McKinsey’s published a great article – Managing the strategy journey
Its focus is on the large corporate market. But there are some valuable lessons and gems that can be used by smaller companies.
In terms of successful strategies, they found, rather alarmingly that of the 2000 companies they surveyed only 35% had strategies that passed more than three of what they consider to be the ten tests for the likely success of your strategy. The full article can be read here
I have taken the liberty of using the key topics in their article and translated them for small businesses.
1. Plan to find the gap
Time and again when I talk to owners of small businesses, they don’t have a plan or forecast or budget for the following year/years.
McKinsey’s suggest meeting two to four hours every week/two weeks to match the amount of time you spend on operational issues.
For a smaller company, particularly with smaller numbers of employees, once a month is probably adequate. But book it out and make it a regular and unmovable date.
2. Find the gap
What is your vision for the future? Where do you want to get to? Why do you want to get there? Is it to exit, to retire and hand it on to the next generation, double in size, have enough to be comfortable, be acquired, acquire other companies, step back from the business and become the chairman? Whatever you decide here will inform any further planning.
3. Close the gap
Work on strategic initiatives that get you from where you are now to where you want to be.
Do you know your market, who your customers are, what makes you different, what your customers value about you, what opportunities and trends there are that you can tap into?
4. Bridge the gap
Work out how you are going to deliver these strategic initiatives. This needs to be tied in to your financial and operational planning phases.
You should only ever attempt to make two to three big changes at once to stand a chance of succeeding. Otherwise you will be constantly fighting against day to day issues and there is only so much that you and your staff/fellow directors can do at any one time. If you attempt to implement the 15-25 they recommend in their article, you will fail.
5. Mind the gap
Measure and review. This may need you to change how you budget and how you do your forecasts.
Identify the measures (KPIs or Key Performance Indicators) that are going to get you to where you want to get to and review against those. Make sure you have lead measures as well as lag measures.
The lag measure is the historical measure of change e.g. sales conversions.
The lead measure is the measure that predicts the lag measure. In this case the lead measure might be ‘Make more sales calls’. It is the activity that should hopefully result in the end (lag) measure. This article explains it well
The beauty of having regular meetings and reviews using your KPIs is that you can track trends – are things improving as they are, or is there a downward trajectory requiring some intervention to take place? Many people only find out at year end when their accountants go through the figures that things haven’t quite gone as planned. Don’t put your la-la ears on; far better to track frequently and see dark clouds appearing on the horizon and to take action rather than waiting for the full scale hurricane to hit.
Smaller organisations have the advantage over the larger ones in that decisions can be made far more rapidly and with much more flexibility and they are less hampered by process. More of a speedboat vs a supertanker. That’s not to say an appropriate amount of time, research and resource shouldn’t be put into it. It absolutely should. And it’s not an excuse for constantly changing the plan. Which is always a temptation. Give it time for new initiatives to work and try not to get tempted by lots of lovely, shiny new things. Review anything new against your existing plan at your regular meetings and make sure a proper business case is put together to assess its viability. And if it actually gets you to where you want to get to. Always check back to your vision and aspirations (and values). Do the activities help you get you there? If not, then you should think seriously about whether or not they should be implemented.
If you want help on developing and implementing your strategy, please contact me for a free, no obligation meeting – firstname.lastname@example.org