What a strategy is and why you need one

Posted by Jeff Loehr on Apr 11, 2019 8:34:51 PM
Jeff Loehr

One of my strategy professors always asked: "What does that mean on Monday morning?" We would give him our clever, well thought through fine answers, but what wanted to know is how that turned into action. He pushed us always to get to that Monday morning list of what we would do next.

What is strategic planning? It is the processdaniele-riggi-635135-unsplash of defining
what actions you are going to take to get your business to the next level. Strategic planning guides your
actions on Monday morning, and through the end of the planning process. A good strategic plan keeps you on target and ensures that you are building something valuable.

Strategic planning and the strategic plan, defined

One question that we get a lot is: “Do I really need a strategic plan?”. The answer is yes and here is why: without a strategic plan you and your company will end up reinventing itself constantly.

When you wake up Monday morning and aren't sure what to do you will act according to how you feel that day or react to what is right in front of you. Building a business is more significant than that, there are many moving parts, and you must think about not just those that are bothering you today but also the parts you need for the future.

Strategic planning is a management process that establishes priorities, guides focus and ensures that everybody on your team is working toward common goals.

It also defines how you know that you will be successful. Part of the planning process is establishing the metrics and determining how you will measure your performance.

Metrics are important; this is how you ensure that you are planning, executing, delivering and seeing results.

Build a business is creating something out of nothing, so you have to guess at first which actions will lead to which results. Over time and by looking at your metrics, you will get better at planning and be more confident in your approach.

The strategic plan is the written form of the strategy; it communicates the idea to others and is the thing you look at on Monday morning when you are thinking about what you need to do.

Building a strategy starts with the vision and ends with actions

The process of strategy creation always begins with some level of assessment of the market and your position in it.

This is the vision setting.

We start with this in the Path, and it is essential in building your plan because it establishes your objective. This is your guide.

We like to set the vision way out in the future to challenge your thinking. A five- or fifteen-year vision frees you from worrying about what you are doing today and pushes you into the mindset of what is possible.

That is where vision belongs.

For strategic planning purposes, you will also look at your competitors and what they are doing. How will you set yourself apart from them? Competitive positioning is a vital part of the vision.

We then break that down to what does this mean for the next year and start working on the next step which is to make decisions about how we will deliver on that vision. We define here the broad strokes and concepts.

So, if your vision is to become a life coach, we would look at the significant components of that: what materials do you need to deliver to your clients? What is the process? How will you stand out in the market? At this level, we are looking at the problem from 30,000 feet – detached from the day to day actions, focused on what needs to happen.

The next step is to break these broad strokes into lower level tactics. These are much more specific, something like “create a course” but not so detailed as to constitute an action plan.

Finally, we develop the metrics and process for reviewing and updating the strategy.

That is it. There is no magic to strategic planning; you are just defining now what you are going to do in the future.

The strategic plan isn’t a detailed action plan

One thing you may notice about the plan is that it doesn't include detailed actions. That is on purpose. You can't plan out every detail for the whole year, you would never get it right, and you would fight the entire time to get back to your plan and make it work.

We do action planning on a continuous and week to week basis. The trick is to make sure that the actions you plan fit into the strategic plan.

Not everything you do on a day to day, week to week basis, is strategic. A lot of it will focus on delivering on your commitments and managing operations.

The plan is there to remind you and to help you to work on the business. To make sure you stay focused on the more significant objectives of what you want to build.

The three levels of strategic planning are focus areas, goals and tactics.

We use our strategy on a page document to capture strategy. You can download that template here.

We think it is important that the strategy be concise: a 200-page strategy document works best as a dust collection device rather than a guide. That is why we created "strategy on a page," ideally it fits on a page.

The document starts by guiding you to capture your focus areas and goals:

  • Define your big focus areas, with a maximum of five. Traditionally these are finance, operations, sales and marketing, human resources, internal processes. Depending on your company these might be the right focus areas they may not be. Just pick the three most significant areas to work on.

 

  • Next, you establish goals for each of these. Each focus area will have a few goals. If finance is one of your main topics, you may have a goal of increasing revenue and a goal of improving cash flow.

 

  • Establish a metric for each goal. Continuing with the revenue example above you might break this down into price and quantity sold, for each metric you set a target and capture where you are today.

These three steps establish the primary drive of the business; they set the parameters that everything else falls into and helps you ensure that you are focusing on those things that matter.

Why does finance matter? Because at the end of the day, you want to make money. So this helps you ensure that you are creating a plan that will lead to making money.

Once you have created the focus areas, you define your tactics

Next, come the tactics. These are the things you are going to do to deliver on your strategy. Each one of these has an owner a metric and a target.

Tactics look and feel like actions, but they are at a higher level, they are something to get done over a month or two. The owner will break this down into the steps that he or she will take over time.

(And if you are in business by yourself you may be the owner of most or all of these. That is fine; you will add your action plan when you do your week to week planning. However, we also encourage you to think more broadly about who is on your team.)

Ideally, the tactic metrics flow right into the goal metrics, as in you could program these in excel so that when you update the tactic metrics, they flow directly into the goal metrics.

In practice, this rarely works, but you want to think that way. The tactics build to the goals. These are the things that you will get done to deliver on the goals.

The challenge in strategic planning is not creating the plan but rather deciding what goes on the plan: which tactics will work, how do you stand out, how will you raise the money you need or create the team to support you? These are all questions and decisions that make up the strategic planning process.

The plan is there to force you to answer those questions, to give you the guidelines to capture them and then to ensure you focus and evaluate the results.

 

 

 

Red Sapiens

Creating a world where entrepreneurs thrive

We help entrepreneurs create strong, growing and rewarding businesses that allow you to thrive.  

 

Subscribe Here!

Recent Posts

Post by Tag