A good strategy is figuring out the best formula or mix across these four dimensions for generating the most profitable and potentially profitable business.

FIVE STEPS TO MAKE YOUR STRATEGIC PLANNING EFFECTIVE

Successful companies as they expand, and experience some initial success,  lose sight of their overall business strategy and end up wasting time, energy and money chasing after the wrong business.

They may also miss seeing the signs of change and stick to a strategy that is no longer viable in the marketplace. Here is a simple and effective method for defining your company’s strategy and ensuring that your company is pursuing the most profitable business.

STEP 1. Defining Your Company's Strategy

Your business strategy is determining your company’s scope or reaches across the following dimensions within your company’s marketplace:

• the market segments or niches your company can and does serve;
• the customer needs your company can and does fulfill (or products and services you company can and does offer);
• the distribution methods that your company can and does utilize to get your products/service to the marketplace (e.g., direct to end users, via intermediary retailers or wholesalers, etc.);
• the geographic territories where your business can and does exist (e.g., local, regional, national or international).

A good strategy is figuring out the best formula or mix across these four dimensions for generating the most profitable and potentially profitable business. Your strategy also positions your company in relation to its marketplace allies/partners and rivals/competitors. It makes little sense to work with customers, products, services, distribution channels, or in territories where there is little hope for current or future profit, thus company sustainability.

STEP 2 Developing Your Company’s Strategy

To develop part your company’s strategy, you can categorize your business’s market segments and product/service offerings and then create a "product/market matrix" (with market segments on the horizontal-axis, and product/service categories on the vertical-axis).

For example, one -Capital Goods marketing & maintenance company in New Delhi ( who  have been our recent client) created their matrix by segmenting its marketplace into A) brand new Capital Goods owners (those having Capital Goods less than one year), and B) existing Capital Goods owners (everyone else with a Capital Goods). They then differentiated their product/service offerings into 1) first-time Capital Goods startup, 2) ongoing Capital Goods maintenance services, 3) providing Capital Goods consumables, and 4) Capital Goods upgradation or decommissioning.

It is important to identify the specific cells in your company’s product/market matrix where there is greatest potential for business profit and where your business has, or can quickly develop sufficient work capabilities and delivery performance. The mentioned Capital Goods Company was very capable and successful at Capital Goods maintenance service for both new and existing Capital Goods owners. (This was their so-called "cash cow" business.) They then built upon that success to bridge into offering other products and services in their matrix to those customers, like selling Capital Goods consumables and providing Capital Goods upgradation or decommissioning. (That became their new "rising star" businesses.)

Another important aspect of strategy is for a company to generate marketing, sales and service efforts for improving their penetration into profitable cells in their product/market matrix. The Capital Goods Company used its reputation and word of mouth marketing to generate referral business with existing Capital Goods owners. However, for new Capital Goods owners, it chose to target them through cultivating relationships with Capital Goods retail and construction outlets.

Also, synergies (connections) among the cells in a company’s matrix can be sought and pursued for increased company growth. The Capital Goods company used its reputation in Capital Goods maintenance to add new services of Capital Goods upgradation or Capital Goods decommissioning for appropriate existing Capital Goods owners, yet made sure it did not compete head-to-head with Capital Goods construction companies. Last, obvious synergy came from continuing to service new Capital Goods owners as they crossed the imaginary line to become existing Capital Goods owners.

STEP 3: Craft Actionable Business Strategy from the Bottom 

In theory, enterprise strategies are developed by senior executives and filtered down to create aligned action throughout the organization. But in reality, this process is often quite different—in most organizations executives establish high-level goals and leave the details to individual business units. These goals continue to be pushed down the chain of command to staff who address these goals from their narrower point of view, which can often cause gaps and conflicts. Ultimately, these gaps form the next set of strategic needs—what action the company must take in order to successfully achieve overarching goals.

While most business architects might prefer a top-down approach to strategy development, guided by executives, in many cases this just isn't possible. In fact, many BAs have discovered that they can better align IT's business and technical capabilities with larger company goals by identifying specific strategic needs and organizing these into themes. To help guide this process, there are a few key steps to follow:

• Facilitate Focus-Group Sessions That Uncover Unmet Needs. Because high-level managers often lack the detailed working knowledge needed to develop next-step strategies, non-executive focus groups can be effective in identifying the organizations concerns and needs at a detailed level. These groups work best with six to twelve people, so they are small enough to be controlled and large enough to generate ideas. To create a productive focus group make sure to find the right participants, and hold meetings in an environment conducive to brainstorming. Pointed questions should be asked, not about strategy but about specific issues and challenges.
• Analyze The Data To Identify Themes. Look for the output of the focus group sessions to be 150 to 200 individual strategic needs statements. These ideas should be grouped based on repeated ideas, and the remaining statements should be sorted for items that can be directly connected to larger themes. Shoot for fewer, targeted themes rather than a long, undifferentiated list.
• Translate Themes Into Defined Strategic Imperatives. Once five to fifteen themes have been identified, each one should be given a title and description without using technical terms. The goal here is to translate the list of strategic needs into business imperatives that describe what the business needs to do to reach a solution. After validating themes with the focus group participants and incorporating feedback, executives can be briefed in one-on-one meetings. They should be provided with a one-page summary of the process and a list of participants as well as an explanation of the identified business imperatives. Key questions to get answered include: "Does this make sense?" "Do you agree?" and "Is it actionable?"
• Once business imperatives are identified, the same three tasks can be used to identify the capabilities IT needs to develop in order to support the business, and to better understand the team's role in the organization.

