Carmen’s still away, but Randy’s back with PART 2 in the GREAT Strategic Plans series. More great nuggets in here be sure to give it a listen, you won’t want to miss a thing!
Welcome to the Evolutionaries Podcast. I’m Randy Harrington and Carmen Voilleque is out on the road living the adventurous life of a fabulous consultant. Meanwhile, I’m here in our studios and we’re going to talk today about part two of a conversation that began as we talked about what makes great strategic planning. In part one of our discussion we talked about three terms. We talked about the need for a strategic narrative or story about who we are and where we’re going. We talked about the concept of strategic guidance. That is, what leadership brings to the table to help direct the strategic planning process and we talked about the concept of strategic yield. What is it going to get us if we do all of this work around strategic planning?
Now today I want to talk about three more focused ideas that really get into the substance of strategic planning and the first one is a very basic concept that says that you know you’ve got a good strategic plan when there is clarity of focus and there is a required behavioral change. So let’s take those two pieces. Clarity of focus means that we have a good strategic plan if when we walk out of the room we can begin to evangelize a new focus on, for example, acquiring new customers. Even more to the point, acquiring younger customers, even more to the point, acquiring younger customers with specific preferences for electronic service channels, right? So what we want is we want to have real focus about what’s important and correspondingly, what isn’t important?
What we can ignore, what we no longer have to pay attention to. The other part of this piece around focus is that we need to know what behaviorally is going to change. So for example, if we say we want to acquire younger customers who have a preference [00:02:00] for electronic service channels, then the question becomes what are we going to do different than we’re already doing to attract and acquire those customers? If you can’t speak specifically to the behavioral level changes that are implied by your strategy, even if they’re only examples of changes, then you’re kind of missing the boat. It doesn’t mean that a strategy has to make in its implied tactics.
In other words, in the writing of a strategic plan, you do not necessarily have to say how you’re going to achieve those things, but you do need to allude to the changes organizationally that are in place. So if I was to say I often find organizations that have fairly interesting and aggressive strategic plans, but no real plan to actually change the way resources are going to be deployed. In which case it makes no since. We’re going to get the same results if we’re doing the same things that we always have. The very first thing that a great strategic plan needs to have is it needs to yield focus. A focal point about what we attend to and what we ignore and it needs to imply specific behavioral changes in the organization.
Now, the second thing that’s critical is we need to be able to anticipate expected results. What are we think is going to happen by the actions that we take? This is the hypotheses generation part of strategic planning. This is where we start making inferences and guesses. I like to talk about this with my clients as the ‘if then’ phase of strategic development. If this is the information we have, then this is what we can expect. If these people seek that particular value, then this is what we need to provide them. So ‘if then’ is the substance of inference and what it does is, is it sets up a, a, a kind of [quazy 00:03:57] scientific hypothesis where we can begin to [00:04:00] try things and actually see if they’re going to work or not.
The scientific approach to strategic development is consistent with a lot of the work that’s very hip right now, particularly as, uh, as we talk about books like The Lean Startup by Eric Ries or the works of Osterwalder in his strategic model planning. So, this, this concept of developing your hypotheses is very important and it’s directly related to the establishment of your key performance indicators or the measures that you have in place. So I was recently on the phone with a client who said “Well, uh, you know, golly, we already have all of these, uh, balance score card measures that we’re using. Isn’t that a part of our key performance indicators?” Answer is well maybe yes, maybe no.
There’s a good chance that balance score card is giving you a whole bunch of information, but it may not be the precise information you need for your current strategic focus. You might think of it this way, your balance score card is the same thing as blood pressure height, weight and the basic indicators of health, but if you were trying to become an Olympic one-miler, then you need a very different set of measures to determine your progress. Certainly your, your height, weight and heart rate and such are a blood pressure are still going to be important, but we’re also going to need to measuring time on the road and speed per mile and speed per 100 yards and so forth.
The measures that you have must foot directly to the hypothesis that is implied in your strategic plan. So with what we’ve said so far is we’ve got focus. We know what our behaviors are and we know what the expected results are from those behaviors and those are the measures that we have. So what happens if we deploy our new strategic plan and we don’t get the results we expected? The young people aren’t coming through the door or the young [00:06:00] people who are coming through the door say “Yeah, but I only have, uh, a little bit of interest in the, uh, electronic channels for service. I’d much rather come into the branches every day and talk to you.” So if that’s the case, then you are experienced a stop or a fail in your strategic plan.
Is that a bad thing, absolutely not. What you want to build into your plan are trip wires that allow you to see what’s working, what’s not working as quickly as possible and then build into the plan the opportunity for adjustment. If there’s no opportunity for adjustment then you have a boat anchor not a dynamic strategic plan. You have something that’s going to hold you back, not push you forward. So a huge part of a great strategic planning process is identifying the trip wires that say “Ah-ha we had hypotheses, they’re not being confirmed by what we’re finding in the marketplace. We need to go back to the drawing board. We need call this a fail and move away from it quickly.”
And when we take a look at companies like Netflix and some other companies that have had some colossal fails in the last couple of years, we see that what, what is really valued in the modern marketplace is speed to decision, not letting the fail just run on and on and on and on, but backing off of it very quickly, making adjustments. So in today’s Podcast we’ve talked about three basic ideas. The strategic plan should yield focus. What do we attend to? What are we ignore? The strategic plan should tell you what we should be doing. What should be different in our behavior moving forward? Next, the strategic plan should establish hypotheses about what we’re trying to achieve and what we expect when we deploy our plan.
What do we think is going to happen, and finally, if what we think is going to happen doesn’t happen, we need to be reasonably quick to make adjustments and recognize that there are no sacred cows in the strategic plan. It’s all about the best guess [00:08:00] possible in the situation and at the end of the day, candidly, that’s what it is. It’s the best guess and when you’re working at an extremely dynamic market space, being wrong can be just about as powerful as being right because it can let you know key information coming from your critical market segments. So I hope this helps you as you begin to plan your own strategic planning process.
You might have people listen to this Podcast and discuss it. Is this guy Harrington full of crap? Does it make since? What really works for us? What are we doing well? What could we do better? We hope it helps you and we’re going to look for you on our Evolutionaries website and we’ll look for you next time on the Evolutionaries Podcast.