Most serious business leaders would readily acknowledge the importance of developing a thoughtful strategic plan for their business. As Lewis Carroll put it in Alice in Wonderland, "If you don't know where you're going, any road will get you there." And that's not a very strategic way to run a business.
On the other hand, in today's ever-changing, global business environment, you must also beware of letting your strategic plan "think" for you, thus preventing you from seeing and reacting to the kind of realities that may call for changing - or even scrapping - your cherished plans and strategies altogether.
Years ago, now, the dean of business thinkers, Peter Drucker, put it this way:
"As time goes by the theory of the business is taken for granted. The organization stops thinking. It remembers the answers but has forgotten the questions. The theory of the business becomes 'culture.' But culture is no substitute for discipline, and the theory of the business is a discipline.
It is not graven on tablets of stone. It is a hypothesis. And it is a hypothesis about
things that are in constant flux - society, markets, customers, technology. And so,
built into the theory of the business must be the ability to change itself (emphasis ours)."
-- Peter Drucker, The Theory of the Business, HBR, 1994
So let's say you feel pretty satisfied that you've thought through and defined the "theory" of your "business" in your company's strategic plan. How do you "build into" your plan the "ability to change itself" to make sure it doesn't turn into those "tablets of stone"?
In the course of some twenty-five years of strategic planning work with business leaders, we've developed some practices and tools that, to use Drucker's term, can bring "discipline" to this important imperative. One of these we call the "Strategic Change Template." There's no magic to it, but it does bring rigor and concreteness to an otherwise abstract challenge.
Creating a Context for Thoughtful Strategic Change
First and foremost, the Strategic Change Template, used in the context of routine strategic plan reviews, forces leaders to focus on the following question: "Since our last review, has anything happened in our environment that is of such potentially strategic impact that it warrants questioning or modifying our current strategy(ies)?" Just asking this question, at regular intervals, ensures that a leadership team doesn't, as Drucker put it, take its "theory" "for granted".
Having validated the question, the Strategic Change Template then provides a framework by which any executive who believes it's warranted, can make a case for changing strategies as a result of a new strategic event or trend. Here are the elements of that "framework":
1. The Issue Statement - A concise statement of what the strategic change issue actually is.
For example, for a former client of ours, a Detroit, US-based auto supplier back in 2008 when the auto industry was imploding: "Given the current business environment, our single-industry focus, if continued, could well threaten the very future existence of the Company. What must we do in order to ensure the long-term viability of the Company?"
For another client, a multi-channel (web, retail, wholesale) marketer: "Over the last few quarters it has become increasingly apparent that the wholesale business is marginally, if at all, profitable. Yet, it is one of our major business channels. How does this suggest we should deal with the wholesale business going forward?"
A key point here is that, going into any strategic plan review, any participant in the process can use the Template to surface and "sponsor" a discussion on an issue that he or she believes is of sufficient strategic importance to be brought before the leadership team for serious consideration.
2. Strategic Alternative(s) - Clear, concise statements of possible strategic responses or actions that the enterprise could take to counter, mitigate or overcome the change in the environment.
Here's an example from our auto supplier: "Within the next three years [Acme] should diversify, applying its core capabilities to address the needs of alternative markets such as furniture, defense, alternative energy, and laser technology."
And one from our multi-channel marketer: "Within the next two years, we should develop partnering programs with our key dealer/wholesalers that leverage our capabilities in ways that help them build their businesses, lower their costs, improve their (and our) margins and, thereby, increase our 'share of shop' with them."
It's important to note here that, by definition, sponsors can and, where appropriate, should identify more than just one alternative response for each strategic issue raised. This ensures that the discussion considers a variety of possible strategic countermoves. In addition, it's critical that each sponsor expand on each alternative so as to begin to flesh out for the planning group "what it would look like/feel like if we were to decide to go in this direction."
Here are some representative elements we suggest our clients consider for each alternative strategic response they identify:
• Product/service offerings that would be delivered
• Markets/audiences that would be served/exploited
• Key customer segments targeted
• Market size/growth potential
• Competitors anticipated
• Points of competitive advantage
• Factors critical to success
• Investment required (estimate)
Of course, these elements can vary, depending upon the nature of the strategic alternatives being considered.
Obviously, the number of alternatives to any given strategic challenge or threat may vary, but the number of seriously feasible alternatives is usually fewer than more.
Setting the Stage for Candid, Thoughtful, Strategic Decision-Making
The very existence and frequent use of the Strategic Change Template, as part of your plan review process, sends a strong message that it's not only "OK" to bring up the oft-dreaded topic of the "need to change," but that doing so is actually healthy for the business. Doing the pre-thinking and preparation required to complete the Template ensures that your very important deliberations about whether or not, or how, to respond strategically are based on more than just "off the cuff" conversation or "gut" reaction.
We've had good success using the Strategic Change Template with our clients, with the result that some have made it an integral part of their yearly plan review cycle. We urge you to give it a try. We're confident it can help your strategies stay relevant to the "constant flux" that surrounds your business as well.