Traditional approaches are not always best. Because business architecture is still in its infancy and there is little-proven methodology or concrete best practices to follow, creativity and innovation must come into play. Although building a strategy from the ground up may lack the appeal of working with C-level executives, it can be very effective in both creating strategy and developing an interest in the strategy process. Once business executives see effective strategic planning taking place, they will be more likely to get involved.

STEP 4 Utilizing Your Company’s Strategy

Eight tested ways to develop and utilize your company’s business strategy:

1. Create an "industry and marketing intelligence system" in order to systematically obtain information from your industry, customers, competitors. This will help you in segmenting your marketplace, and in understanding your best and worst product/service capabilities with respect to your competition.
2. Categorize your marketplace (customers) by industry, customer size or other significant demographic distinctions and then list those categories in order of greatest current and/or potential profitability to your business. Then ask yourself how to a) best pursue buyers within the categories at the top of your list, and b) harvest or divest your business of customer categories at the bottom end of your list.
3. Follow the same thinking as above with your company’s products/services and distribution channels.
4. Don’t bite off more cells in your product/market matrix than your organization can chew, for you will spread your organizational resources too thin and be more likely to fail. Chasing after too many "rising stars" can diffuse your organization’s energy. You need to figure out your highest potential marketplace "stars" and pursue those product/market segments first.
5. Don’t try to be all things to all customers. Pick whether your company can best pursue: 1) product or service leadership (being the best in a product/service category), 2) customer intimacy (focusing on serving a broad array of needs in a particular customer segment), or 3) operational excellence (providing best overall efficiency or lowest cost).
6. Align your company’s marketing and sales efforts with your strategy. You may choose to set up separate marketing and sales goals, tactics and materials for different sets of viable cells in your product/market matrix.
7. Make sure that your organization’s policies, processes and people are fully aligned with your chosen business strategy. If they are not, then you may be sending a mixed message not only to your marketplace, but also to your company’s people.
8. Review your company’s strategy regularly. In turbulent business environments, organizations need to reconfigure themselves (their products, services and target markets) every few years just to keep pace in today’s fast-shifting marketplace.

By thinking through and following the above formulas you can develop a clear and consistent business strategy that can give you a step up on your competition. Also remember that your strategy does not need to be perfect. A reasonable strategy supported by people’s passion and energy has a much better chance for success than a perfect strategy with little enthusiasm and drive behind it.Most strategic plans and intents are swallowed in the execution phase and forgotten.

STEP 5  Driving  Your Company’s Strategy

When your company is faced with a major opportunity or challenge, how do you go about managing it? If for example you've decided that your marketing  system is dated and inefficient and you want to gut it and install a new enterprise wide system, who do you turn to to get the job done? The  Chief Marketing Officer ? After all, the IT department reports to him or her so isn't that the logical way to go? But if you think about it for a moment, the function of  marketing is to serve the customer and thereby be the revenue earner for the rest of the company. Literally every department is a stakeholder in the efficiency of the system that delivers them inputs. How much more efficient would it be to have the actual stakeholders determine what is needed and how to implement the plan? This efficiency, this doing it right the first time is the reason that strategic management teams are becoming more and more popular.

But how do you create these teams? Who should be on them and what responsibilities should they have? Well here are a few ideas on just how to develop and support the effort.

Core team members                                             

A core team of between three and ten members should be selected from senior leadership who are also stakeholders in the project. This will result in a team made up of multiple disciplines whose combined point of view will best reflect the company's culture and focus. A team leader should either be appointed, or elected by other team leaders.

Responsibility

The team should be given a broad objective by the CEO and it should be based on "benefits" to the organization rather than specifications. Using the marketing function, for  example, the objectives may be lower selling costs, better market position, increased customer satisfaction and increased new value through innovation in the promotion. The team then takes those broad strokes, and because they represent every affected department, work out solutions to achieve the objective. Can you see the difference? This is not the marketing department telling the rest of the company "Here's your new system" it is the end users saying "This is what we want a new system to do".

Authority

This is where a CEO has to have courage. The role of the strategic management team is not an advisor to the CEO, they are decision makers. Knowing that their actions will have a direct impact on how the company operates is the secret to successful management teams. Their approach to the task is considerably different and far more focused than if they were simply assigned to a committee to make suggestions. As decision makers, the company needs to invest in them the resources and authority to get their task done

Extended team

The extended team supports the core team by providing additional insights and expertise. The team has as many members as are required by the core group and members may be added or deleted as their expertise is required. At some point, external vendors mat become part of this team. The core team poses the questions and the extended team does the heavy lifting providing the answers.

External members

Complex projects may require bringing in outside talent to assist the core team in performing their function. Brainstorming, for example, is an excellent way to generate many ideas in a short period of time but is most productive when an outside facilitator with experience in brainstorming conducts the session. Likewise with a business coach. If the team bogs down at some point, business coaching can help the team work through the problem solving process.

The CEO's role

While the responsibility and authority for the project rests with the strategic management team, the CEO can obviously have an influence by keeping in close contact and monitoring and measuring progress. Having a close working relationship with the team gives the CEO an excellent opportunity to demonstrate the leadership style that he wants his team to take back to their departments.

The organization's role

Management must be certain to communicate to everyone in the organization that the strategic management team has been formed and that they have absolute authority regarding the project and the cooperation and support of all employees is encouraged and expected. Territorial issues shouldn't be a problem as the core team is made up of senior leaders from each discipline, however having the company in general support the group can only make the process more efficient.

Dr Wilfred Monteiro Founder / Executive Director  of SYNERGY MANAGEMENT ASSOCIATES Mumbai ; works with owner managed companies to help them accelerate performance by offering innovative approaches to business strategy, sales management, organization development & leadership skills 

He can be contacted at email id wm@synergymanager.net