To stay on the growth path in 2020, alignment on a vision, strategy, and key initiatives is essential. By having participation and alignment across your company in the planning process, you can be certain that each team knows it’s part in the success of the company.
Here’s a high-level overview for a company with a year end of December: In July, the executive team begins meeting to discuss key strategic questions, such as what’s the market and competitive landscape, how you can win, what products/services to build and sell, what markets to operate in, and what customers to target. As the company vision solidifies, planning starts to include departmental heads who build plans to implement this strategy across all activities like people growth, new initiatives, training, and operations. Once there is alignment across heads on the core strategy and departmental plans, you roll it out to the whole company. When 2020 begins, you track each initiative with KPIs to hold teams accountable and detect areas where you may need to get back on track, reviewing quarterly.
My recommendation is a seven stage strategy process. I will cover these stages in this and my next blog:
1. Timing of Strategic Planning
Regardless of your growth stage, it is never too soon to think about strategy. World- class companies begin next year’s planning process half way through the current FY, with monthly meetings that become more frequent as you approach year-end. There are a few reasons for this timing: First, waiting to month six allows you time to evaluate the existing strategic plan and make adjustments as the year develops. Second, strategy takes time, requiring research and market input – by starting six months before the next year, you have time to gather and absorb all the research. Finally, strategic plans cascade to departmental plans; if you assume that it takes at least 2-3 months to create a departmental plan and this needs to be in place prior to the start of the year, you will need to have a refined strategy in place by the 10th month of your FY.
A key aspect of successful strategic planning is to identify an owner to drive the process. In high growth companies this is usually the Finance Director. The CEO is intimately engaged in strategic decision-making, but day-to-day project management is owned by the Finance Director.
2. Understand Your Market and the Competitive Landscape
Strategy is built on an understanding of your market and the opportunities available to you. Market and competitive analysis is undertaken before any strategic planning so that when the strategic planning team meets to align company vision and strategy, it is able to answer the following questions:
- Who are your key competitors by product/service and market?
- What is changing in the competitive, regulatory or technology landscape that impacts your competitive differentiation?
- Where is your current growth coming from (product, region, departments, team, etc.)?
- Do you expect the same level of growth from these areas in the new FY or is change likely, and why?
- Where are you winning and losing, why, and to whom?
- Are there macro economic factors that will impact your growth expectations?
3. Align on Your Company Vision and Strategy
Whether this is your first strategic plan, or if you’re updating your previous plan, strategic planning always starts by answering the questions: “Where to Play?” followed by “How to Win?”
“Where to Play” must answer these answer questions:
- What is your company’s purpose?
- What is the definition of your market? What problem are you solving?
- Who is your customer?
- What markets do you currently compete in, and which new markets are you going to enter?
- Do you focus on specific sectors?
- What solutions do you need for new and/or existing customers?
- What are your ambitions for growth?
“How to Win?” must answer these answer questions:
- How are you going to grow?
- From a product/service perspective, what are you going to build, discontinue, partner, or buy?
- What is your marketing/sales strategy?
- What investment is needed?
- What are realistic and stretch growth targets in existing products and markets?
- Do you have the right team in place to succeed?
The research you undertake in Step 2 – an understanding of competitive, customer and economic dynamics – is a precursor to answer, “Where to Play”. Many companies work with an outside facilitator, such as High Growth, during one or two offsite sessions, to develop alignment on “Where to Play”. This lays the foundation for identifying the “How to Win” capabilities needed to implement the vision.
Stages 4 to 7 I will share in my next blog.
