Five Questions in Strategic Planning
Principles tell you what good strategy contains. This is the process that produces one — four reasons to plan, and five questions you answer in order.
Process over fashion
The plan behind the plan
Management fashions come and go. The one skill that never goes out of date is the ability to sit down and build a clear, workable strategic plan that gives your business a real competitive advantage.
Part 2 described what a strong strategy contains. This part is about how you actually produce one. It comes down to a small set of questions — first, why you are setting a strategy at all, and then five questions you ask and answer, in order, to build the plan itself. The questions are simple. The discipline of answering them honestly is what most organisations skip.
Start with why
Four reasons to set a strategy
Increase your return on equity
Strategy exists, before anything else, to raise the return you earn on the money and effort invested in the business — a sharper measure than raw return on investment. Every strategic choice should ultimately make each dollar of capital work harder.
Reposition the company
A good strategy lets you deliberately move the business — into new products, services, markets or technologies — especially when competitors or conditions turn against you. Apple has repeatedly reinvented what it sells rather than defend a fading position.
Maximise strengths and opportunities
Strategy concentrates the organisation on what it does best and points it at the openings that matter most, so scarce time and resources are spent where they yield the greatest return rather than spread thinly across everything.
Create a basis for action — now
Strategic planning is not an academic exercise; it is about action. It gives you a clear basis for the decisions you must make today. Alexander was the quintessential man of action, and a plan that never turns into movement is worthless.
The core process
The five questions in strategic planning
Answer these five, in sequence, and you have the skeleton of a strategy. Answer them again next quarter and the plan stays alive as conditions change.
- 1
Assess the present
Where am I now?
Take an honest inventory of your current situation — the business as it stands, your customers and markets, your competitors, and your real financial strengths and weaknesses. You cannot chart a route without knowing your starting point.
- 2
Reexamine the past
How did I get here?
Look back at the critical steps that brought you to today. What did you do well, what went wrong, and what has changed in the market since? The lessons in your own history are the cheapest strategy research you will ever get.
- 3
Design the future
Where do I want to be?
Create your perfect future. If there were no limits, where would the business — and you personally — be in one, two, three, five and ten years? A vivid, specific destination is what every later decision gets measured against.
- 4
Plan the route
How do I get there?
Work out the next concrete steps. Use brainstorming and mindstorming to generate options, pushing past the obvious few until you have a genuinely wide field of possible moves to choose from.
- 5
List what's missing
What do I need?
Build a checklist of everything the plan will require that you do not yet have — additional skills, people, resources and money. Naming the gaps early is what turns an ambition into an executable plan.
Two techniques that make it work
Mindstorming and the basics
Mindstorming — force twenty answers
Write a question at the top of a page — for example, "How could we double revenue in twelve months?" — then discipline yourself to write down twenty answers before you stop. The first few are obvious; the best usually appear near the end, once easy thinking is exhausted.
Be brilliant on the basics
When Vince Lombardi took over the Green Bay Packers in 1959, he promised no secret plays — just to make the team brilliant on the basics. Strategy is the same. Keep asking and answering the right questions, execute the fundamentals better than anyone else, and results follow.