Your 15-point strategic planning checklist – Part 6

My last post in this series dealt with questions 9, 10 and 11 on the strategic planning checklist I provided. This one will explore the correct answers to questions 12 and 13.

Question 12:

Are all plan outcomes / goals related in some tangible way to creating value for the customers and markets served by your organisation?

If you answered “yes”, you can pat yourself on the back. Congratulations!

When strategic investment is focused too inwardly, customer value creation can slip into second place in priority, behind overhead reduction plans and similar initiatives. For forward-thinking executives, this creates an internal struggle about managing this dichotomy and maintaining balance between internally focused overhead reduction strategy goals on one side and those related to the creation of customer value on the other.

In recent years, corporate planning has become overly focused on creating shareholder value, sometimes to the exclusion of customer value. This has created a gap that allows market share to be taken away by more nimble competitors that focus on creating a better value proposition for their customers and plan accordingly. That gap means we risk losing competitive advantage.

Customer-centric planning creates competitive advantage for the business by aligning organisational action with value propositions perceived by the customers and markets served by the enterprise. When this occurs, the planning effort literally creates value for the most important stakeholder of the firm – the end customer. That is not to say that all plan goals are or should be specifically aimed at the customer. However, with the focus on what end-value we can create for the customer through our plan goals, we’ve put a face or persona on the reason for the desired outcome and can work the organisational culture and hierarchy more effectively to accomplish our strategic outcomes.

Question 13:

Does your strategic plan include detailed operational plans to support the execution of all goals defined in the corporate strategy?

Preferred answer: “yes”. An effective planning approach should be a bifurcated process allowing for the organisation to plan strategically at the enterprise level and then operationally at the business unit / divisional / departmental level, with each component supporting the other. Failing to expand the planning effort far enough to reach all the way down through the organisational layers and to extend beyond the enterprise boundaries is an all too common problem with planning efforts and processes.

Those engaged in strategic planning understand that business strategy involves an integrated set of actions designed to help companies gain sustainable advantage over competitors. To address the needed integration, planning should be constructed in layers that address the overall business ecosystem. The business ecosystem is a framework that allows a company to visualise the entire enterprise and design the key outcomes that will most likely benefit the company and help it stand out against its competitors.

In 1985, Harvard’s Michael Porter introduced the value chain framework in his book Competitive Advantage. The client’s business ecosystem looks at all of the functional areas that are involved in developing and delivering the offering to the marketplace. Through each segment of the circle, executives choose how they intend to serve their market.

From a planning standpoint, it is important to assess how the business ecosystem operates and, more specifically, how decisions within one segment of the ecosystem can impact (or have consequences for) the enterprise as a whole or specific segments of the chain. This is where well-performed operational planning can make the game-changing difference. The ecosystem highlights enterprise alignment and individual value within the sphere as important components in the organisation’s overall success.

My final post in this series will focus on questions 14 and 15. For clarification of any of the points mentioned above, email me or call me on 020 7099 2621.