What Tools and Approaches are Best For Strategic and Business Planning?
By Bob Norton, Founder
I am asked this question all the time, and it can be frustrating to try to answer for people. So here goes and now I can send them this link.
Really it would require hours to answer this question well, as prescription without diagnosis is malpractice. Strategic and business planning is a very complex process. It involves many disciplines including sales, marketing, product development, operations and finance, as well as whatever industry domain skills needed. Even as a 25 year CEO I would never do it alone. I have twelve tools I personally use and teach in my CEO Boot Camp and also sell in the AirTight Management Strategic Planning kit. I would generally use three to four approaches (see list below) and twelve tools to create an optimum business model and plan. The "approaches" are frameworks for thinking to divide a highly complex problem into its component parts really. They are a process. The tools dig deeper into the details to validate a particular idea, product or change. That experience could not be captured in five books, never mind a blog post. There are no doubt thousands of books on the art of Strategic Planning.
Hot Tip: All entrepreneurs and CEOs with low experience always think they have their business model figured out. None, yes literally ZERO in my experience, and I have worked with hundreds of startups, ever do until they reach $50 million or more in sales. Even then the smart ones know they will need to constantly adjust and learn and their job is getting the right people on board and evolving the business constantly ahead of competitors in the modern, global business world. Entrepreneurship always has iteration through and trial and error. Because I have been doing Strategic Planning since 1987, I can generally improve any business model 100% within 4 to 8 hours of work with a client. They will come away saying "We never would have thought of that." almost every time. This is art and creativity, not science.
There are always unknowns unless you are replicating someone else’s business, and even then maybe.
That said I would also say the tools are only 5-10% of the problem, as this is like giving a paintbrush to someone and expecting them to paint the Mona Lisa. Strategic Planning is about deep experience, or "unconscious competence" (see the book "Blink" by Malcolm Gladwell), which is your subconscious neurons being wired to do this by thousands of hours of experience. Even big companies with highly experienced management teams get a facilitator to take them through the process.
What everyone needs is someone to help you with this who has done it for 5 to 20 years. As a new entrepreneur you will likely struggle with trial and error for years before figuring out many things that a good mentor can tell you in a month of work with them. If you have an established business then you need help even more because you and your staff are locked into a particular way of thinking and need outside perspective too. You will learn that in any marketplace you will be facing tough competition from top experts. Best you have someone on your team that can help you pull everything you think you know apart and see what holds up for the future. There are so many questions to ask it is not possible insiders can even think of them due to history, group think and cogitative dissonance.
Great companies are never built by individuals, but by teams with complementary skills. It is ideal to have everyone on your management team have some responsibility in the Strategic Planning process. We always stretch the minds of the team so the plan can be updated annually by them and, of course, benchmarked against progress for adjustments quarterly too.
All that said here is a partial list of the tools we use, but remember putting a hammer in your hand does not make you a fine carpenter:
1. A one-page business plan framework with summary vision, mission, values and strategic "rocks"
2. SWOT analysis - A good starting point to validate your business core, or "Hedgehog Concept" and also how I test the level of thinking of the management team member by asking each to bring one page, divided into four quadrants with their personal starting point.
3. Market Research and Competitive Intelligence update - This is a lot of the work and the process should be started when it is mostly done. Do you understand your competitors 7P's? Direction and messaging? Rate of growth and financing capacity? Many other things needed.
4. Competitive Landscape Maps (CLMs) to validate the differentiation and direction of competitors in the marketplace
5. Development of a Risk Landscape Map(TM) - a proprietary tool we invented to identify and reduce risk by tuning a business model. It is often the first tool I use in due diligence process for investment or M & A.
6. Ten "Frameworks" or approaches to consider using: Porter's Five Forces Analysis, Crossing the Chasm view, Blue Ocean Strategy, Christensen's Innovators Dilemma and Solution, PEST analysis, Balanced Scorecard (too simplistic and inferior to a good corporate dashboard in my view), Hoshin Kanari/TQC or Deming's approach to incremental and constant improvement, McKinsey's 7s framework, Debono's Six Thinking Hats and more. These are just structured ways to look at a business and market, and an experienced Strategic Planning expert will do all of them in their mind in seconds each once they load the business facts into their head. These frameworks will force your team into better thinking and expand their mind out-of-the-box. Usually two to three of these approaches can be used collaboratively from this list. Each will provide a different perspective and generate new insight.
7. Validation of the vision and Strategic Plan by experience and simulation in the minds of the experienced people on the team. This is why a diverse team is needed to validate sales, marketing and product strategies developed.
8. Our proprietary Strategic Budgeting(TM) process that is designed for innovation and growth companies where straight line extrapolation and too many unknowns exist for a normal accountant driven cost control focused budget. This is about analyzing opportunities one by one which accountants do not do well.
There are well over a hundred of these tools available but the magic is in knowing which to use in a given situation that will vary greatly by industry, stage of development, competition, maturity of the market and many, many other factors. Any Strategic Planning process should be iterative, not linear.
We can help you through a professional Strategic Planning process on any budget with the following different options:
1. On-site facilitation of your team to stretch their strategic thinking abilities and tap their expertise fully
2. Remote coaching through the process - Usually best for companies under 15 employees with a small budget and limited management team to keep costs for travel down.
3. Full service Strategic Plan development program where we do the heavy lifting and are responsible for the end result but work closely with you also. This is the most expensive, but predictably also the best option. It will be a "teach to fish" approach but we will make everything happen and deliver a completed plan come hell or high water.
4. Use a Strategic Planning Kit (Here) - This is primarily for startups or businesses with no budgets. It will help but not create and optimal plan without the experienced talent and creativity from outsiders injected into the process.
A Strategic Plan can be developed at any time then updated annually. It is often linked to the annual budgeting process. Great execution eats strategy for lunch they say, but a bad strategy with great execution is a dead company too.
Telling most people about strategic planning feels like trying to teach a fish to ride a bicycle because they have no context to understand the many factors and processes needed. It is literally the most complex process in every company because it encompasses all the other processes and business disciplines, and lots of market knowledge and experience. You truly need to be a "guru" to do it well.
Even people with 10-20 years business experience that have not learned to do it right, and I don't mean B-School classes and case studies, generally cannot grasp it until they are taken through the entire process by a top professional.
Don't try doing it alone, or at home, for the first time. It is guaranteed to be sending a new light weight fighter into the ring with Mohammad Ali in his prime. The marketplace is cruel and has no pity for new entrants that are not prepared to do battle.
Bob Norton, Founder of AirTight Management, has been designing dashboards since 1992 and trains and certifies all AirTight consultants and coaches. Bob Norton has been a CEO since 1989 and a CEO Coach, Consultant and Thought Leader in Leadership, Management and Systems since 2002. He is also the creator of The CEO Boot Camp and hundreds of training programs for executives and managers.