Know-How Exchange : Strategy

Depends on your definition of success. Please cite specific firms who you know do not have strategic planning processes and and how you define success. If you can't do this, then you have a big logic flaw built into your question. But, OK, let me give you an example of how this might happen using a retail beverage corporation.

Two kids selling lemonade on a hot saturday on a busy Minneapolis neighborhood street can sell out at $0.50 per eight ounce glass by selling 32 glasses. The cost is $4.50 for the Kool Aid brand lemonade. They make $11.50 and since they each pocket $5.75, they consider their enterprise a success! I bet neither of them can spell strategic process! And if the weather is hot the next weekend, they could repeat the process and continue their success. And keep continuing their string of success. Right up until October when the first snow storm happens. Then, their little stand sees no business for six months. Oops. The success string ended! And the next summer? Oh, the kid in the house next door saw their success and decided to cash in. However, they sell it for $0.25 a glass. The neighbor are happy with their profits of $3.50. Our initial entrepreneurs find a magic market and make their price $0.20 because they know something about competition and pricing...but they find that some people still buy from the neighbor - he's younger and gets some "cute" sales. And there aren't 64 people in the neighborhood who will buy lemonade in a day. So they only sell 20 glasses. They are now losing $0.50 for the day. They close up their stand and are out of business. Now they are NOT successful! The neighbor, however, sells 20 glasses also and he believes he is successful because he has a fun day.

The message: If you the conditions are right and you are looking at the situation over a short time frame, anyone can be successful without any planning or process. But, as soon as their success gets noticed by a competitor who makes life less than idea, the success evaporates. Or if a company defines success as "we like what we do for our customers" then success can continue even as the investment the company makes in the business could yield better if they put it in a bank savings account.

I hope this helps.

Wayde

Well, more specifically, you need a good objective plan that takes into account the "real world" and is not shaded by biases. The analysis leading to the plan has to be thorough - which means the appropriate amount of investment time and money has to be made in primary and secondary research into customers, competitors, and into the company itself. Assumptions have to be identified and risk mitigation actions need to be developed. Steps need to be taken to validate conclusions. The plan has to have clear, defined actions and the team has to execute those actions. The process has to have a feedback and review system built and the plan has to have metrics defined so the company can identify deviation to the plan, identify factors leading to the deviations, and then take corrective action measures.

Aside from the plan, the firm needs visionary leadership and creative people to bring ideas to the table. It needs the right resource base to make needed investments. It needs operational talent to make everything work together.

Many things contribute to a firm's success. A good strategic planning process is one of the tools - that when everything else is in place too - can help a firm maintain success.

Wayde