The Opinion Page
News and comments about the issues facing today's SCM and Inventory Management professionals.
The following article, authored by "yours truly" was published in the Durham Business Times, February 2011 edition. I hope that you will enjoy:
As the senior manager or proprietor of a small or medium-sized enterprise (SME), does the prospect of developing a strategic plan frighten the daylights out of you? Do you view strategic planning as the exclusive domain of intellectuals, expensive consultants, or even mystical practitioners in the Dark Arts?
Perhaps the overwhelming volume of literature and teaching regarding strategic planning has contributed to its becoming an intimidating activity. It does not have to be so. One thing is certain: those SME’s who effectively utilize a strategic plan enjoy a much greater chance of long-term success, whether measured in key financial performance indicators, longevity, or cultural stability. Professor Sydney Finkelstein of Dartmouth College provides a concise working definition of “Strategy.” It is: “what a company does, or does not do to fulfil its vision in a competitive marketplace”.
The high-impact strategic plan can be presented effectively on one page. Its elements can be expressed in a few well-chosen words, clauses or sentences. The strategic plan should not be confused with an operations or business plan: the latter two are subservient to the strategic plan, shorter in timeframe, and far more detailed. A strategic plan well done is the manifestation of elegant simplicity. Yet it is powerful enough to guide the daily activities of dozens, hundreds, and even thousands of employees.
Within the strategic plan, senior management sets the dominant logic and the moral compass of the organization. It is an opportunity to unambiguously document ethics for leadership continuity. It forces introspection and situational analysis. And, primarily through articulation of core values, it provides a directional beacon especially in hard times.
Fundamentally, the creation of a strategic plan is a five-step process:
The Vision is an inspirational call to action. In a few short words, the CEO or senior manager uses the Vision to point the way to the company’s future. It should engage our emotions. It should be designed to last for many years. For example, Google’s vision statement is world-class: “To develop a perfect search engine.”
With ethical problems causing the downfall of countless corporations each year, preparing a statement of Core Values becomes vitally important. Choose five or six words or short phrases that define the values that must be intrinsic to your culture. Examples of such words might include “integrity”, “transparency”, or “honesty”. Core Values will guide your firm in making hard choices in very difficult times. They must not be compromised. They will state how you will treat others as well as yourself. Hire people who personify your Core Values.
An effective mission statement should be able to tell your company story and ideals in less than 30 seconds. Comprised of three or four short sentences, it is more detailed than the Vision, and is often written in the present tense. It defines your company’s customers, products, and how your company contributes unique value for its customers.
Strategic objectives should be specific, measurable, attainable, relevant, and time-framed (SMART). Three to five objectives should suffice, and they should be attainable within one to three years. For reasons of confidentiality, strategic objectives are rarely published outside the company, but they must be effectively communicated to all employees.
This acronym stands for Strengths, Weaknesses, Opportunities, and Threats. An honest, fact-based discussion between senior management and key advisors needs to take place. Documenting strengths and weaknesses tends to involve serious introspection, while opportunity and threat analyses tend to require external environmental scanning.
Since it establishes the firm’s current position relative to its competitive environment, the SWOT can be very useful in establishing objectives and even the mission. It is therefore frequently performed early in the planning process.
The strategic plan is a living document. It must be communicated effectively and constantly to employees. Successful businesses frequently incorporate the plan into the annual employee performance review process, ensuring that individual and departmental goals and objectives are aligned with the strategic plan. The strategic plan should be reviewed at least annually, noting any SWOT changes that might require modifying strategic objectives. A comprehensive renewal of the strategic plan should be undertaken every three years.
While helping to prevent tactical conflicts between operational departments, a good plan will also discourage spending on projects that are not aligned with strategic goals.
For a wealth of information, simply search key words such as “vision statement” on the internet.
John Skelton is the Principal Consultant and founder of Strategic Inventory Management.