Commentary

Don’t forget the importance of strategic planning

Because business conditions change over time, it is necessary to have a long-term strategic plan that allows you to adapt your foundational business plan. Vending/foodservice veteran Ray Friedrich offers some tips in this area.

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September 27, 2021 by Ray Friedrich

A business plan is an important tool for any successful business. Once you crossed this hurdle, it is important to recognize that the business plan is only one step in strategic planning.

The business plan forces you to consider every aspect of launching and then operating your business on a day-to-day basis. Once a business has been up and running for any length of time it is logical that you modify your business plan to adapt to changing market conditions, unexpected challenges and your current reality. So it is equally important that you pivot your strategic plan or long-term strategic goal as some call it.

The purpose of setting a strategic goal and plan is important because it drives your priorities, your budgeting process and your resource allocations. When shared with all stakeholders it helps align all employees around a single mission. It gives your marketing, administration, operations, human resources and IT a common objective. Most often these business segments have their own or conflicting agendas. Therein by defining and sharing the company's strategic goal everyone is inspired and driven by a common objective. It forces managers and employees to ask the question, "If what I am doing does not align with the strategic goal should I do it?"

According to research conducted by Cascade the latest data as of 2020 shows 67% of leaders believe their organization is good at crafting strategy but only 47% believe their organization is good at implementing strategy. Only 10% of organizations surveyed achieve at least two-thirds of their strategy objectives, with 36% achieving between 50%-67% and 54% achieving less than 50%. This level of failure is not due to the plan itself but the leadership required to execute the plan. The key to success is leading your organization through the plan. This requires the leader to be a strategic thinker as well as strategic planner. A leader must get the team aligned and inspire coordinated actions throughout the company with the strategic goal as the objective.

The vision statement

Define your long-term vision through a vision statement.

By definition your company's long-term vision is a statement defining where the company is going and built around thinking with the end in mind. It is the entrepreneur's best and most effective way to demonstrate to all concerned the end goal and purpose of the venture itself. Your vision statement should reflect the leader's passion and comment to achieving a thoroughly thought out future for everyone to rally around. You don't start a hike without knowing where you are going to end up. Without a destination it is impossible to know which path to take. Everyone needs to know how long it will take to get there and what resources they will we need to sustain them on the journey.

When writing a vision statement it is best to start with what the founder's dream for the company is. Dream is the operative word here. It may sound a bit touchy-feely but who doesn't have a dream? It is your fondest vison of a perfect outcome and there is nothing wrong with having a dream. Next, what is your company's role in the world or what is "its purpose"? The answer is not "to make money." Making money is the byproduct of your passion and purpose. What is the company in the grand scheme of things? What is its higher purpose?

You can start with writing down four to six short phrases that you think should define the company's future vision. Be as abstract as possible. Finally, using your short phrases create two sentences that describe your company's long-term vision. In creating a couple examples of this, work your two sentences down to a concise statement of your vision. Remember, being brief and concise in articulating your vision statement is key.

Examples of vision statements include:

Amazon: "Our vision is to be earth's most customer-centric company, where customers can find and discover anything they might want to buy online."

Avon: "To be the company that best understands and satisfies the product, service, and self-fulfillment needs of women — globally."

Ford: "People working together as a lean, global enterprise to make people's lives better through automotive and mobility leadership."

IBM: "To be the world's most successful and important information technology company. Successful in helping our customers apply technology to solve their problems. Successful in introducing this extraordinary technology to new customers. Important because we will continue to be the basic resource of much of what is invested in this industry."

McDonald's: "To move with velocity to drive profitable growth and become an even better McDonald's serving more customers delicious food each day around the world."

Nordstrom: "To serve our customers better, to always be relevant in their lives, and to form lifelong relationships."

Starbucks: "To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow."

Define your mission statement

There is a difference between a company vision statement and its mission statement. The vision statement is where you articulate the overall goal of the company in the long run. A company's mission statement is concerned with "how" the company achieves its vision. In short, the mission statement is the "how" and "what" while the vision statement is the "why". A mission statement is a guide for the company's day-to-day operations as it strives to fulfill its vision statement. Unlike your company's vision statement, your company's mission statement can be a collaborative effort.

A mission statement is an action-based statement that declares the purpose of an organization and how they serve their customers. This statement should include a description of the company, what it does, and its objectives. A mission statement provides perfect clarity behind the "how" and the "what" of your company. The best mission statements are guidelines by which a company operates.

Everything you do as a company should work toward your mission statement. Most mission statements are between one and three sentences, never exceeding 100 words. The best mission statements are typically a single, succinct sentence, so keep this in mind when creating your mission statement.

Examples of mission statements include:

Virgin Airways: "Our mission statement is simple, yet the foundation of everything we do here at Virgin Atlantic Airways... to embrace the human spirit and let it fly."

Tesla: "Tesla's mission is to accelerate the world's transition to sustainable energy."

Facebook: "Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them."

Starbucks: "To inspire and nurture the human spirit — one person, one cup, and one neighborhood at a time."

Google: "Our company's mission is to organize the world's information and make it universally accessible and useful."

IBM: "To lead in the creation, development and manufacturer of the industry's most advanced information technologies."

Develop guiding principles and values

The company values statement defines the beliefs and principles by which you will operate your business. The Boy Scouts of America's values are stated in its Scout Law: "A Scout is Trustworthy, Loyal, Helpful, Friendly, Courteous, Kind, Obedient, Cheerful, Thrifty, Brave, Clean and Reverent." All scouts are expected to behave personally and with others following these 12 core principles. Not only should your company develop guiding principles and values for its internal relationships with fellow employees, but these should extend to all your company's relationships. This would include managers, employees, partners, suppliers, customers and even your lenders.

By developing your corporate values and principles, all your relationships will know what you stand for and what behaviors are expected. As a result, all stakeholders are more likely to make the right decisions that help them achieve the company's vision and mission. Likewise, having a set of well-defined company values provides a moral direction to guide employees in difficult times. In a volatile environment of rapid technological, environmental and societal changes they are a needed constant. Your values and principles can make your company a more kind and friendly place to work and to do business with.

Examples of common company values include:

Integrity, boldness, honesty, trust, accountable, commitment to customers, passion, fun, humility, continuous learning, ownership, constant improvement, leadership, diversity, innovation, quality, teamwork, simplicity, employee development, discipline, empowerment and authenticity.

Once these strategic planning steps are complete, it's time to assess strength, weaknesses opportunities and threats. Stay tuned.

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