Not too long ago, I featured Rich Horwath, the author of Elevate: The Three Disciplines of Advanced Strategic Thinking here to discuss the common mistakes of strategic planning. Rich has helped thousands of managers with the strategic process.
After the interview, I decided to follow up with him to ask when leaders need to abandon or re-evaluate a strategic plan. I have seen executives stick with a plan and others modify or abandon a plan. Most leaders don’t want to open up the plan over and over because it shows indecisiveness, a lack of confidence or it creates confusion. That said, there are times when a major review or rewrite is important. So, I asked Rich:
When is revisiting the plan the right thing to do?
The ability to modify strategy at the right time can literally save or destroy a business. Here is a checklist of five moments when it is critical to evaluate your strategy.
1. Goals are achieved or changed.
Goals are what you are trying to achieve, and strategy is how you’re going to get there.
It makes sense then, if the destination changes, so too should the path to get there. As you accomplish goals and establish new ones, changes in resource allocation are often required to keep moving forward. In some cases, goals are modified during the course of the year to reflect changes in the market, competitive landscape, or customer profile. It’s important to reflect on the strategy as these changes occur to see if it also needs to be modified.
2. Customer needs evolve.
The endgame of business strategy is to serve customers’ needs in a more profitable way than the competition. But, as the makers of the Polaroid camera, hard- cover encyclopedias, and pagers will tell you, customer needs evolve.
The leaders skilled in strategic thinking are able to continually generate new insights into the emerging needs of key customers. They can then shape their group’s current or future offerings to best meet those evolving needs.
3. Innovation changes the market.
Innovation can be described as creating new value for customers.
The new value may be technological in nature, but it can also be generated in many other ways including service, experience, marketing, process, etc. It may be earth shattering, or it may be minor in nature. The key is to keep a tight pulse on your market, customers, and competitors to understand when innovation, or new value, is being delivered and by whom. Once that’s confirmed, assess your goals and strategies to determine if they need to be adjusted based on this new level of value in the market.
4. Competitors change the perception of value.
For many years, fast food was fast food. Burgers, tacos, chicken, pizza, and hot dogs were the standard fare. Within each category, there was greater similarity between competing offerings than distinction. As Subway entered a period of rapid expansion through franchising, it began to promote a healthier fast food. Eventually, they used a spokesman who lost weight on the “Subway diet” to lead the campaign, and the fast food arena slowly started to change. People who never really considered the nutritional aspect of their fast-food meals were now faced with healthier choices. Subway crafted a new perception of value in the market. While we’d like to believe that people choose products and services based on the actual merits of the offerings, we know that this isn’t always the case. Shaping the perceived value of an offering through marketing campaigns, social media, celebrity endorsements, and so on is a powerful weapon or threat, depending on your position.
5. Capabilities grow or decline.
A final consideration when determining whether or not to change strategies deals with what’s under your own roof.
Having led strategic planning sessions for the past 15 years, I’ve observed how challenging it can be for organizations to honestly evaluate their own capabilities relative to competitors. One indication is compiling a meandering laundry list of 15 strengths during the SWOT Analysis exercise (which lists an organization’s strengths, weaknesses, opportunities, and threats). However, objective assessment of the group’s capabilities relative to the competition is a starting point. If your capabilities have significantly grown, it may open up new strategies for capitalizing on opportunities to increase profits. If your capabilities have declined, it may call for new strategies to neutralize competitor initiatives or to exit the market.
Rich, most strategy books focus on organizational strategy only, but I appreciate how you also consider the individual executive’s issues in developing strategy. Specifically, you’ve researched executive time spent doing various activities. Would you share a few ideas that help executives manage their time?
Sure. Here are three ideas to help managers more effectively utilize their time:
1. Dedicate chunks of time to a single task.
The opposite of multitasking is to work on one task at a time—simple in concept, challenging to practice. Dedicating a significant portion of time to one task can boost productivity in two important ways.
First, setting time aside to focus on one thing increases productivity by as much as 65 percent in some studies because the person is able to channel all of their cognitive processing power to a single item.
Second, focusing on one task and not allowing any interruptions prevents those interruptions from wasting valuable time getting back to the original task. Research has shown that people take on average, 24 minutes to return to the original task after an interruption. Start blocking out 30-minute chunks of time to dedicate to single tasks.
2. Send fewer e-mails.
While it can be difficult to limit the number of e-mails you receive, you do have influence over how many e-mails you send. One company’s total e-mail output dropped by 54 percent over a three-month period after the company’s leaders reduced the number of e-mails they sent out. The company realized a gain of 10,400 man-hours over the course of the year, all started by executives limiting the number of e-mails they sent to others.
3. Make time trade-offs.
Before we can improve on a current state, we need to understand what the current state is. If we’re going to improve our ability to allocate time effectively, then we first need to determine where our time is currently being spent. I recommend carrying a notebook and logging your time in 30 minute increments for a typical week. Then plot those time investments on a graph to visualize where it’s being spent. Does it match up with your goals and priorities?
What are you currently reading?
I’m reading Johnny Cash: The Life by Robert Hilburn. Johnny Cash is a great example of how great strategy leads to success based on differentiated value. Cash didn’t have the best singing voice, but he was unique and took risks–two of the hallmarks of great strategy.Elevate: The Three Disciplines of Advanced Strategic Thinking