Some people have a tendency to mix up strategy on the one hand on planning on the other. In fact, they used the term strategic planning which is almost oxymoron a contradiction because strategy is about where you want to be in the future. It’s a clear vision of your destination. It’s the place on the map that you want to go to.
Planning and operations is how you get that and the roots you will take, the things you will do along the way, but it’s incredibly important to keep them separate because if you mix them up, you might devise what a bank manager will call your business plan and that might predict certain levels of income, certain levels of profitability, production levels and so on. But that’s not strategy, that’s just a prediction of some of the things you’ll meet along the way. It doesn’t tell you where you’re going. So, you have to have a clear vision.
And if the economy gets tough which it appears to be doing at the moment or if gets something brilliant and there are lots more opportunities. Not having clear strategy can trip you up in two ways. So, if the economy gets tough and you have to make some really tough operational planning decisions, you have to say, we need to drop this product line or stop this product line or we need to change our pricing with something.
You still need to maintain your vision of the future in order to make sensible decisions about them now. Otherwise, it’s just a knee-jerk reaction. But if the going gets really good and opportunities come along which they do. Sometimes, if you’re not clear about your strategy, you can grab an opportunity that looks like its really attractive for whatever reason, but it might be entirely the wrong thing for you to do. So, if you have a very successful company and you’re doing very well, somebody else might come along and you might think that might look like an interesting acquisition, but I would say, go back to the strategy, does that potential acquisition fit with where you want to go on the map because if it doesn’t walk away from it.
People get distracted. One of the things that separate good businesses from great businesses is the tendency of the format the good business is to get distracted. The great businesses stay focused. And whatever waves the economy throws at them because they know exactly where they’re going, they can bend and adapt because they know exactly where they go.
So, when I engage with companies who are asking me those kinds of strategic questions, the first thing I do is separate the two. Don’t talk about strategic planning, talk about where you’re going and then we’ll talk about how you get it, but don’t mix them up.
Transcription by:
Scribe4you Transcription Services