Save me! Nothing could be more terrifying in business than to see green turn to red, sales slipping, best employees resigning, and investors threatening to take action. We read about companies that were once high growth and well-respected who are filing for Chapter 11 or are under attack by activist investors.
Why companies go into decline or fail range from being a victim of the economy, to technological obsolescence, to out of control costs due to new government regulations. In hindsight, CEO’s who are honest with themselves will be able to pinpoint where a different decision might have changed the outcome.
How do you ensure that your company makes the right decisions and moves to stay competitive and growing in your market or industry? The answer is simply to develop a complete strategic plan, ensure the leadership team has goals, metrics and tactics aligned to the plan, and review the plan annually. Yes, a simple formula that not only hedges your company against failure, but sets the course for continued growth and profitability.
If strategy is so important, and the answer is so simple, why do companies continue to go into decline or fail?
The strategy must be right.
Yes, there had to be a catch! How do I know if my strategy is right?
1. It must be anchored in a fact base.
This means studying the economic outlook and how it impacts your product or service. How did your firm’s growth track to GDP in the past? Are there industry growth indicators to which it correlates more precisely? What other external factors impact your company’s growth?
What about your competitors? Can you articulate their business strategies? What do they know that you don’t? Are there gaps in your product or service portfolio compared to your strongest competitors? Are there adjacent services or products that threaten your space?
And your customers…how are their needs and demands changing? Do you have an opportunity to expand your market size by taking your products to new customer segments? Are there new geographies where you should consider expanding?
How is technology, social media, e-commerce and shifts in distribution and mobility impacting your products and/or services?
2. The outcome of a deep dive into a fact base results in new insights and hypotheses that must be considered and tested.
This is the fatal step. A fact base will undoubtedly reveal new information that disrupts previous thinking. If it doesn’t, the fact base is weak. What management does with new knowledge ultimately determines the future. For instance, if economic indicators predict a multi-year recession, and customers are shifting to a competitor’s lower cost product, ignoring this “fact” and hoping that “a miracle happens,” will be disastrous. The right response is to develop a plan that will either make your product more competitive, lower the cost or enter new markets.
3. A responsive, comprehensive strategic plan is developed that includes new product/service development, customer segmentation and marketing, operational execution and customer experience excellence, and financial planning that has multiple scenarios based on various possible outcomes.
4. The organization aligns behind execution of the strategic plan.
While the temptation is to keep the strategic plan confidential because contained within are most important plans and moves your company will make, the strategic plan must be shared. Each functional and operational leader has to know his/her part in the execution of the plan. The leadership team should understand what and why with goals that stretch the team to overachieve the plan.
5. The fact base and strategic plan must be reviewed annually. Never let a market shift or competitive move catch you by surprise.
Future blogs will speak to many of the specifics of execution of strategy. At Calade Partners, we have a combined 50+ years of managing at one of the most respected Fortune 100 companies in the world. Our experience in sales, marketing, technology, operations, and finance will allow us to help your company grow your top and bottom line. Contact us and let us help you.