While goal setting is important, it doesn't define your strategy.
One of my favorite aspects of being a business coach is working with leadership teams on strategy development. Strategy defines how you will approach the market and differentiate yourself. Without a clear strategy, you will be dependent on trends and the forces of your market.
Unfortunately, many people confuse setting a goal with having a strategy. A goal is a target you want to hit. For example, become a $100 million dollar company or make the Inc. 5000 list. A strategy is how you're doing to do that. It defines the set of choices and moves that you're going to make over a period of time to achieve that goal.
Here are the three basic steps for developing your strategic direction and plan.
1. Make predictions about the future.
The first thing you need to do in any strategic planning effort is to predict future trends. The key here is to be able to read the current market, industry, and macro trends that are at play and extrapolate them into the future.
I typically start with the immediate market trends that our company sees based on the work we are doing with current customers. By identifying what is impacting our customers' businesses, we can determine what is going to impact our business by servicing them.
Next, look at broader industry trends that are changing the nature of how your type of business is conducted. This could be changes in technology, regulations, market saturation, and increasing or decreasing demands. For example, I work with many companies in the cannabis industry and the pending change in federal legalization will have a major impact on how they conduct business as well as the industry as a whole.
Finally, we map out general macro trends. This includes changes to the economy, interest rates, and social and cultural fads and events. These types of trends will affect all businesses over time. For example, the trend toward using mobile devices rather than desktop computers has impacted just about every aspect of our culture.
2. Decide on a key set of moves.
Once you have your market assessment, you can start developing your key moves. Essentially, these are the ways you are going to respond to the pending changes in the market that will put you in the best position for your business and your customers.
When Wayne Gretzky was asked what made him such a good hockey player, he famously replied that he didn't chase the puck. Instead, he figured out where the puck was going to be and he skated there before anyone else. He read the situation and positioned himself to make the right play.
Too many companies just chase the puck. Like Wayne Gretzky did when playing hockey, your company will anticipate what is next in order to make the moves needed to succeed.
3. Define your critical capabilities and policies.
Once you have planned your moves, you need to define the capabilities and policies that will allow you to implement those moves. These are the core capabilities you need to develop and the actions you are going to take, and, more importantly, the actions you are not going to take.
For example, if you are going to move upmarket and serve a higher-end client, you may need to develop leads through a different channel, improve your customer service, adjust your pricing models, or change your qualification processes.
I like to work with companies to develop a twelve quarter roadmap that prioritizes what needs to happen each three-month period over the course of three years. We set targets for each period for the key metrics of the business. This includes revenue and cash on hand, but it also includes factors like leads, pipeline, production units, clients, and people. The goal is to set a clear picture of what the company will look like at each step.
Once that is mapped out, we then look at the projects and tasks that need to be completed each quarter to make the new strategy relative. This includes all of the milestones for the capabilities and policies defined in step three. This sets clear goals for implementing strategy on a quarter-by-quarter basis.
This last step is what most companies miss. They come up with a brilliant strategy, but fail to create a realistic plan for how to implement it. By setting quarterly targets and milestones, you have a perfect tool for driving your quarterly planning process.
Of course, like all well-laid plans, things will change. But with a clear set of predictions, moves, and key capabilities defined, you can quickly update your strategic model and decide how you are going to respond and what needs to change.
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