I’ve been thinking and reading a lot about strategic planning lately. I guess when all hell is breaking loose, as it has been for many businesses of late, it becomes real easy to question the strategic direction of the company. When sales are falling or profits are eroding, when new ventures are struggling to gain traction or long-term successes are beginning to wane, one begins to question the strategic direction of the business. It’s probably second nature.
Reviewing your company’s strategic direction is never a bad thing. It never hurts to reconsider past assumptions or decisions to make sure that they’ve had the desired effect on the business. But a few words of caution if you’re considering reevaluating your business’ strategic plan:
- Don’t panic. If the current strategic plan has any value, it’s fair to assume that a great deal of work and thought went into creating it. It’s a document that is designed to guide your business. Just because the results you’re currently experiencing aren’t what you desired or anticipated doesn’t mean that the strategic plan you have in place isn’t the right one. We’re experiencing the worst recession of most of our professional lives.
The operating results of most businesses are not what the stakeholders would have expected or preferred. But there are external forces at work. You can’t control everything that will affect your business, and making a rash decision because we’re experiencing tough times isn’t going to make things better. Grasping at straws or looking for the “silver bullet” that will solve all your company’s woes is foolish. You must react and adapt — but you must do it with reason and logic, not fear and panic. - Be objective. There are many reasons a strategic plan might not be working. We’ve already established that external forces have a tremendous impact on the operating results of a business, many of which you can’t control. But there are other reasons your organization’s chosen strategic direction might not be working. Determining how much is outside your control and how much is because of decisions made within the company isn’t an exact science, but some tough questions answered honestly can go a long way in determining why the current results are not meeting expectations. Do you have the right management team in place to carry out the company’s strategy? That can be a tough one for many of us since it begins with looking in the mirror. Are you the right person for the role? And have you hired the right people around you to meet the company’s objectives? Often times taking a critical eye toward the situation can lead you to uncomfortable answers.
Another key question to ask is whether you’ve allocated the necessary resources to accomplish the plan you have in place. Unless adequate resources — human, financial, and otherwise — are committed, there are only good intentions but no plan. Have you made the necessary commitments of resources that would allow your plan to succeed? There’s no sense in revising your strategy if you’re not willing or able to dedicate the appropriate resources to make it successful. - No inspiration out of desperation. Recently I wrote about a colleague who said, “Hope is not a strategy.” If you’re considering revising your strategic plan, make sure you’re not doing it to offer false hope to the people within the organization. Providing a new vision to the stakeholders in an organization might seem to be inspirational. It could inspire hope when everything appears hopeless. But if that new plan or vision for the business is the result of desperation instead of based on empirical data, then it’s doomed to fail, and the hope that you inspire with it will be short lived.
You must evaluate the current plan based on the environment in which it is being implemented. Measurement isn’t easy, and you must make sure you are measuring the right things. In business, financial targets are likely key metrics in measuring the effectiveness of any plan. And in the current economy, many company’s results are not measuring up to expectations. But what about other key measurements? Have efficiency and output targets been met? Is the quality of the product or service at or above the standards that have been set? Are the key operating metrics consistent or greater than industry norms?
Remember all of this must be taken in context of what is going on around us — those nasty external forces again. I heard recently that the number three automaker, Nissan, revealed that May production was down 27% over the same month last year. Wow! That sounds like Nissan’s headed in the wrong direction. But if you take a look at the number one and number two carmakers, Toyota and Honda, their production numbers were down 39% and 38% respectively. Does that make you think about Nissan’s numbers differently? Context matters. Nissan probably wishes it were able to build and sell as many cars as it did last year, but that’s not the case given the disposition of consumers worldwide. But this significant decline doesn’t necessarily mean that Nissan’s current strategy is misguided.
Evaluating your current strategic plan, given the unprecedented changes we’ve seen in the global economy, is likely a prudent decision. But you must make sure you approach the process with reason, logic, and objectivity. You can’t venture into the process out of panic or a sense of desperation. Remain diligent and disciplined in your approach, and the end result — whether it’s a new plan or validation of the existing one — will serve you well.