In Mastering the Rockefeller Habits Verne Harnish states that to become and remain competitive your company needs three things:
- A framework that identifies and supports your corporate strategy
- A common language in which to express that strategy, and
- A well developed habit of using this framework and language to continually evaluate your strategic process.
Most importantly he states, keep it simple. The One Page Strategic Plan wraps these three into one practical package.
In previous blogs I've covered Core Values, Purpose, BHAG and Brand Promise. Today's blog will focus on your 3-5 year plan. Please consider reading Is Long Term Strategy Really Dead? to understand the importance of today's economic environment and the importance of quarterly planning and meeting rhythms to any strategic plans you make.
You may also wish to complete a SWOT and Core Competencies with your executive team prior to doing a. These will help highlight what you can build on and where you need to improve which will magnify your work in Key Thrusts and Capabilities section of the One Page Strategic Plan.
Most business owners have an idea where they want to be in 3-5 years. If not, this is even more important for you. The key to this process isn't so that your 3-5 year plan is set in stone. In reality the middle is gone when it comes to planning. Most of us can only plan for certain for the next 90 days. Looking ahead to where we want to be in the next 3-5 years forces us to come to grips with our reality and recognize the gap that exists between where we are now and where we want to be.
What revenue, profit, growth rate and market cap do you wish to achieve in 3-5 years? Market cap refers to what your business will be worth. You may be a long way from retiring or selling your business however there's no time like the present to begin planning for succession. Knowing the market today for your business, the multiples that drive the value of your business, you can prepare for the future and even build the business growth toward the favorable business cycle that drive potential business sales.
In this same column as your 3-5 year plan is your sandbox. Your sand box is a marketing decision that focuses on the answer to three questions;
- Where will you sell? [Sales Territory]
- What will you sell? [Product Lines] and
- Who will you sell to? [Customers/Distribution Channels]
Remember your customer is your ultimate end user of your product or service. Is your plan to expand internationally or to focus on local market? Which of these three answers will your growth come from in the next 3-5 years to achieve your goal? There can be a different strategy to grow each one or a combination of them. You must consider this carefully.
Below the Sandbox are your Key Thrusts and Capabilities. These are the activities and initiatives you will need to complete in order to attain the goals you set in your 3-5 year plan. Will you need to improve Sales, Customer Service, Delivery, Operations, Management, or IT? Perhaps you'll need to reduce costs of operating, expand internationally or purchase competitors. What type of expertise or knowledge will you need to add? Key Thrusts and Capabilities forces you to think ahead to what the business will look like in your time frame of 3-5 years and envision your company being there. What will it be and what will it have had to achieve and conquer in order to reach this height? It's important to have your executive team included in this exercise because they know all too well the company's strengths and weaknesses. Often times in our workshop meetings this is where arguments and heated discussions break out as one executive recognizes the pressure to reach a goal will require additional resources, manpower and expertise that is in short supply currently. These discussions are critical because they shine the light on developments that too often are overlooked when strategic planning and growth decisions are limited to one or two top level people. As Jim Collins states, "you must face the brutal facts!"
Don't be dismayed by disagreements between executive team members. To open and honeslty disagree is a sign of a healthy organization. Review On The Way Up - On the Way Down - Leadership Dynamics That Matter Most from Jim Collins How the Mighty Fall to understand the leadership qualities that drive success.
Is there more to developing a solid 3-5 year plan. Of course there is. We'll explore how your 3-5 year plan drives your One Year Plan next blog and why it's so important to have completed this exercise first.