Category Archives: Planning Skills

Willie Sutton Strategy

Why did Willie Sutton rob banks? Legend says Willie robbed banks because that’s where the money was.

We’ve talked about strategy over the past couple of weeks because many of you are engaged in strategic planning. Successful companies bring their (right) product or service to the right market at the right time in the right way.

Strategic planning is not to create tactical goals for the following year, but to examine those external systems that will have an impact on your long-term success. Willie Sutton may lack moral turpitude, but he knew where the money was.

The Trend is Your Friend

“But these regulations are designed to stifle business,” Rory complained. “The government rules that we play under are political initiatives designed to drive us under.”

“Then, what are you waiting for?” I asked.

“What do you mean?” Rory replied.

“Are you waiting for the next political election, hoping for a new regime that will return your operating climate back to the way it was?”

“That would be nice,” Rory’s face lit up.

“Nice is like hope,” I said. “Ain’t gonna happen. Even if you do win a political victory, the likelihood of a return to the good old days will not happen. Instead of fighting or waiting, figure out how to take advantage. The trend is your friend.”

External Systems that Impact Internal Systems

From the Ask Tom mailbag –

Question:
When I look at our strategic plan, it is mostly a mathematical increase in revenues over last year and some projects to cure some of our operational problems. If that is all it is, why is there such a focus on strategic planning?

Response:
Unfortunately, for most companies, your observation is correct. Most strategic plans are not strategic, they are tactical. Tactical planning is important, but it is rarely strategic.

Your question is why plan. If we were successful in identifying our competitive advantage and effective efforts to operationalize that advantage, why pow wow to come up with a new plan?

We have to periodically pow wow because of this one factor, change. Change requires us to reexamine our assumptions, understand our marketplace, revise our thinking, adapt our internal systems and track our progress in the face of that change.

Most planning is an attempt to resolve operational issues with our internal systems, that is still a noble goal. Strategic planning is an examination of those external systems that have an impact on the way we organize and operationalize our internal systems. Here are five important external systems you might consider –

  • Market (external system). This external system includes your best customer, different customer segments, your best competitor, second tier competitors, vendors and suppliers.
  • Regulatory (external system). This could be financial regulation, like taxes, environmental regulation, tariff regulation, permit regulation.
  • Finance (external system). As companies grow beyond the resources of stockholder investment, reliance on external sources of capital becomes more important. This includes simple revolving lines of credit, institutional term debt, private equity. All come with strings that have an impact on the way you internal organize. Banks call these covenants. Access to capital markets is seeing an extraordinary shift with increased interest rates depending on market risk.
  • Labor (external system). We used to look at unionization and unemployment statistics to get a handle on our access to labor. Now we have to include governmental intervention, student loan forgiveness, cultural impact on employment conditions (unlimited vacation, virtual roles) and accountability in those conditions. It’s all part of your business model.
  • Technology (external system). Technology has changed the way that we work. Meaning, technology has changed the way we make decisions and solve problems. Every business model is shifting to incorporate technology and make it effective with a constant eye to the next technology which will bring the next change to the way we organize.

It is these external systems that will have the most impact on your change in strategy. This is where I always start. What’s changed?

Casual Opinion

From the Ask Tom mailbag –

Question:
You appear somewhat down on SWOT analysis as a planning tool?

Response:
It’s not the analysis part, it’s the opinion part. Most SWOT exercises are not analysis, but rather opinions, not tested by reality. Chuck Bamford, in his book Strategy Mindset tells the story. He was able to teach his eight year old son the SWOT methodology and asked him to conduct an “analysis” of his third grade class in school. Shockingly, his son declared the strengths of recess and lunch.

In our companies, we make million dollar bets on strategy. That strategy has to have some relationship to reality and requires a much harder examination than casual opinion.

List or Analysis?

“Of course, we are doing strategic planning this year,” Allison smiled. “Each year, we go off-site, the central exercise is our SWOT analysis.”

“But, you said you were disappointed over the past few years with your planning efforts?” I asked.

Allison nodded her head. “You are right. Sometimes it seems our planning is a rote exercise to build some SWOT lists and call it a day. The effectiveness of the exercise, though completed and compiled in our single page business plan, isn’t very helpful when the firefighting of the day kicks in. Sure, we pull the plan out every quarter and walk through its initiatives, but at the end of the year, we are still firefighting in spite of the plan’s guidance. Becoming the premier provider of goods and services to our targets markets seems like more bluster than planning. I mean, we wanted increases in revenue, gross and net profit, but it appears to be more intention that a methodology.”

“But, SWOT is a tried and true exercise,” I observed. “Why do you describe it as lackluster?”

Allison was quiet. “SWOT is supposed to be an analysis. Seems like more of a list than analysis. We are comfortable making the list, not so much on the analysis. And what we are really comfortable with, is the firefighting of the day.”

We Improvise

“Not one plan, but four plans?” I wanted confirmation from Roberto.

He nodded. “I was in the Marines. We had a saying, ‘We don’t plan. We improvise.’ But, improvisation only works if you are prepared with a plan. What’s the first part of every plan?”

“Purpose,” I replied. “We all have intentions, mostly unspoken. A plan is created when intentions become a documented purpose.”

“Improvisation only works when there is a commonly agreed-to purpose,” Roberto continued. “Without a purpose, improvisation becomes chaos. The chaos may be interesting, but it accomplishes little. Purpose drives the next step.”

“Visualization,” I replied.

