Business Skills 360, the podcast that looks at the other side of business English.
Hello, and welcome back to the Skills 360 podcast.
I'm your host, Tim Simmons, and today we're going to look at strategic planning.
Strategic planning is all about laying out your business activities for the next three to five years in a nice document, right.
Wrong.
A strategic plan alone isn't always useful.
However, strategic planning is truly invaluable.
Strategic planning asks the big questions.
It's about the vision, the mission, core value propositions and key approaches in a dynamic environment.
Fundamentally, strategy is about priorities and trade-offs.
It's different from operational planning, which is about activities and timelines and accountabilities.
It's the answers to the big questions that will unify people throughout the business around a common purpose.
If every individual or every department has a different vision, then how far do you expect to go?
And if everyone is working with a few pieces of the larger puzzle, then nobody can see the bigger picture and how it all fits together.
That's why a key element of strategic planning involves understanding our company, its people, its position and its environment.
Only with good information can we hope to overcome the many cognitive biases that lead to bad decisions.
So what kind of information should we be gathering?
Business performance is an obvious place to start, but remember it's about performance in a competitive market.
It's not just about your sales numbers, but your sales numbers compared to the competition.
And it's not just about how the numbers have been changing.
It's also about how the numbers will change in the future.
Beyond business performance, there are different frameworks we can use to understand our circumstances.
One of the most popular is the SWOT analysis.
SWOT stands for strengths, weaknesses, opportunities, and threats.
But where the SWOT goes wrong is when it becomes simply a big list-making exercise.
It's great to list 30 strengths of an organization and 30 weaknesses, but we need to learn how to leverage that understanding and ask good follow-up questions.
When you consider your strengths, consider questions like which strengths have contributed most to our success.
Also, ask yourself, how durable are these strengths?
That is, will they continue being strengths tomorrow if you don't spend energy to reinforce them?
I mean Blockbuster Video and WeWork.
Both had long lists of strengths, but clearly they missed some key strategic questions.
Regarding your weaknesses, learn to ask yourself, what are our greatest weaknesses?
Otherwise, where will you focus your energy and resources?
The fact is, many companies are not focusing on their most salient weaknesses.
Instead, they're focusing on their most familiar weaknesses, while leaving the big problems alone, uncertain of how to even begin dealing with them.
Just as not all weaknesses are equal, neither are all opportunities.
Opportunities need to be analyzed from multiple perspectives, and good strategy helps leadership teams come to consensus on the criteria used to evaluate opportunities.
In fact, if these criteria can be understood by everyone, then everyone can be equipped to make strategic decisions.
But if choosing the right opportunities is just a negotiation of preferences, well that's not what I'd call strategic.
Like weaknesses, threats come in different shapes and sizes.
We assess threats in the same ways we assess risk, with two important questions.
What's the probability of this happening?
And what's the potential impact?
This allows us to prioritize threats and spend our energy neutralizing the most important ones.
There are other frameworks besides SWOT that can be useful.
One of those is called PESL, which stands for Political Economic Social Technological, Legal and Environmental.
In a PESEL analysis, we are asking what are the biggest current and future factors that will influence our company and strategy?
Some say that humans are the only animal that thinks about the future.
Unfortunately, we're really lousy at predicting it.
Still, despite considerable uncertainty we can anticipate some changes with confidence.
And a PESEL analysis ensures we are taking a holistic view, considering multiple variables.
This way, we can be more prepared for the changes in our operating context.
One more thing concerning all these important questions.
They shouldn't be the sole purview of leadership.
Truly strategic leaders engage staff, customers, partners, and others in this kind of analysis.
And if you do it right, you'll have a ton of good information that you can then use to set a clear vision and priorities, which is what we'll look at in our next lesson.
That's all for today.
You'll find a quiz about today's show as well as a PDF transcript.
So long and see you again soon.
