“There has never been a time in which managers did not invoke the idea that the world is changing faster than it’s ever changed before.”Nitin Nohria, just-retired Dean of Harvard Business School
Pandemic, rampant unemployment, economic uncertainty, climate change, political upheaval.
And that’s just what you’ll find above the fold in today’s newspaper. Given all the turmoil and confusion across the board — about today, let alone tomorrow — is there even any point in developing a strategic plan for your business?
Of course, as someone who trades in strategy, my position on this question is pretty easy to guess: The answer is a resounding YES.
First, because as Dean Nohria and many others have observed over the years, we humans are biased towards believing that change today is happening more rapidly and more broadly than ever before. It’s not. The specifics may be different, but rapid change has always been a given.
Second, it depends very much on what you envision when thinking of a “strategic plan.” If your answer is, “a fancy, dust-gathering binder full of financial projections and dozens of pages of text assembled to spell out specific plans for five years into the future,” then I agree, it’s a waste of time.
But that’s not what an effective strategic plan looks like.
Strategy Is Choice
Strategy is about determining your purpose: who you serve and what you offer them. And it requires a consideration of context — of the business environment and of competitors — so that you can pinpoint how you stand out as different from the rest, and in a way that gives you a sustainable competitive advantage.
For example, consider your customers. Have their needs evolved? Do they have new options or choices — or will they soon?
Recently, when working on strategy for a university client’s undergraduate program, our target customer fell into one of two groups.
- Recent and soon-to-be high school graduates. Obviously.
- Potential “degree-completers.” These are the people who have some college but did not finish. As of 2019, there were 36 million of these people in the U.S. alone, an estimated 10% of whom are “potential completers.”
Considering demographic trends and the different needs of these two segments, one action we recommended was that the university expand its online course options to make them more accessible to the second group. As a happy coincidence, this commitment of resources to strengthen its limited online platform ultimately served the university well when COVID-19 forced everyone online.
The point is, it was not until the university pinpointed who it best served and what the business context was, that it could modify its plans and offerings to match the opportunity. That, in a nutshell, is strategic planning.
Strategy Is Direction
Even when things are changing rapidly, from a longer-term perspective, some things — demographic trends, for example — evolve in a steady and predictable way.
Not to minimize the jolt and disruption that COVID-19 created; clearly the pandemic has accelerated some trends dramatically and altered others permanently. But it’s the longer-term changes that may be most relevant to your organization.
In the university example above, another trend we identified was that for many students, an alternative to completing a degree might be to get highly focused training on specific, high-demand skills that are in short supply in the workforce, things like software development and data analytics.
These kinds of specialized trainings are being offered by programs across the country. There is no reason a degree-granting university can’t do the same, especially since programs like these generate additional revenue while leveraging capabilities already in place.
Absent a clear strategy, matching emerging trends to opportunities, large and small, is difficult (particularly in the midst of a pandemic).
- Look from the outside in. Do your best to ensure that you are not looking at things through an internal lens only, or falling subject to Confirmation Bias. Seek out data regarding trends that are most relevant to those whom you serve.
- Consider recent developments. Are there new technologies (or early signs of new offerings that could become substitutes) that could meet your customers’ needs in a different way? Your organization doesn’t operate in isolation; are there potential sources of new threats on the horizon?
- Seek primary data. In addition to researching trends, try to have frank conversations with customers, prospects and other key stakeholders. Often, it is useful to have an objective outside party do this research for you (you’d be amazed what people share when their confidentiality is assured).
- Keep it fresh. Your strategic plan should be a living document — one that explains your real purpose, and that helps you allocate resources (money and time) in ways that allow your organization to make the right decisions. Revisit the plan at least annually to see if adjustments are needed.
Regardless of how fast or in which direction the world is or is not changing, strategic planning is fundamental to making the choices necessary for sustained and efficient business growth.