What does strategic planning entail?
In an earlier blog we explored this question and determined that the concept of strategic planning is quite simple, as shown in the diagram below.
However, though simple in concept, each step may be less so in practice, when extensive data gathering may be required and is sometimes problematic.
It was noted that the Business Adept Cards system was designed to support the strategic planning process by adding intuition and subconscious knowledge, thus enabling speedy focus of effort on those areas that promise the best returns.
The level of detail and the period covered by any plans is a matter of judgement, depending upon the nature of the industry.
This blog examines more closely the step in the cycle which I have chosen to call the first – Decide what to do – and to give examples of how the BA Cards can be used to improve the decision-making process.
STEP 1 DECIDE WHAT TO DO
Although strategic planning is a cyclical process, when starting a new venture, this is the first thing to do. Hence, step 1.
In order to decide what to do we need to know:
- What we are doing now and how well
- What we want to achieve by x years’ time
- What are our options to move from a) to b)
- The approximate cost/benefit of each option
We then decide which option(s) best suit our needs.
The following paragraphs examine each of these aspects in turn, providing examples of the sort of issues to address at each stage and how BA Cards might be used to clarify and accelerate the process. The examples are of a general nature and not exhaustive. Many others are possible, including those specific to a given industry.
a) What we are doing now and how well
Analysis of recent history and current performance is a good place to start. We are primarily interested in:
- what activities/industries are we engaged in?
- how effectively are resources being used and is there spare capacity?
- were last year’s targets met?
- was the business profitable enough?
The figures will show the hard facts but not necessarily any developing weaknesses. At this point the BA Card layouts that would help are – SWOT Analysis to show up inherent Strength, Weakness, Opportunity, and Threat of the business or any part of it eg marketing strategy; Problem Analysis to show up the root cause, obstacle and possible solution; and possibly a Relationship Analysis if any interpersonal problems are suspected.
If starting a new venture, history will not be available but it is still possible to do SWOT Analyses for available resources and participants, prospective Problem and Relationship Analyses.
Combining hard facts and intuitive analysis enables a more comprehensive understanding of the current position which will help towards identifying what is best to do for the future.
b) What we want to achieve by x years’ time
One of the first things to decide is what ‘x’ should be. It may be 3, 5, 10 or more years depending upon the type of industry or career. For retail 3 years is probably long enough, whereas for a high investment industry such as ship building, I’d expect at least 10 years. Relying on the next 1-year’s business plan is generally insufficient for managing future strategy.
So how do we determine what we want in, say, 5 years’ time? One way is to aim for a steady percentage growth year on year throughout the period. Or perhaps the vision for a retailer may be a presence in every major city. A car manufacturer may want to gain a particular market share. A start up entrepreneur may seek to employ a given number of staff.
In this instance BA Cards can help generate ideas, things to consider when creating a vision of the future. Use any of the layouts but ignore the card designations and simply take the cards as random concepts to prompt your own imagination.
Whatever is decided, though speculative, it provides a direction and destination – a focus for the next question “How do we achieve this?”
c) What are our options to move from a) to b)
All strategies in business can be expressed in monetary terms. It can be useful to understand the $ value of our vision – what it means in terms of profit - and ask “How do we fill the strategy gap?”
a desired profit b forecast profit (doing nothing new) c strategy gap
The main possibilities for closing the strategy gap and reaching the new level of profit are:
- increase the volume of sales at the same price
- increase the selling price maintaining the same volume of sales
- reduce costs
- add something new to the product/service portfolio
- a combination of the above
The BA Cards can help to identify and evaluate the options. Problem Analysis and SWOT Analysis are both useful for identifying opportunities and evaluating potential outcomes. Option Comparison will highlight best and worst features of competing strategies. Relationship Analysis can be a framework for testing how well new strategies fit with existing operations.
d) The approximate cost/benefit of each option
This element is very much a number crunching exercise. The result can only ever be an approximation because accurate costs will not be available until later in the overall process and income can only be estimated. The idea is to use experience, historic data and research to generate a best guess that’s good enough to eliminate the least attractive options and produce a shortlist for further exploration.
There are also strategic costs and benefits to consider. Financial factors are not always the most important. This is where BA Cards can accelerate the process of analysis. The two layouts that are most useful are Option Comparison of the best and worst features for two options at a time and SWOT analysis of each option.
This is an important decision point so engaging the whole team in the exercise will inject plenty of subconscious knowledge and enhance the quality of the results.
Having completed all the preliminaries, it is time to synthesise all the research and calculations in order to decide what strategic options to implement. Some will be a definite ‘Yes, go ahead regardless’ eg regulatory compliance, continuing with existing operations. Some will be a definite ‘No’ and several, especially new ventures, will be ‘proceed to the next step’.
For these indefinites, the final decision is deferred until more information has been processed about how to do them and what it will cost. They are still competing for scarce resources. Their value has yet to be validated.
In other blogs I address exactly how the BA Card system can enhance the next stages of the planning process:
- Determine how to do it
- Do it
- Review it
Why not experience for yourself the benefit of using Business Adept Cards? FREE TRIAL
Laura Dziaszyk, BA Cards Co-creator
Strategy And Planning