February, 2005

The Importance of Strategic Planning

In my introductory article, I noted how the failure of the Pennsylvania Railroad to plan effectively for the future had a devastating impact on the economy of Blair County, an impact that lasted for decades. With that reality as a backdrop, let's talk about why planning is important, and the differences between strategic planning and operational planning.

Whether in one's business, social, recreational, spiritual or personal life, some level of planning, both strategic and operational, is essential to be successful in each of those five endeavors. In a broad sense, strategic planning asks the question, "What do I want to be when I grow up"? This question and its answers stem primarily from the brain's right side, and have a futuristic implication. This question is asked all the time by businesses who have come to understand that they never "grow up", and, if they do, they cease to be market or industry leaders. Similarly, successful people understand they never really "grow up" either, and are constantly asking themselves that question in every aspect of their lives - constantly looking for improvement, and avoiding becoming outdated.

On the other hand, operational planning asks the question, "How do I most effectively complete the task at hand"? This question and its answers stem primarily from the brain's left side, and typically have a current implication. Examples could be preparing a budget, how to most economically ship a large order without sacrificing customer service, how to decorate for an upcoming party, how to best prepare for the team's next basketball game, setting the structure for a worship service, or determining what exercise routines to engage in over the course of an upcoming week.

If you are giving these examples some thought as you read, you will be correct in thinking that the operational issues make much more sense, and are a lot easier to execute if they are the result of a preceding strategy, especially in situations where multiple people, departments or entities are involved.

One of the best examples of successful strategic thinking I can give you was brought to my attention by Carl Macharola at our Railroaders Memorial Museum strategic planning board retreat in December of '04. And, Carl's example comes from a company headquartered right here in Altoona. As the board was discussing the Museum's vision and mission, Carl said the best example of vision he had heard in a long time was from Sheetz, and (paraphrasing slightly) that was "to create the Sheetz that will put our current Sheetz out of business". Now I've been involved in strategic planning in many roles much of my career, but I was absolutely blown away by what Carl said as I reflected on the enormity of those few words! An absolutely brilliant, concise statement that should be every company's vision - become the company that will put our current company out of business. No Pennsylvania Railroad thinking in those words!

From the Sheetz web site, we also learn their mission is "To provide fast and friendly service, quality products in clean and convenient locations", and that "Our company tradition of TCF ('Total Customer Focus') combined with an appetite for innovation enables us to meet the evolving needs of customers". Given that vision, mission and TCF statement, I would lay very strong odds that Sheetz will continue to be the ONLY company that puts Sheetz out of business for many, many years to come. As Carl said a little later during our board retreat, "Sheetz is the best company in terms of continually reinventing itself that I have ever seen". Though I have never had a relationship with Sheetz other than as a satisfied customer, I would have to say that if they're not the best, they certainly have to be very near the top of a list of 'best in breed'.

Before we leave the Sheetz example, allow me to make an important point. You might be thinking, "Well sure, Sheetz can afford to plan. Look how big they are". That's a critical mistake in thinking you simply can't afford to make. The smaller your organization, the more important planning is. Why? Simply because the smaller your organization is, the more vulnerable it is on all fronts. To the contrary, I would suggest that Sheetz has 300 retail locations in six states BECAUSE they learned very early the dynamics and benefits of strategic thinking, not that they do strategic planing because they have 300 stores.

To be truly successful as individuals and as organizations, we must NEVER grow up, and we must constantly be reinventing both ourselves and our organizations. So what are some things we should consider as we engage in strategic planning. For sure, to be of benefit, a strategic plan has to integrate the values and desired outcomes of the organization or individual in question. So those are the foundation and need to be established first. After the foundation has been built, then major objectives are established - usually only 3 to 5 for any given period of time. Then the goals that will have to be met to achieve the major objectives are established and implemented. Then the process is audited and performed continually, to make sure 'reinvention' never stops. Following that process is what makes great companies and great people. Also, in the business setting, make sure the wisdom and collective experience of all levels of staff are considered in the planning process, that the resulting plan is owned by everyone and that it is used as a day-to-day decision-making guide.

In today's trying economy, "disruptive strategy setting" is a dynamic that should be considered by all organizations as a way to differentiate one's organization in the market place in a substantial way. Developing a disruptive strategy is difficult at best, but very worthwhile if one can be developed. Rather than go into the process by which disruptive strategies are developed, let me offer some examples of the results of disruptive strategy development -- Google, eBay, Dell Computers, FedEx. These are all companies that looked at how things were done in a given industry, and through creative thinking came up with a strategy to disrupt that industry in a manner that would turn every other industry participant into a follower. Consider FedEx alone. Where was the United States Postal Service while FedEx was coming into the industry? While the USPS OWNED virtually every aspect of the letter and package delivery market at one time, it could not, with all of the capital and human resources it had at its disposal, figure out how to get a letter or package from Altoona to Beloit, Wisconsin (or to almost anywhere else for that matter!) from one afternoon to the next morning every day of the week. HELLO!!! Now, the FedEx brand has become so ubiquitous that you hear people say they are going to FedEx something when it actually is shipped by another carrier! Kind of like "I'm going to Xerox this document", or "Do you have any Kleenex"?

Finally, one more important point about planning, and this is a further reinforcement of the constant need to reinvent and to never grow up. And, that is the most dangerous trap of being satisfied with "being good". There is a fabulous book in print titled from "Good to Great". It's a book that every individual and every company that has a passion for success will read. I'll give you the punch line, but please read the book, as it will forever change the way you view "satisfaction". The book's thesis is, the moment an individual or organization becomes satisfied with how good it is, that's the very moment the individual or organization begins to either stagnate or decline, eventually reeling into a state of vulnerability. With all each of you has invested in yourself or your organization, are stagnation, decline or failure the future descriptors that you will want to be used to describe you or your organization?

If you would like to have templates on either strategic planning or the creation of disruptive strategies, please email me at jim@bdartpnc.com, or call me toll free at 877.876.4BDA, and I'll happily provide you with the information you request.

Thanks for reading, and NEVER GROW UP!

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