Computer Guy

Computer Guy
Sunset at DoubleM Systems (DBLM.com), Del Mar, California

Thursday, January 3, 2013

Strategic Planning


Many business books and articles present case studies about successful companies and endeavor to find common themes we can learn from. Unfortunately, good luck and forces outside the control of the business leaders can play a bigger role in these success stories than the authors care to admit. Also, success can be a very fleeting thing, and many authors have been embarrassed by their reference companies going from “great to bankrupt” in the space of a few short years.
A study by Booz and Co. took the opposite tack and studied “losing companies” to see if there was anything we could learn from their mistakes. Here is our take on their findings:
It's all about Strategic Planning!
Poor strategic decision making and failing to properly recognize the risks associated with chosen courses of action (or inaction) are the issues most responsible for destroying shareholder value.
Making matters worse, the sources of strategic risk have greatly increased. The rate of technology change is accelerating which is bringing forth new products / services and even completely new business models at a faster rate. This means you need to be hyper vigilant and learn how to adapt faster.
And it’s not just your competitors and disruptive new entrants you need to worry about. Your suppliers are changing their behaviors; your customers are changing their behaviors, even society as a whole is changing. Add to that changes in the political and regulatory environment and you have a rapidly shifting strategic landscape that needs to be anticipated and navigated.
Major causes of strategic blunders that destroy shareholder value:
  • Being caught flat footed when a competitor introduces a superior product
  • Being caught flat-footed by a major industry shift (e.g. digitization, technology change, changes in the political and regulatory environment)
  • Introducing new products / services that fail to gain traction and soak up valuable resources
  • Unsuccessfully entering new markets
  • Failed mergers and acquisitions
  • Major changes in the cost of inputs
  • Supply chain disruptions
  • Customer service failures
  • Fraud, accounting problems, ethics violations, and other failures to comply with laws
  • External shocks (e.g. natural disasters / website attacks) which we may not be able to control, but we should make contingency plans for
SWOT Analysis.
It seems the "losing companies" did a poor job of understanding their Strengths, Weaknesses, Opportunities, and Threats
In particular, the leaders of losing companies did not properly take into account the difficulties and risks associated with their chosen courses of action (and yes, even maintaining a “business as usual” formula is a strategic choice that has its own risks)
Here's how to perform an effective SWOT analysis.
Don't be a loser.
To prevent your company from joining the list of losing companies, business leaders need to do a better job of assessing their strategic environment. The rate of change will continue to accelerate, which increases the level of uncertainty in strategic decision making – and both the upside and downside of these risks should be factored in to your decisions.
Events cannot be accurately predicted, but they can be anticipated. Ideally, look for strategically resilient options that will give you the agility to roll with the punches.
At RESULTS.com we recommend to all our clients that strategic planning should be done very thoroughly once per year, and then reviewed and updated quarterly to ensure your One Page Strategic Plan remains relevant in light of the changing environment.

(from results.com)

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