Strategy is often confused with tactics. Strategy has to be the longer-term plan that ensures the right business model is being used to deliver what customers need, do it sustainably and profitably. That means not the here and now this week but the next year or two to ensure that the money employed, the equipment and people are secure.
It also should have the overriding aim of building a reputation, brand and revenue stream because that is the intellectual property that makes the business valuable.
That means knowing what business you are in!
Our team of advisers have many years of experience in industry under their belts and have come across their fair share of strategic planning tools (or, models, frameworks, techniques) for businesses and have seen what works, and what doesn’t. So how can you avoid wasting your time and energy on a process that simply won’t deliver?
We are always exploring new tools and techniques that support our clients, but we have to admit to having our personal favourites that never seem to let us down. We asked a selection of our strategy experts, “If you had to pick only one, what strategic planning tool is your go-to, and why?”, and here is what they said:
Mark McGowen, Innovation and Growth Advisor
What is your go-to strategic planning tool, and why?
Depending on the audience and context, I will use a few such as diffusion of innovation model, Stakeholder analysis, Porters Generic Strategies, BCG Matrix, occasionally Ansoff’s Matrix but with more established or mature businesses I tend to look at what will facilitate a review of the client’s strategic position and strategic options for the organisation, with a large focus on establishing or leveraging the organisation’s competitive advantage.
With start-ups and for this example, I will initially begin with a decision pyramid made up of three parts: Operational decisions, tactical decisions and strategic decisions.
What’s its purpose?
To demonstrate the goal and design of operational activity and how it supports strategic objectives further up the decision pyramid.
At what stage would you use?
At the beginning to just frame what part each element plays in strategy formulation before going on to more specific approaches and fit for an organisation.
Do you have any top tips?
Keep it uncomplicated and keep your eyes on the prize of clearly defined strategic objectives that are serviced by aligned tactical and operational decisions and processes. There is a natural tendency when a company is starting up to have operational creep trying to service peripheral revenue streams to support survival cashflow. These can be out of alignment with the company’s strategic objectives.
Learning to fund the cashflow from a strategic finance perspective instead of chasing fragmented revenue opportunities to try and fund growth was the first stage of my own learning experience. Also to think and act more strategically in terms of scaling up a business
Linda Grant, Executive Director:
What is your go-to strategic planning tool, and why?
PESTLE analysis – perhaps the Cinderella of strategic planning
What’s its purpose?
Helps you imagine what might feel unimaginable and lead on to the “what if” questions. Makes you look at the different external forces that your business has to operate within.
At what stage would you use?
It can be used at any stage in the business lifecycle, from set up through to maturity, through to succession planning….but the real value comes from when it’s a repeated exercise. The interval really depends on how fluid those external forces are – at times of great change, the business may need to review/do the PESTLE analysis relatively regularly, certainly as part of its annual planning process.
Do you have any top tips?
Best to do this as a group activity – with some prep work so that people come to the activity with some ideas. Allow time to explore each “letter” and the issues uncovered….allow people to explore implications, even if you later pull back to what is relevant.
Don’t leave it as a document gathering the proverbial dust – think about how the issues discussed should play out in your long-term strategy. You can’t do/respond to everything, so you need to prioritise.
If the PESTLE is a strategic tool, then the good old risk register is the tactical tool. I used to roll my eyes at a risk register, now I wouldn’t do without it. It’s like writing a shopping list, and then leaving it on the kitchen table – the very act of writing it out means you remember it and are more prepared.
Taking the issues identified in the PESTLE analysis and applying a risk lens that addresses how likely that risk is and the severity of the impact helps you plan/model what you need to do to mitigate those risks or how you will behave if the risk occurs and you can’t mitigate. For example, although we hadn’t planned for a pandemic, we had planned for what would happen if we couldn’t access the office for a period of time due to something like a severe weather incident or the building being taken out of action for some reason. So we missed the biggie, but we were still able to move quickly to remote working because we had in fact planned for that eventuality.
The risk register is part of BIC’s planning discipline, we review it every 3 months, close out risks that have been addressed, add new ones – basically keep thinking “what could possibly go wrong” and then think about how to avoid that scenario altogether, or if we can’t, what we would do if it did happen.
John Taylerson, Cluster Manager
What is your go-to strategic planning tool, and why?
Want to grow the business and are not sure how to go about doing it? Ansoff matrix might be a handy way to think through the process.
What’s its purpose?
Ansoff matrix is a simple 4 boxes business model. It starts with current business and moves through finding more from existing, more custom like the current business, then what else might those people buy (NPD) through to new products and markets (diversification).
At what stage would you use?
Use it in the strategy development stage when looking to grow your business as the whole point of Ansoff is it addresses the key aims of the business, but it also makes you focus on what business you are in and helps to build on the tactics that can be deployed.
Do you have any top tips?
Key to making the process work is to ensure that you are honest about the growth plan and its costs. The test should be, are we gaining incremental volumes and value.
Sometimes initiatives like this can end up moving existing customers around, costing more by spreading those customers across different sales channels and worse, confusing them so they don’t even buy as much at the end of the initiative.
RELATED: Tried and Tested – The Ansoff Matrix
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