Grow a Business
To create value, strategic growth planning requires persistent critical analysis.
When I say the word strategic planning to business owners, three things pop into their heads:
- Meaningless acronyms, like SWOT and GOST.
In truth, effective strategic plans crafted to grow a business are necessary to insure sustainable profits, which is the sine qua non of value creation. So maybe it is time for you, as a business owner, to adjust your thinking.
Defining Strategic Planning
Unlike a mission statement, for example, which can get a little touchy-feely with goals and aspirations, strategy is much more inward-looking and critical. Strategy demands insight into your business and its position in the market. It requires a detailed plan for how the company’s limited resources will be deployed and must focus on creating systems that ensure consistent execution. As most seasoned business owners know, without operating systems, you’re forced to rely solely on luck for future performance.
So, as you look inward, what exactly are you looking for? The answer is easy. You’re looking for a competitive advantage that’s sustainable (in the beginning this was probably you!). Without this, you’re likely competing on price. This is a race to the bottom, and you can’t and shouldn’t compete on both price and a competitive advantage. Aristotle’s rule of non-contradiction says, “The same attribute cannot at the same time belong and not belong to the same subject in the same respect.” Aristotle as a business consultant—who knew?
What’s Your Competitive Advantage?
A sustainable advantage is derived from distinctive capabilities. Capabilities that a rival cannot duplicate, and because of your systems, you should be able to replicate flawlessly. When differences among competitors are stripped away, the only thing left for customers to compare is price.
Therefore, the big question to be answered is, “What does your company do that your competitors do not?” This is truly the essence of your business, the thing that is perceived as valuable by customers and makes you superior to your competition. According to Harvard University, competitive position is twice as important to profitability as the industry in which a company operates.
Means Creating Value
Resource allocation is mostly about time and, of course, money. Statistics indicate 80 percent of top management’s time is devoted to issues that account for less than 20 percent of a company’s value. We have all witnessed the “prodigal product syndrome,” where a poor performing area of the business continues vacuuming time and money at an alarming rate (usually due to sunk-costs, bias, etc.—topics for another time). It is critical that your company’s strategic plan includes the allocation of resources to only those undertakings that lead to superior value for your customer—value that is both actual and perceived.
In creating performance systems, it is critical to first determine where your company derives its value. Some examples include product leadership like E*TRADE, operational excellence like Southwest Airlines, or customer intimacy like most successful small service businesses.
Once your value driver has been determined, you must develop systems that ensure consistent execution. These effective systems often share common attributes:
- All employees understand the link between them, their duties, and this value driver.
- Compensation plans are tied to following the system.
- Customer reactions are routinely solicited to determine if the company is meeting their needs and if there is anything else the company can do to meet other unaddressed needs.
Let Burke & Schindler help you and your company elevate strategic planning from off-site acronyms to an essential process that creates a valuable enterprise. Strategic planning can lead to cash and continuously accruing shareholder health. Contact us to learn more about how Burke & Schindler can help you begin your strategic planning today!