It’s the Strategic Plan, Stupid

With a title like “The beating heart of the enterprise, it’s the strategic plan, stupid” there was no way I wasn’t going to read the article.

As an added incentive it was a Q&A with a Harvard professor published in the top magazine for entrepreneurs and business owners. (Call me odd but I think that combination just has to be fascinating.)

So what were the pearls of wisdom? Here are 6 of them.

• Working with corporate types the Prof had always viewed strategy as a set of mechanical tools, a series of frameworks and analysis. But she quickly realized that entrepreneurs are emotionally invested in their strategies – which impact their employees and companies very directly. And business owners feel responsible because, compared to corporations, that impact is felt very quickly.

• Strategy is not only about making your company different – it’s about making it different in a way that matters to your customers. For example, becoming a “one stop shop” is only worthwhile if you know why one stop shopping is important to the people you expect to pay for it. Otherwise, no one will care.

• Entrepreneurs and business owners are more likely to create strategies that reflect their own character. For example, Michael O’Leary the CEO of Ryanair is apparently blunt and in your face. So their bare bones strategy has an aspect of bluntness bordering on rudeness – think of wanting to charge passengers to use the washroom – to it as well.

• Don’t make the mistake of getting into “strategy creep”. That’s Cynthia Montgomery, the Harvard Prof’s, term for businesses that add more services and more technology to reach more customers – and lose sight of what made them different in the first place.

• Business owners should treat their strategies as a living, breathing process that they think about on an ongoing basis. Not as something that is pulled out and dusted off once a year. Why, because what worked last year may not work 3 years from now. The difference a company makes has to be relevant to customers today – and every day.

• A major benefit of seeing strategy as being fluid and dynamic is that it can be adapted as competitors catch up or as customers’ needs change. Montgomery gives the example of Ikea’s constant search for new ways to do things and to save their customers money. She contrasts that with Gucci who lost touch and stopped responding to their market. That required a much more painful – and risky – change to their business model.

I like it when magazines targeted at entrepreneurs deal with topics like strategy. It reinforces the point that every company has to have a strategic plan and a process for keeping it relevant.

It can be formal or informal – I don’t care. But it must exist.

If you enjoyed this post you’ll also enjoy 3 Ways to Test Your Strategy.

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Tags: business owners, customers, entrepreneurs, Jim Stewart, ProfitPATH, strategic plan, strategy

Comments

  1. I recently helped a family owned business create sustainable growth strategies, They had been bogged down on operational issues but not looking forward at what they should be doing to grow the business. Many family owned businesses focus on day to day operational issues because they are comfortable with these issues and can not find time to look strategically at where they are in the market, what customers think about their value proposition and where the market is going. his seems to be a pretty common occurrence with family owned and privately held businesses. Growth stagnates because of being stuck with dealing with the the operational challenges. Operational issues are the only priority. These business owners were most comfortable. focusing on the day-to day.

    In a very short time we created a SWOT analysis that lead to creating growth strategies and refocus on growth initiatives with out sacrificing the day to day operational issues. It is difficult to change the operational culture to a growth culture and sometimes an outside view point will help trigger the change.

  2. Jim Stewart says:

    Marshall, thanks for sharing this case study with us. Jim

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