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No business can succeed without a strategic plan. But based on my fifty years of experience running companies like Reebok and HBO Video, I’ve learned that often the biggest hurdle to creating a plan is knowing exactly what business you’re in. A step-by-step formula for building a strategic plan that will take your company from good to great.
Know what business you are in: Sometimes it’s not as clear as you think. For example, when I ran Reebok, it became clear that we were not in the athletic shoe business, but in the “lifestyle entertainment business.” Less than 30% of athletes have seen any form of athletic competition or physical activity. In the toy business, we were in the growth of children, especially today’s well-educated millennial mothers. We were in the business of creating custom behavior in video games. I encourage leaders to identify the businesses you have. not at all In order to explain.
The plan should be based on high data: Start or want to start an internal and external analysis of your business. This includes current and expected competition and the industry. In today’s environment, identifying and predicting trends is critical. The markets and the core customer go to market and end consumer trends are changing rapidly. Everywhere I worked, I insisted on an annual review of our strategic plan. In today’s environment. Reviews of the plan should occur frequently.
This plan should be derived from a mission statement, including a set of values and objectives.At Treehouse Foods, the largest global, private label food company, where I have been on the board for 16 years, the mission is “to create value for our customers, the preferred manufacturing and distribution partner.” . . We are committed to a performance-based culture where we live our values with both our clients and our customers to ensure our mutual success and well-being. Then there’s a list of “own” items for all employees, along with our mission statement: “to make high-quality food and beverages accessible to all.”
Consider hiring an outside consultant: I suggest hiring an outside consultant or firm to lead the strategic planning process. Most people in companies have never been involved in the development of a strategic plan. You often think that it is a budget and a detailed plan of tactics, but it is not.
I was fortunate early in my career to lead strategic planning companies such as Bain, BCG and McKinsey. Later I hired the Parthenon– EY To lead the development of strategic plans in each company I lead. I created my own list for small companies and startups and then hired brilliant analytics MBAs to develop the data base. Eventually, I worked for Parthenon as a senior partner doing strategic plans for all kinds of companies worldwide.
The management team and ultimately the entire organization must own the strategic plan. Please understand that it is not about a group of brilliant outsiders or a consulting firm imposing a plan on management. Management should be fully involved in the process. But I constantly find consulting firms, after studying internal and external data, can come up with some flashy insights. In a recent study of a holding company I was involved in, an external analysis revealed that several divisions were not meeting their cost of capital and never would be. Sell or close, and your income will increase.
Elements of a strategic plan: Gather key people in one room with all the relevant data and analytics. Then consider alternative strategic directions. Make sure you involve people who are actually engaged – this probably means including more than just senior management. Try to keep the groups small. Encourage positive, non-judgmental, constructive thinking. If necessary, use a professional facilitator who can reinforce the ideas and then present them to the participants to identify which one is best.
Then detail the ideas and determine the information necessary to evaluate them based on agreed criteria, such as idea size, human and capital resources, schedule, and possibly success. Following these steps, using these criteria, is the best way to create a strategic plan that will help your company succeed in today’s highly competitive, fast-paced business environment.
Written by Frank O’Connell.
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