Hear that? That was the nation collectively sighing as they received their email invitation to their next strategic planning retreat.
Somehow the year is halfway over already and we’re, yet again, pointing our thoughts to the next year.
Unfortunately, strategic planning is less than exciting for most of us, and it’s likely because we’ve learned from experience that traditional strategic planning is where great ideas go to die.
Bain & Company recently asked nearly 300 global executives to rate their planning process, and only 1/3 said that it resulted in strategy that meets three vital criteria: bold ambition, adaptability in the face of changing market conditions, and concrete guidance for management and the frontline.
The majority reported that, instead, they faced ineffective process, poor strategy design, poor execution, and poor adaptation.
Even more discouraging is that the majority of leaders reported they were satisfied with the process that lead to their mediocre strategy. Perhaps they have lowered their expectations or maybe they feel that fixing it is unrealistic.
Well, that’s sad.
On the flip side, the producers of great strategy take a different approach. They’ve invested time, people, and tools in making their strategic planning process a competitive advantage for their company. They allow for respectful debate. Most importantly, they incorporate data about customer needs and competitive dynamics to in order to drive better decisions.
Data is vital to effective strategic planning because the people making the big decisions are often further removed from the customer and the front-line. Without data, this can lead to a strategy that lacks customer insight and is out of touch with reality.
By incorporating the “voice of the customer” in the planning process, you can create a strategy that is much more likely to be successfully executed and win customer choices.
It doesn’t have to be like last year and the year before that.
Together, let’s take the pledge and sign the manifesto for better strategic planning:
1. We recognize that strategic planning isn’t an annual, top-down event. It should be evaluated throughout the year and adapted as needed.
I recently spoke to a leader at a top healthcare agency. She said that their markets are so fast-paced and dynamic that if organizations take too long to come up with the right solution, the market may change in the meantime and the strategy becomes outdated before it can even be implemented.
This really puts the pressure on the leadership team to continually monitor their environment, make decisions quickly, and execute even faster. This can’t be accomplished with the slow, annual strategic planning process of yesteryear.
2. We will demand customer data to supplement, and perhaps challenge, internal expertise.
Customer insights focus internally-sourced intuition. Your leadership team is smart and talented, but that means they have a lot of ideas. You can’t spend all of your time making decisions, because you need energy for implementing them successfully.
A financial institution client recently analyzed their Vennli results, and, while they weren’t surprised by the data, it immediately focused their discussion and allowed them to confidently commit to a few strategic initiatives. In other words, it cut down on the time spent debating the options, and took the risk out selecting which ones to invest resources in.
3. We will focus our strategy on the drivers of customer choice… Because without customers choosing us, we don’t have a business.
This means that resource allocation is not dependent on last year’s budget, but is instead defined by future growth opportunities and areas that are most likely to win more customer choices, resulting in company growth. It means that areas that are no longer providing a competitive advantage may be divested while other areas are invested in more fully.
We recently worked with one of the largest SaaS companies in the world to analyze the growth potential of one of their product lines. The results identified that it would be very difficult to win the customers’ choice in this market with their existing product, so some tough choices had to be made. They ended up divesting a $50M project so that they could reinvest those dollars into areas with higher potential.
4. We will demand current, real-time data instead of relying on that dusty market research report from three years ago.
When there was a slower pace of change, it wasn’t as vital to keep a pulse on your market at all times. You could make strategic decisions based on what you thought you knew, and you had a better chance of being right.
Alas, that was then. This is now. If you think your market isn’t changing quickly in ways that you should be aware of, then you’re probably wrong and just lacking the right data (sorry!).
Today, we have quickly changing customer perceptions and assuming to know the customer’s mind is a dangerous game.
For example, at Vennli, we have a demo case about smartphones. Competitors are releasing new models every year, so we rerun the survey on an annual basis to reflect changes in the market. It never ceases to amaze us how customer perceptions and the market change in just a year. You might not make smartphones, but your market is still dynamic.
It is very common for us to hear our clients and prospects admit that they are using market research from three years ago to drive strategic planning. But sustaining a competitive advantage takes constant vigilance and markets are changing more quickly than any time in history. Real-time data is now a must-have, not a nice-to-have.
5. We will present our data and recommendations in intuitive, visual ways so that we can spend our strategic planning meetings talking about strategy instead of debating n sizes and the meaning of p values.
A pet peeve of mine is when researchers provide dense, hard-to-interpret results to prove their value. (In a past life, we used to call this the “thud factor” – the sound your research report made when it hit the desk… and then probably stayed there.)
The real value of data is its ability to drive better decisions. To do that, it must be easy to interpret and clearly convey meaning. Even better, it should provide a line of sight into what actions should be taken based on the data.
To get closer to this ideal, consider Hypothesis-Driven Research, or “Backward Market Research.” People tend to think research will tell them what to do. Instead, research should be used to test out what you might do – then the results are immediately actionable. If you propose a few different strategic scenarios to your research team, they’ll develop research to provide exact results you need to drive decisions and ACTION.
6. We will demand competitive intelligence but through the lens of our customer.
In fast-paced markets, it’s becoming harder and harder to define who our competition is or will be. Is it only competitors with products like ours? Or do we compete with new technology coming from other industries? Or perhaps we’re actually competing with a customer’s option of doing nothing or some other behavior.
The trick is understanding what options customers are considering when making a choice. What or who do they consider to be the competing alternatives? And how do we compare to competitors on the factors they care about? Your customers decide who your competition is, not you. And, as discussed above, it can change!
Did I forget anything? Let me know. Best of luck to you in your strategic planning endeavors!