Tips for an Efficient and Effective Investment in Strategy
STRATEGIC PLANNING FOR SMALL- AND MEDIUM-SIZED ENTERPRISES (SMEs)… AND ANYONE ELSE WHO’S NOT INTERESTED IN WASTING TIME
In a previous post, I laid out the signs that your small- or medium-sized business might be ready for a new strategy. Those signs include evidence that your current strategy may not function well to define your choices and align your organization but also outward triggers that suggest the time is ripe for investing in long-term thinking.
After all, the tangible benefits of a great strategy are real: from aligning your team to clarifying priorities, guiding investments to addressing threats, identifying your next wave of growth to articulating your enduring value creation potential. But developing a great strategy isn’t easy. It takes time – from your most senior leaders, but also those who will need to prepare the fact base upon which strategic decisions will be founded – precious time that would otherwise be spent with customers, closing deals, driving immediate business outcomes.
Strategic planning is no small investment for any company, and it can be especially demanding for SMEs when responsibilities are spread across a smaller number of people. What’s more: because of their smaller scale, the direct P&L impact of a great strategy is almost certain to be smaller in magnitude (though just as large – and I’d argue even larger – on a relative basis) for SMEs. It’s no surprise that the instinct for many small- and medium-sized business leaders is to skip (or more precisely, delay…interminably) thinking about tomorrow to focus on today.
There must be a better way, one that maximizes the ROI equation for strategy formulation so that SMEs can enjoy the benefits of great strategy at an investment that is right-sized for the upside. Unfortunately though, there are no corners to cut. SMEs need to answer all the same strategic questions as their larger counterparts and the answers should be based on an equally robust fact base and decision-making process. Simple math tells us we have two options: reduce the I(nvestment) or raise the R(eturn) of our strategic planning efforts. What follows are a set of tips for doing just that. (Note: most of these tips are equally applicable to large businesses too! It’s just that smaller businesses are most motivated to deploy them.)
Tips & Tricks for Efficient Strategic Planning
We’ve already established that we can’t omit steps in the process or eliminate needed inputs, not if the objective is a great strategy. So, right-sizing your investment in strategy formulation is about engaging in a strategic planning process that is, above all, smart.
Invest in upfront scoping. When you enter a strategic planning process with the goal of being hyper-efficient, the instinct is to advance quickly to fact-finding and debate. This is a mistake that costs you in the long run as leadership embarks on debates with fuzzy parameters and support staff gathers inputs of dubious necessity. Instead, efficient strategy formulation spends real time defining the critical few questions that are relevant to your company, facing your market challenges over your defined timeframe. Done well, you should have no more than 5 questions that will frame the work you do.
Ruthlessly prioritize inputs. Spend real time defining the analyses needed for each of your key questions. You might start with the long list of everything you’d like to know, but ask yourself how the possible outcomes of those analyses would impact your answer to each question. Then home in on the inputs that matter most – that is, those most likely to swing your strategic decisions. Next, assess the relative ease of conducting each of your desired analyses. Now you have a classic 2x2 evaluation of the impact potential vs. practical execution of each of your strategic inputs and can focus your scarce resources accordingly.
Get creative about high impact analyses. Undoubtedly, some of your highest impact potential inputs will also be the hardest to carry out. Expend some creative energy considering alternative ways of getting at the same insights. You might tap the knowledge of a trusted customer or supplier. You might conduct a what-if analysis, run some scenarios or engage in role plays that allow you to draw out the important insights without commissioning detailed market research. You might consider pilots or field tests that enable exploration of strategic alternatives with a lower burden of advance proof. There are multiple ways to get at any desired insight; not everything requires brute force.
Identify low-cost sources of external perspective. Another pitfall to hyper-efficient strategic planning is a strong internal orientation; after all, you already have a great deal of expertise in-house. But strategy formulation that relies exclusively on common knowledge can only yield a strategy that is, well, common. External perspectives, particularly those that run counter to your company’s prevailing wisdom, unexamined assumptions and sacred cows, are critical to fostering the debate that results in robust strategy. Digital has brought widespread access to mountains of “off-the-shelf” external perspective – TED talks, futurists’ Twitter accounts, publications and blogs from all manner of industry experts. Find the discipline to sift through, evaluate the credibility of sources and deliberately introduce thinking that runs counter to your ingoing assumptions.
