Charting a new strategic direction is a dilemma of leadership. You have to have a strategic plan, but setting goals for the future may feel perilous. What if you don't achieve them? What if they are meaningless and failed to provide any valuable direction to the organization? Is it any wonder that executives rate their effectiveness in strategic planning at only 20 percent?
In the previous post on this topic, I reviewed two significant factors contributing to the high failure rates of strategic planning and what to do to combat them: incomplete strategy development and neglect in guiding strategic thinking through implementation. In this, the last in the series, I want to explore the third most significant factor impacting the success of strategy: getting beat because you were focused on the wrong goals.
Competition is real, and it is everywhere, so even the best strategic planning efforts can fail when key assumptions change or when an innovation radically shifts your market, and you are shut out. However, this does not have to mean you fail. If your core strategy is still viable, you can reevaluate, adjust your plan and get back in the game, quickly. It is an endless competition, so if you don't win today, you can come back and still prevail.
However, if your strategy fails to achieve its goals and there is no significant change in the market. You most likely failed because you set the wrong goals.
Setting The Wrong Goals
There can be many reasons your planning sets the wrong goals. One we see a lot is that goals are pulled from thin air, generated during a stimulating brainstorming exercises and left in the plan without vetting or without any strategy to achieve them. I covered this at length in a blog post that I call Is Your Vision Lame.
However, there is a more crippling cause of epic strategy failures. It is defining long-range goals that address today's customer demands or competitive pressures, rather than tomorrows. This occurs when planning efforts use a problem-solving approach and not a true strategic planning approach. These short-sighted goals feel right. They are well-understood, and everybody knows why those goals are in the plan, but they are not strategic goals or rather they should not be the only goals. They cannot be.
Cycles of change are shortening. Innovation is the norm. Markets are fluid, and barriers are disappearing. If you use what you know today to set future goals, you have set yourself up to fail. If your planning process does not take your thinking past today into the future to think more broadly about the ideal role you want to have in the future, it has failed you.
Using a true strategic planning approach, your strategic planning assessment should queue up issues with the status quo.
- Customer Input: You need to gather customer input, what they are happy about today and what they would like to see more of or less of from you. Then you need to park this conversation.
- Market Analysis: You need to scan your market, evaluate the competition, identify new and shifting influences. Explore trends and innovations and preferences. You also need to review and evaluate the regulatory environment and discuss how it could change in the near-term or impact future success. Spend a good deal of time deepening your understanding of your environment today and how it might shift in the future. Then you need to capture and move away from these discussions.
- Evaluation of Current Performance: You need to evaluate the performance of your current goals (both financial and nonfinancial) and deepen your understanding of how well your current business model and plans are working. Be open about what is working and what is not working. Once you have a realistic performance assessment compiled, set it aside.
None of these on their own defined the right goals for a winning strategic plan.
Strategic planning is about defining the future by taking a mental leap into this future. Before you turned to goal setting, you need to review or define the ultimate picture of success – your vision. The vision establishes one edge of your strategic thinking. Your strategic assessment defines the other. Strategy fills the gap between these two points.
As you explore this gap during strategy development, you may decide to shift your market focus. Your customer today may not be your customer in two years. Why spend limited resources continuing to compete for the preference of these customers when you will not need that preference you in two years?
As you explore how your business model should evolve, you may decide to make significant shifts in your operations to stay true to your vision. Funds may be better utilized for building future competencies rather than strengthening the current business model.
These two examples illustrate how using a strategic planning approach fosters very different strategic thinking and generates goals based on your planned evolution. These goals will move your organization to where it needs to go rather than creating goals that may be obsolete by the time you deliver on them.
The work of strategy development and guiding its implementation is indeed very challenging. However, skipping it leads to stagnation and eventual decline for any enterprise. In this series, we have provided insights as to why executives say their strategic planning efforts fail 80% – 85% of the time. We have also given you recommendations to combat these issues and beat the odds in your next planning effort.
Still unsure how to proceed? Maybe it is time to bring in the pros. Schedule a free mini-consultation.