Innovate Your Strategy
Strategic Planning is Repeated Innovation!
Great strategy requires some aspect of invention and innovation relative to market and competitors. But too many organizations innovate only until they get a hit. Unfortunately, innovation is a perishable commodity! Markets change. Globally, competitors emulate and reverse-engineer success – often unrestrained by patent and copyright law.
Walt Disney knew the role of innovation in the success of his business, and had a remarkably open attitude about projects in development. Mike Vance, in charge of idea and people development at Walt Disney productions tells a story of executives warning Walt: “People are going to steal your ideas!”. To which Vance says Disney replied, “Don’t worry about it; I can create faster than they can steal.” The question other companies must ask themselves is – do we know how to innovate reliably and frequently?
The purpose of business strategy is to help the organization create sustained success in their industry by:
- providing the board of directors or business leaders the information they need to repeatedly and consistently set a clear, competitively unique and defensible direction and destination for the organization, and
- providing management and staff the information they need to efficiently and effectively achieve that goal.
In most cases, the board of directors or business leaders produce a Business Strategy document – a living document that brings the company’s future into focus, and becomes the template for communication, alignment and implementation.
The strategic plan is most commonly developed in four steps:
- Business Insights
- Business Strategy
- Business Goal
- Action Plan
Before leadership can craft a meaningful strategy, they must understand the system encompassing their business. They must know the stakeholders and their motivations. They must figure out how the elements connect. They need to think through how this system will change over time. This is the work undertaken in developing business insights, in four broad moves:
- In step one we are attempting to describe the match between our offering and what the customer wants.
- In step two, we explore key questions of marketing and distribution – ‘How do they know about us?’ and ‘How do they get it from us?’
- In step three, we examine the future of our match between offering and market. In the timeframe of this strategy – 3 to 5 years, say – how will the market change? How must our offering change to remain relevant and valuable?Â Note that for many companies, this level of detail about the future is adequate. For companies with long development cycles or uncertain, rapidly changing markets, our best clients precede their strategy work with Scenario Planning.
- In step four, we back up and examine the essential direction of the venture – as an organization, where are we going?
If the organization does not have a firm grip on what generates wealth, it is far less likely to succeed.Â (In the case of a not-for profit substitute ‘relevance to stakeholders’ for wealth.) In this part of the document, we ask:Â How do we generate wealth and maintain relevance to our customers, long-term?
The business goal is an End Result with multiple standards of measure, and a completion date that, if achieved, indicates that the organization is fulfilling its purpose. The business goal is usually set 3 to 5 years in the future.Â It focuses all activity and decision-making by board and management.
The Action plan addresses the concrete steps required to implement this strategy throughout the organization, and to continuously monitor the planâ€™s effectiveness at getting you to your goal. The action plan is completed to two levels of detail:
- A high-level plan covering the broad actions to be taken to reach the goal, and
- A 6 month to 2 year plan that details the upcoming actions for each broad action step.
The final document is the basis for building a framework that guides and focuses the daily decisions and actions of the organization in achieving its desired end results.
For further reading, we recommendÂ Path of Least Resistance for Managers – Chapter Eleven
The communication plan: keeping your ‘living document’ ALIVE!
People talk about a ‘living document‘ – a document constantly updated to reflect the current understanding of strategy, goal and plan. But plans do not live in documents (and certainly not in PowerPoint decks!) – they live in the minds of the leaders, managers and workers, as stories.
You can intentionally help this process along by writing narratives using short forms, such as mantras, parables and urban legends, or longer forms such as manifestos, position papers, movies, audio presentations and graphic novels. Here’s the test: your plan is only alive if it has replicated itself in some way in the thoughts of the people executing the plan.
Finally, you need to re-think your plan more frequently than ever before, as the pace of change increases, globally. If you used to do 5-year plans, consider 3-year plans. If you reviewed annually, consider quarterly tune-ups. For some fast-growing companies in unstable markets, a month might not be too often to revisit…