Why is it that the word “strategy” forces even hard-core executives to cringe? Two reasons come to mind. First strategies force them to confront a future that they have only had to guess at to date. Secondly, strategies entail making decisions that eliminate the ability to hide behind possibilities and options. The natural reaction would be to try and head off or turn an uncomfortable situation around favorably by developing a strategy once the situation is upfront and personal. Unfortunately, by that time it may be too late and the energy and cost to turn it around is much greater than if a strategy was in place to handle the situation before it even became a possibility.
Get Real
Developing a strategy may be an excellent way to alleviate or manage fear, but if it is not bound by realistic expectations, the strategy can become a hindrance rather than contributor to success. It is important to understand that the objective behind a strategy is NOT to eliminate risk but to increase the odds of success. It does not involve hours of effort trying to come up with the perfect solution but rather a realistic approach of thinking through the “what ifs” to arrive at a plan of action that is both doable and productive. Approaching the strategic process from this more simplified viewpoint alleviates the majority of discomfort and fear associated with pushing boundaries outside the comfort zone.
Strategy vs. Plan
The doable part of the Strategy comes in the Plan. The goal of the Plan is three-fold…to clarify an objective, outline an action plan and develop a budget and timeline. The ultimate purpose of the plan is to take the assumptions made during the strategic process and figure out how to make them a reality. Therefore, also somewhere in there, metric analysis is incorporated to ensure that the plan is working.
Revenue vs. Cost Budgeting
When working with the Plan budget and metrics it is important to take into consideration where the control lies. Although revenue is the primary driver of any business success…it is important to note that it is the customer who ultimately controls revenue. Companies may fool themselves into thinking they control revenue, but ultimately their revenue projections are based on assumptions and therefore planning, budgeting and forecasting is subjective at best. This is where the strategic portion of the plan comes into play. The strategy and subsequent plan are not set in stone but living, breathing management tools and must be treated as such with constant review and updating.
Revenue forecasting is only as good as the research that goes into the projections presented. The research must support the numbers and also contribute to the plan of action to reach those revenue numbers. This is especially pertinent when predicting market share and customer capture. Realistic predictions are key to plan success.
Staying Ahead of the Curve
Most entrepreneurs or executives focus on incorporating strategic measures as events unfold believing that the future is too unpredictable and volatile. They believe that it doesn’t make sense to make strategic choices until the future becomes sufficiently clear. Unfortunately, by the time this happens it is often too late for the strategy to have any impact to turn things around. The whole premise to having a strategy in place is to position the company favorably during volatile or unpredictable futures so that they can come out on the other side successfully.
Take the most recent economic recession for example. So many players had their hands in the economic struggles causing a negative domino effect on the market. We saw major, long-standing companies scaling back 80% of their workforce or even shutting their doors because they were caught off guard. The strong, robust economic environment leading up to the recession carried with it complacency and greed. Once the recession kicked in, these businesses could not turn things around quick enough to offset the devastation. The banks were pulling credit lines…diminishing the security blankets larger organizations depended on. Many found themselves chasing revenue dollars they never would have chased before, only to come up again a much larger competitive market as more companies did the same.
These businesses could have avoided or minimized the effects of the recession by simply adopting a strategy addressing the possibility of an economic recession hitting. It’s not as though we have not gone through these recessions in the past.
A predictable future is not something that will ever be attainable. But strategies can be put in place to offset the effect that an unpredictable future can bring. It’s just smart business!
DAVNA Enterprises, LLC is a Florida based firm specializing in the development and implementation of strategic growth, operational, marketing and business development programs locally and internationally. Whether a new business starting out or an existing firm seeking increased market exposure, rebranding or repositioning, DAVNA brings more than 35 years of experience and the expertise needed to successfully develop and execute strategies designed to achieve your ultimate goals. For more information visit www.davna.com or email info@davna.com
