Strategic Planning Q & A

This column is intended to answer common questions related to strategic planning and strategy in general. In each issue we will answer questions posed by seminar attendees, our clients and our readers. Please send your questions to Elizabeth Tidd, E-mail: simplifiedstrategicplanning@cssp.com — Mail: CSSP, Inc. P.O. Box 851 Ann Arbor, Michigan 06890-0851 — Fax: 203-255-9191.

Is there any preparation required before starting the Simplified Strategic Planning process?

Nothing is required prior to starting the process - our experience reveals two particular problems associated with too much preparation. First, while there are numerous reasons why a company may not have previously engaged in strategic planning, the most common one tends to be simply failing to get started. This is due to the constant onslaught of urgent issues that tend to seize the necessary time commitment for planning. Assigning extensive preparation tends to compound the problem with the resultant delay in holding the first planning session. A second reason to defer the majority of the preliminary work is that there is an unlimited amount of study that could be done on any company's situation. The first session is a preparatory session. A significant part of the first formal team meeting in the Simplified Strategic Planning process is devoted to identifying which specific areas of the company's situation are relevant from a strategic standpoint and what type of information should be gathered to give the team necessary insight. Research is much more efficient when it is deferred until after that discussion.

That said; it is helpful to have a preliminary questionnaire to get the team members thinking strategically before the actual meeting. The preliminary questionnaire might include the following:

What are the top four strengths?
What are the top four weaknesses?
What are four key opportunities that we should pursue?
What are four key threats to the business?

In addition, a matrix covering the two questions: 1. What do you sell? (Or what service do you provide?) and 2. To whom? Often helps with the market segmentation process.

We find it very difficult to determine our market share in our specialty niche markets. Will this be a detriment to successful strategic planning?

While the lack of great precision in determining your market share will not preclude successful strategic planning, it is important to realize why knowledge of your relative market share is important. There is a proven correlation between profitability and strong market share, regardless of the size of a company. Smaller companies must focus on smaller markets, which is largely a function of market definition. Thus, while precision in determining market share is not critical, if you estimate your share to be small, you may need to re-examine whether the definition of your market is sufficiently precise and well focused. Often you can increase market share by giving up unproductive areas of a market, thus achieving tighter focus for your attention and energies.

What role should our board of directors play in strategic planning?

Our recommendation is that the strategic planning team is composed only of members who are active in the day-to-day operation of the business. This would preclude board members, other than those who are within the management ranks, from participating directly as a part of the planning team. This should not imply however, that the Board does not have a role. A Board is often instrumental in establishing certain mandates that define what is acceptable in terms of on-going business performance. If these exist, they should be communicated to the planning team in advance of the first meeting. The Board should be fully briefed on the management's expectations of the planning process. Often teams use the time between the second and third meeting to inform the Board of the strategy and allow for input before the action plans are in place. .

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