You wouldn’t set out on a journey without knowing your destination so why is it so many businesses don’t know where they’re headed? Ask them where do they want to be in four or five years time and they don’t know. In too many cases the business is just going day-to-day, hand to mouth. It’s of course understandable, a lot of businesses are just trying to get through the next six months so what’s the point in thinking about four years ahead? The point is if we don’t have some destination in mind the business will just drift from one thing to the next. Having a destination in mind is of course no guarantee we will get there but at least we’ll have something to test against and adapt.
Dwight D. Eisenhower famously said, “Plans are worthless but planning is essential”. What did he mean by that? This is how he explained it:
“The details of a plan which was designed years in advance are often incorrect, but the planning process demands the thorough exploration of options and contingences. The knowledge gained during this probing is crucial to the selection of appropriate actions as future events unfold.”
In other words we can’t tell the future so we will have to adapt the details but we need a starting point. This why I don’t advocate detail in the strategic planning, it’s a waste of time, events change things but we should define the high level strategic steps and the actions required to realise them. So, what does a strategic planning process look like?
The first thing is to define an endpoint. Where do we want to be in four or five years time, what do we want the company to look like? We need to put some parameters on the endpoint that we can easily measure so we know when we get there. Revenue, profit, product features or number of customers can all be useful measures. Now, we know where we are today and we know where we are headed so, what are the key milestones to get there. We need to define a few strategic steps. The final part is to define the high level actions needed to move from one strategic milestone to the next. The chart below shows how to represent this:
The final consideration in strategic planning is resource. What human, physical and financial resources do we need to execute the actions? We have to make sure we have them or we will not be able to execute the actions.
Now we have, in broad-brush terms, how we plan to grow the business. This high level approach means it’s easy to adapt as we encounter future events. A word of caution about milestones though, each milestone should increase the value of the company and, especially in the early days, the main measure of value is revenue. Revenue only has two levers: sell more or, charge more so each milestone should consider how we act on one of those levers. If it does not act on one of them we should really question why we are doing it. Performing strategic planning in this way will help all companies with their growth ambitions.