“Everyone on the team must agree to the purpose and hold a similar vision of what that future state looks like,” Roberto explained.

“How do we know the picture each holds is close to the same picture of their elbowed teammate?”

“Simple,” Roberto grinned. “They talk to each other. It’s a discussion. It is the necessary work of improvisation. When all hell breaks loose, we have to be prepared to make the micro-decisions of the moment, in concert. Serendipity doesn’t happen by random chance. Serendipity is all about our intentions.”

“And?”

“And only then can we create the mile markers to chart our progress, the goals, objectives of our micro-decisions. What looks like serendipity only occurs when we create the context of a plan in which to operate. It may appear we are winging it, but our actions require preparation to be effective toward our purpose.”

Scenario Planning

“You had a pretty good year, last year,” I said. “What was your secret?”

“It was a solid plan, flawlessly executed,” Roberto flatly stated with a smile.

“I know that’s not true,” I replied. “I mean, I know you had a plan, but, that’s not what happened.”

Roberto’s smile turned into a grin. “Your observation is correct. We didn’t have a plan. We had four plans. We took the two largest variables that would impact our business and played them out in four quadrants. We played each variable up and each variable down in combination. At the time, what we thought would happen was very far from what actually happened. If we had not had three alternate scenarios, we would have been sunk.”

“And this next year?” I asked.

“Same. We thought we were finally getting back to normal, then Ukraine, protests in China and Iran, now a looming rail strike. You have to plan for contingencies, not just what you think will happen.”

A tip of the hat to Gideon Malherbe.

The Two Strategic Questions

When I was in journalism, I was taught to answer the 4 “W”s. Who, what, where and when?

This is planning season and companies across the globe are asking those questions. The multi-day retreat is called strategic planning, but in most cases, it is tactical planning. Here are the questions again, only two are strategic.

  • Who?
  • What?
  • Where?
  • When?
  • How? (I know it doesn’t start with “W”)
  • Which?
  • Why?

The responses to the list are mostly tactical.

Given two or more choices (and there are always at least two choices), which choice fits our strategy? Given two or more choices, why would we choose one over another? Those are the strategic questions.

Fear and Hesitation

“Let’s hear the self-talk,” I said.

Lucy began to describe her vision of the project as it would be completed. Her words were tentative. “When we finish the project, the new territory should be ours. The competitors will think twice about ignoring our expertise. The client should have a new-found respect for us.”

“Not bad, for starters,” I said. “I want you to try something different. Pretend the project is already finished. Close your eyes and visualize that we are one day beyond the project’s completion. Now open your eyes and describe it again.”

It took Lucy a moment for it to sink in. I could see her eyes blink hard as she moved her mind into the future. “We finished the project and the new territory is ours. The competitors cannot ignore our expertise in this marketplace. The client has a new-found respect for us.”

“Lucy, it is more than just confidence. What else is different when you talk like that?”

“When I transport myself into the future, all of the problems that get in the way and slow us down are gone. All of the hurdles have vanished.”

The power of visualization, to a real time in the future, works to conquer more than problems. It conquers the fear and hesitation of moving forward.

Planning, Goals and Objectives

From the Ask Tom mailbag –

Question:
My role has expanded recently and as a manager, I am expected to participate in our annual goal setting exercise, including setting expectations for my team. How would you suggest I approach this task? I recognize that communicating context is critical.

Response:
Congratulations. Welcome to your new role. Goal setting is actually the second step, not the first in your organizations annual planning exercise. Before you can set goals for yourself and expectations for your team, you have to understand where the organization is going. That always starts at the top of the organization, and, it appears you are now part of that circle.

  • S-V – Business Unit President, goals and objectives, 5-10 years, mission, vision.
  • S-IV – Executive Managers, goals and objectives, 2-5 years, multi-system integration.
  • S-III – Manager, goals and objectives, 1-2 years, single system, single critical path.
  • S-II – Supervisor, goals and objectives, 3-12 months, implementation, execution.
  • S-I – Production, goals and objectives, 1 day-3 months, production.
  • Each layer in the organization should be thinking about, and asking questions related to context at the next level up. It all starts at the top with Mission, Vision. I hold the Business Unit President accountable for leading that discussion, arriving at and defining some conclusions. Then, toward that Mission, Vision, each layer begins to grapple with defining the tasks and activities (the work) including stated targets for each objective.

    The approach, for you, will be to get your arms around the way your company expresses itself in these cascading sets of goals and objectives. Some companies are very formal, some informal, some are loose. Speak directly with your immediate manager.

    • How did the process go last year?
    • How were the results of last year’s process stated, or published?
    • Can you get a copy of last year’s planning output?
    • Is there a schedule for this year’s planning?
    • What preparation do most managers complete prior to the planning process?
    • What data needs to be gathered?
    • Specifically, what formal documentation do you need to produce, as a new manager in your company?
    • Does your planning need to coordinate with anyone else’s plan?
    • Does your plan need to include budget and costs?
    • What has changed during the past 12 months? In your market? In your company? In your department? With your team?
    • What changes in the future do you need to be aware of that might impact your plan?
    • How will the elements of your plan need to be broken down and communicated to your team?
    • When will your plan need to be communicated to your team?
    • What feedback from your team will you need to collect in the preparation of your plan?
    • What milestones will you track (key performance indicators) to make sure your plan stays on track?
    • How often will you review those milestones with your manager?

    That’s probably enough for now.