Strategic Planning - Not Just For Fortune 2000 Companies
Generally, if you have more than about a dozen people in your company you need to have an annual strategic planning process. With a small management team of three or four people, it is not very difficult, and will likely go quickly because you discuss these things daily. The trick is to look at the longer-term (at least a year out, preferably three years) in the context of a 3 to 5 year vision for the company. As the company gets bigger the time invested will get bigger too, but either way, it will pay big dividends and needs to be done.
I recently attended a leadership seminar doing research to add a Leadership segment to our CEO & Entrepreneurship Boot Camp. This instructor said that at a recent corporate training with about thirty people from the same company, including the CEO. The instructor simply asked who understood the goals of the corporation for the coming year. Only about 20% of these managers raised their hands. This is a pretty bad indication of both leadership and management results.
Our job as CEO and senior executives:
- Formation of the plan
- Communication of the plan to all (at the level each audience can understand)
- Finding the right people
- Oversight, training, and coaching to develop the staff
Everything else supports these efforts. At a certain size, these become the only important things, though we must wear many hats and actually do something while the company is under 25-40 employees. Without all four of these done properly, a company will not move forward easily, if at all. In this case, a company's success will be more by accident than by design.
Do you have a clear vision of what your company will look like on December 31st of this year? How much revenue? How many people in each department? What kinds of new customers, products, and services? What new processes, systems, and people will be needed to allow smooth growth? This is the starting point of the annual planning process. Most people do not have the forethought to do this well and the CEO and senior managers must tease this out of our subordinates and crystallize it into a comprehensive and congruent strategic plan (or annual operational plan if you prefer) that allows all departments to move in lockstep towards the shared annual objectives.
Can you answer the following questions? And more importantly, would all your managers be able to answer them similarly?
1. What are our long-term purpose and the goals for the company in terms of market position, size, market share, and competitive position? This is often driven by a market vision, philosophy, and values of the company. A clear understanding of your value proposition to customers and your company's strengths is required. If this is not well known already on our team, you should perform a simple SWOT analysis (Strengths-Weaknesses-Opportunities-Threats) analysis before this process begins. I do these in a single day with a one-hour meeting with each senior manager for smaller companies. The outside perspective (forest for the trees view) is critical to have at least annually.
2. How many new employees will be needed to handle the projected growth? What gating factors will be used to make those hires? (i.e. revenue, customers, cash-flow)
3. What key initiatives will position you well for your 2-3 year vision? These are usually related to product development and building sales and distribution to scale the business. However, they could be in any area of the business. Can you take a weakness that is holding back the business and turn it into a strength in some areas? Are there alternative markets, channels, price points, and product/service bundles that would create a new market niche? Or do you simply need to focus and do more of the same while improving costs and productivity?
4. What specific targets and goals need to be met this year to move us towards that long-term objective and vision? Will this market position be defensible and unique in some way that makes your solution better for a certain profile of customers?
To learn more, click here
5. What are the quarterly priorities and measurable goals for each department that will be used to benchmark our progress during the year?
6. What incentives are built into the culture, systems, and compensation plan to drive these specific goals?
7. Is there an overall theme that links together department objectives? I.e. improved quality, retention, or lower costs in some areas?
8. Does each department have a dashboard of key metrics to watch and report on daily, weekly, and monthly that measure success against these goals? (note although a dashboard might have ten or twenty measurements, people must focus on only two or three in any given quarter to improve performance. Will your dashboard(s) measure both trends and ratios over time to avoid surprises? In growth, absolute numbers (not ratios) can mask problems hidden in larger numbers? This is your early warning indicator. Without these solid metrics going from a five-person department to a ten-person department can be a disaster.
If you and your team can answer these consistently, then you are probably in the top five percent of companies in terms of strategic planning and internal communications. If not, you need to go through a strategic planning process that will get the best input possible from your team and congeal your priorities and goals for each quarter and the entire year. In a company with less than 100 people, this can generally be done in a series of about three meetings over several weeks. The result will pay ten-fold the cost in time and effort because most decisions made by these managers will then be held up against these known priorities and goals. Without this, the agenda to decide things can become a personal one or a bad interpretation of what is important to the company that day. This causes mixed-signal, inefficient use of resources and certainly does not properly position the company for good growth.
If this is not the case, as it will not be at 95% of companies out there, then you need to dig deeper in this process.
How to Raise Millions for Any Company - Online Video Course
Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
Call (619) SCALE06 or email info@AirTightMgt.com for a complementary strategic consultation.