Structure decisions to be made and how you will make them. Prior tips have focused on efficient gathering of high-quality inputs, but using those inputs to make strategic choices is often an even more variable source of inefficiency. Executive teams find themselves swirling around a topic but never quite hitting on the central issue. Or they have the same conversation repeatedly without reaching resolution. Or they demand ever more inputs from their working team fooling themselves in the belief that more information will make the right decision clear. Or the loudest voices in the room drown out critical contrasting perspectives. Defining the critical few questions to be addressed in your strategic planning effort is a necessary step in focusing executive time on the right topics, but it’s not enough. Establish ground rules upfront about how you will debate, identify tactics to ensure all voices are heard and include techniques to deliberately challenge your emerging conclusions. For decisions that are likely to be particularly difficult, break them into smaller pieces before you even dig into the data: identify a discrete set of plausible answers and align on the conditions under which each of those answers would be the right one. Then use data to prove or disprove the conditions. Architecting the process by which decisions will be made is perhaps the most underutilized tool on this list; you won’t regret the effort.
Tips & Tricks for Highly Effective Strategy Planning
The difference between middling and highly effective strategic planning is vast; much has been written and the exceptionally large, successful industry of management consulting was developed around it. I will focus here, instead, on ways SMEs can increase the return on their strategic planning investment by leveraging the process to “kill two birds with one stone.”
Leverage strategy formulation to build alignment. There is no better way to generate buy-in for a decision than inclusion in the process that resulted in that decision. By virtue of their smaller size, SMEs enjoy an opportunity their larger counterparts only dream of: extending the reach of their strategic planning process to cover most (and maybe even all) of their key leaders and change agents. There is a limit to how many people can be effectively involved in actual strategic decision-making, of course, but it might be larger than you think; I’ve regularly facilitated effective sessions with >10 active participants. Beyond this core group of decision-makers, there are other opportunities to engage team members throughout the process. Consider establishing a core working group consisting of your younger, high-potential talent tasked with managing the planning process and providing quality, provocative inputs. Engage more senior colleagues as subject matter experts on specific topics related to your key strategic questions. As a strategy begins to emerge, test it and your ability to clearly communicate it on a focus group consisting of your leading change agents. Large organizations need to rely on after-the-fact communication – through memos, town halls, cascaded team meetings – to relay strategic decisions. SMEs can get a jump on the roll-out by wisely designing the strategic planning process itself. The result is an organization primed for strategic execution and quick capture of the value encapsulated in that strategy.
Cement and extend relationships with strategic partners. The possibility of leaning on key customers and suppliers to efficiently gather insights was mentioned above. But this type of engagement has another – and potentially even bigger – advantage. It demonstrates to your current strategic partners the value you place in them and communicates a different way of interacting to those you’d like to become strategic partners. Let your partners know that you’re embarking on a strategic re-think, ask them for their input – on what the key emerging trends are, on where the risks and opportunities lie, on what your core strengths are and what they’d like to see you do better. Be sure to follow-up to communicate your strategic decisions and show them how their vital input impacted your thinking.
Develop the strategic thinking competencies of your team. Most of your team’s time is devoted to the day-to-day, operational and tactical efforts involved in making your business go. Strategy formulation promises a real-life, concentrated opportunity to further the professional development of strategic thinking competencies within your organization. The aforementioned working team of young, high-potentials is an ideal way to stretch the skillset of your future leaders. But even your current leaders may have a need to develop their strategic thinking abilities; consider investing in training or individual coaching in parallel with your formulation efforts.
Strategy is Worth the Investment for SMEs – When the Investment is Smart
All organizations – of every size, shape and discipline – have much to gain from the clarity of a great strategy. But the cost, both in real dollars as well as organizational time, can seem daunting, even prohibitive. It doesn’t have to be. With upfront planning, it is possible to manage a smart strategic process that delivers outsized bang for the buck.
What other tricks have you deployed to lower the investment or raise the return on your strategy endeavors? Are any of these tricks particularly intriguing, ones you’d like to learn more about? Leave your thoughts in the comments and don’t forget to subscribe to hear about future postings!
