Strategic planning and the process of strategy 2: goals and benchmarks
This is my second installment in a series on the strategic process and on strategic decision making per se (see Part 1: putting strategy in perspective.)
I began this series by putting the strategic process in context relative to ongoing operational and projects-based activities. And I turn here to at least begin discussing those strategic processes in at least a conceptually different perspective, but one that I would argue leads to the same place: the context of the business’s overall goals and priorities and of what it offers to its marketplaces.
• Effective strategy lays out a road map for fine tuning what the organization’s overall goals and objectives are as the business seeks to define and provide a source of unique value to its marketplace.
• Operations standardize and systematize the processes that would be followed to achieve, maintain, benchmark and performance review, and continue actively pursuing that strategy on an ongoing and day to day basis.
• Ultimately, both are defined in terms of the business’ unique value propositions – the sources of value as defined and viewed by marketplace consumers, as setting that business apart from its competition.
• And the goal of strategy in this is to set overarching priorities and to determine the ongoing steps needed to follow this path.
This begins with the products and services that the business offers, and what sets them apart. An effective strategy facilitates the business in creating, marketing, distributing and selling their products and services, and in offering customer support for them where and as needed, and in ways that bring in business – that generate incoming revenue. And the most effective strategy in a marketplace, long term, is the one that does this most cost-effectively while providing the consumer with what they see as the most attractive, cost-effective purchase option for them.
I wrote that starkly in terms of the for-profit marketplace, but the same basic principles apply to the not for profit and nonprofit sectors too. They face competition and competitive pressures too, and for mission-driven nonprofits as a perhaps extreme example there, that competition can be very severe. Nonprofits in the same mission-defined sector (e.g. healthcare-focused or environmentally protective oriented organizations) compete for the same discretionary income dollars as donations to their cause. And when the economy is down and discretionary income is scarce, every nonprofit competes against all others, as well as with not for profit and for profit businesses that seek those same income-limited dollars too.
So strategy revolves around products and services offered and for nonprofits, to follow through on them for a moment, adherence to and organizational effort in support of mission is their product. Given that, and for essentially any organization that operates in a competitive marketplace of any sort, what is the best starting point for defining and developing a strategy?
• Begin with the goal of most cost-effectively providing the best, most value-rich products or services possible, and on a sustaining basis.
• Begin there with a focus on developing and providing unique value propositions at the product and service level – imbued directly in what you bring to market, and on doing so more cost-effectively than your competition can for what they offer.
• Seek to out-perform the competition at multiple levels and through multiple value sources.
• An effective strategic process would do that for products and services offered wherever possible, and would then, as a second-stage iteration turn to more internal-to-the-organization sources of unique value. When the product itself is difficult to differentiate out as unique in the buyer’s eye, and even with difference defining and promoting marketing and branding, speed of service and response, quality control and other supportive functions and qualities become the defining strategic goals – and ease of availability, where and when the consumer would want what you have to offer.
The strategic process in play here is to define the basic goals-oriented parameters that would govern operational decisions and decision making, and that would determine where and when projects would be undertaken, and which ones. And strategy is carried out as an ongoing, evolving process.
• In all of this, effective strategy is about defining and refining core values and determining what constitute core resources and capabilities that operations, in turn would organize and provide.
I am going to continue this discussion in my next series installment with discussion of quarterly, annual and five year planning. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) And I also discuss strategy and how it point-by-point connects to operations at Startups and Early Stage Businesses too.