by Dave Youland
Strategic planning is a common organizational practice that, when done properly, will increase the likelihood that an organization will meet its goals. The following Harvard Business Review article, “The Hard Questions to Ask When Planning Your Strategy” provides an interesting perspective on conventional strategic planning and the importance of being realistic about the value that your organization creates.
The article highlights the chaos associated with strategic planning within organizations, emphasizing the emotional and territorial aspects that often overshadow what should be a rational process. While the annual strategic planning process is often portrayed as an objective exercise that is rooted in facts, this is often not the case. The article contends that the solution to more effective planning lies not in additional analysis but in increased honesty.
This involves simplifying the strategic planning process by answering three fundamental questions:
- Where are we now?
- Where do we want to go?
- What is a credible path to get there?
The authors emphasize answering the first question with real and unvarnished honesty about the organization’s strengths and weaknesses. They point out that many organizations, including market leaders, lack a true understand of their actual strengths and weaknesses. In contrast, non-market leaders tend to assume weakness across the board without recognizing their inherent strengths.
Leaders are then encouraged to ask three additional questions to truly understand their actual current position:
- What is the one thing that makes our business special?
- How special is the one thing that makes our business special?
- How far are we willing to go to make the one thing truly special?
This process involves a genuine assessment about the unique or special aspects of the organization, including products, services, and other capabilities. The aim is to identify the true source or sources of differential competitive advantage and understand their relative importance.
As managers we, of course, believe that our organizations have a unique value proposition and that our offerings somehow provide us with a competitive advantage even if we are unable to articulate how this occurs. Many organizations unknowingly offering de facto customer or stakeholder value as if they are operating on autopilot.
At Luminas Strategy, we believe that in order for strategic planning effective it is critical to take an outside-in approach, to gather input from customers on how they perceive you create differential value vs. your competitors. The only way to know with certainty that your company’s customer value proposition is differential, is to validate it with the customer’s beneficiaries of value. By doing so, you will discover what specifically differentiates your company — and its offerings — from its competition. You will gain a better understanding using an outside-in approach of where there are gaps and opportunities in your customers’ business and gain clarity on the ways you can meet their needs and expectations, and ultimately make a positive impact. Together, you can become more profitable.
The Luminas Customer Value Xcelerator® (CVX) will help you know with certainty how to win with your customers. Through CVX, you will gain validated, fact-based answers to questions like:
- What do you do that generates value for your customers?
- How is the value you bring different from customers’ next best alternatives?
- What can you start doing that will help your customers’ business be more profitable?
Having this information will result in an improved perspective on how you create customer value and make the annual strategic planning cycle more robust and, hopefully, a bit less chaotic. (This was definitely true for BASF, watch the case story here
The Hard Questions to Ask When Planning Your Strategy
Tis the season for annual strategic planning. For most companies, the process is a spectacle — a ritualistic game of jump ball for budget where emotions run high and departments defend their turf. Marketers cringe as non-marketers dish out “expert” wisdom. Salespeople shake their heads at the mention of “stretch goals.” And every business unit believes it is the chosen one.
Everyone knows this corporate song and dance costs a ton of time and resources. Employees endure the meetings, despite knowing that sidebars, pre-meetings, and post-meeting debriefs are where many decisions are actually made. CEOs watch their teams compete and cajole for budget, despite the fact the company is tied to one profit and loss statement and stock price.
To try to solve this problem, try shifting your organization from strategy planning to strategy therapy.
Strategy planning is a rational, more external, analytic exercise that focuses on the market. The answer to a healthier and more productive annual strategy planning process is not additional analysis, but increased honesty. Strategy therapy is an emotional, more internal exercise that focuses on self-awareness. We’re not talking about team-building and trust falls, or an exact parallel to traditional therapy, but rather a path toward transparency and truth. Strategy therapy uses the same kinds of analyses and frameworks as strategy planning, but it forces leaders into hard discussions they don’t want to have.
To keep reading and access the complete article: Harvard Business Review
