The importance of strategic planning.
Strategic planning gives any board and its senior management an opportunity to step back from the hustle-and-bustle of daily operations and think strategically about where they want to take their business.
In all organisations, planning can seem a distant priority when pressure is mounting to produce immediate results. In such an environment, it is easy to ignore those issues that are critical to long-term success but seemingly unimportant to everyday activities.
One of the constant challenges facing businesses is to create more time to think about the important issues, not just the pressing ones. This is why strategic planning excites me as it gives me the chance to spend some quality time with my clients pondering their future.
Strategic planning has been defined as “the science of making good decisions about the future”. Planning identifies where an organisation wants to be in the future and how it’s going to get there. It also determines how a business will position itself in the marketplace for long-term sustainability.
There are lots of myths about strategic planning, the most frustrating being the belief that planning can happen in a day. Strategy unfolds over time as it permeates and drives decision making. The choices that shape the future of an enterprise are invariably made in the flow of running the business.
Strategy, then, is about change and transformation. It’s not a one-off process but an ongoing commitment to improve. The term “business as usual” is now an oxymoron as the marketplace is constantly changing. The mantra of business today is “quicker, better, cheaper”.
From a planning perspective, there are strong parallels between business and nature. Businesses are often referred to as living organisms as they experience birth, growth, decay and death. It’s natural to want to prolong life and one way to do this in the business world is via strategic planning.
Strategic planning helps an organisation see itself as a living organism that is aware of its environment, its place in the ecosystem and the shifts that are occurring. This awareness and sensitivity to internal and external changes enables an organisation to adjust and adapt.
“Adapt or die” is a common phrase that highlights the struggle for survival in the business jungle. During any strategic planning workshop, participants are encouraged to inject some new ideas into the ecosystem of their business to take advantage of the opportunities arising from the transformation taking place in every business sector.
I have clients in a variety of sectors but interestingly all are being reshaped by multiple forces including disruptive digital technologies, cutting edge innovations, and nimble new entrants, evolving consumer demands, profound demographic shifts, tightening regulatory requirements and increasing stakeholder expectations. The successful businesses will be those that understand the reach and scope of the shifts taking place and modify their business models accordingly.
On the question of Mission statements, many organisations are still stuck in the past in how they express their Mission while the more progressive organisations understand that they exist to help people. An example here will help.
Microsoft’s Mission Statement used to be: “A computer on every desk and in every home, running Microsoft software”.
Microsoft’s Mission Statement is now: “To enable people and businesses throughout the world to realize their full potential”.
The message is clear: Organisations must cease expressing their Mission in terms of the products and/or services they provide. Rather, the Mission should convey the human need the organisation is trying to satisfy.
While the Mission statement is a pragmatic articulation of what business the business is in, the Values or Vision statement is a more aspirational declaration of what the business hopes to achieve in the longer term. The Vision Statement serves as a rallying cry that energises people throughout the organisation to achieve the corporate mission.
The early work of NASA illustrates the power of a Vision Statement. In an interview, a cleaner at one of the major NASA installations described his job as “helping to put a man on the moon”.
But there is one piece of the jigsaw still missing – a customer value proposition; (CVP.) A CVP is designed to answer one question: “Why should I buy from you?” Put another way, the consumer wants to know “what’s in it for me?”
The standard textbook definition of a customer value proposition is “the promise of value to be delivered and the belief from the customer that value will be experienced”. Of course, the more specific your value proposition, the more effective it is. Perhaps you recognize these two classic value propositions:
- “You get fresh, hot pizza delivered to your door in 30 minutes or less – or it’s free.” – Domino’s Pizza
- “When your package absolutely, positively has to get there overnight” – FedEx
What is your value proposition?
So, the message is clear, the only constant in a fast-changing business world is change itself and to meet that challenge you must constantly lift your head up above the trees to see the forest and reshape your future by having ongoing annual strategic planning in which you review and refine your mission, vision and your customer value proposition.
This opinion piece is provided by John (JT) Thomas, a 46-year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.
JT has been proudly involved with Princeton for nine years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.