framework on which your more detailed business plan can be built.
Ensure that your strategic plan is concise, clear and focused. Keep any introduction to the minimum necessary to set the scene for your intended readers. Do not clutter up the plan with detailed analysis that underpins assumptions or strategies. If this information is required for clarity and completeness, attach it in an appendix.
Here, we focus on the guts of the strategic plan and offer a suggested format that can be used as a simple template. Here are the core sections:
Vision, Purpose and Mission
Values
Strategic Objectives
Strategies
Measurement
Strategic planning is all about the future and that is driven by your Vision which goes hand in hand with your Purpose and your Mission.
Vision - A picture of what you want your business to be in (say) 5 years time;
Purpose - Why you exist; and
Mission - What you want to have achieved by the end of that timeframe.
Yes, there is an overlap and it is easy to become hung up on the definitions or bogged down with the wording. Don't let this happen to you. Many of the most successful companies have addressed these three items together and we suggest you do the same. You may have a crystal clear phrase that beautifully sums up exactly what your business is all about. If you do, run with it. If not, aim to answer the questions of Why you exist, Where you are going and What you hope to achieve. Keep is short, clear and to the point.
Is it really worth the effort? Absolutely! If done well, it can make a world of difference. This is what persuaded me:
Some years back, my family went to Disneyland. The parade was about to begin and they were putting up guide ropes to keep back the throngs of people. My 6-year old son and I were on the other side of the street from the rest of the family and he decided to make a dash for it to join the others. He was wearing a cap with a solar panel that drove a fan. So much for a cool head! He fell in the road, broke the solar panel and burst into tears. I was immediately by his side, but so was one of the attendants. He made sure my son was okay, did something funny to make him laugh and promised him any cap he wanted from the Disney store. He gave me the coupon, swept up the mess and it was all over in a minute. Impressive? Yes, but not surprising. It all makes sense when you think of the famous Disney mission statement: “To make people happy”. If everyone who works for Disney uses this as a guide, they are likely make the right decisions when dealing with customers.
Short, compelling and inspiring statements that capture the essence of your business are a very powerful way of sharing your dream with those who count. It motivates everyone to pull in the same direction and helps you realise your vision. Very few businesses will match Disney for brevity, so do not be concerned if your statement is a bit longer. Also, you do not necessarily need to be outward-focused. Here are some more examples:
Starbucks
“2000 stores by 2000”
One of Toyota’s divisions:
“To become the most successful and respected lift truck company in the U.S.”
Estee Lauder (Billion-dollar perfume and cosmetic company):
"Bringing the best to everyone we touch". By "The best", we mean the best products, the best people and the best ideas. These three pillars have been the hallmarks of our Company since it was founded by Mrs. Estee Lauder in 1946. They remain the foundation upon which we continue to build our success today."
At FBA, we have the following:
“We exist to support you, our subscribers. Our mission is to help you realise your vision and achieve your mission.”
The next section of the plan turns to your business culture. Here you define your Values that guide your behaviour and will often help you or your employees to resolve trade-offs that arise from day to day. Examples include: Integrity, Respect, Passion, Innovation, Quality, Excellence, Accountability, Sustainability, Loyalty, Teamwork, Consultation and so on… These are usually expanded to explain what they mean in the context of your organisation.
We suggest that you choose 5 to 10 core values that represent the type of reputation you wish for your business. You may find that coming up with a mnemonic can help you and others remember the values that you choose. For example, “We value SPICE - Success, People, Integrity, Commitment and Excellence”.
Having gained a sense of the bigger picture, it's time to clarify your Strategic Objectives. These are longer-term, high-level objectives relating to the nature of the business, its primary customers, expansion or consolidation, diversification, partnerships, management changes, product lines, technology, plant, markets, major funding, etc. You may only need to include a few objectives or you could have over 10. Often they will emerge from major issues that have arisen, projected risks, assumptions as to future opportunities, or changes in the business environment. In all cases, these can be expressed as high-level objectives for which strategies can be developed. This is an area that you will expect to update during the period covered by the plan as new issues arise of strategic significance.
As with all goal setting, your objectives must be SMART:
Specific
Measurable
Achievable
Relevant and
Time-bound
Everything to this point will help you to define the strategies themselves. The strategies will be aligned to the objectives but also consistent with the attainment of the mission, the realization of the vision and the ethics embodied in your values. For example, if you have an objective to expand, this may lead to specific strategies on mergers, acquisitions, opening of new outlets or diversification. If you value sustainability, you will not choose a strategy that is unnecessarily damaging to the environment. To help your strategic thinking and to keep things at the right level, recall that many great business ideas have been said to have been sketched out on a paper napkin or back of (dare I say it) a cigarette box. We are not advocating that your strategies are as brief as that but you do want to capture the strategic idea which can later be expanded in your business plan.
Lastly, your strategic plan will deal with measurement. In short, document how you will know if your strategies are actually meeting your objectives. Remember that the objectives must be measurable. The success of the strategies can therefore be monitored against the objectives and your measurement approach will form part of the strategic plan. This will include review points to assess progress and make such amendments as are required. If it is apparent that a strategy is failing, you will have to make the necessary changes to get your business back on track.
In our next issue we’ll be winding up our strategic planning theme with further detail, tips and ideas to turn your strategy into action – in other words, we’ll look at actually achieving the vision.
Reignite the Passion