Most of will think of strategic planning as a classical discipline used by many businesses. They aim to be the biggest and the best in their market and will follow a standard approach of:
- Analyse their market
- Write a plan
- Execute that plan
However, this only works when your market is highly predictable. And right now it is anything but. We therefore need to change our approach.
Before I go into more detail this short video demonstrates this using a lemonade stand as an example:
The theory behind is this is from a book called “Your Strategy Needs a Strategy”*.
The authors advise there are three questions you need to answer to ensure the right approach:
- How predictable is your environment?
- How malleable is your environment (can you shape it?)
- How harsh if your environment? (can you survive it?)
Depending on the answers determines the strategic approach (see table 1). Think of it as choosing the right type of paint to match the materials you are working with e.g. oil paints on canvas; watercolours on paper. If you try to use the wrong paint on the wrong material then the end result is likely to fail.
So unless you match your planning approach to the current environment, it is likely to fail.
As Harsh as it Gets
Now, we can all agree that right now it is about has harsh as it gets. So we should be focusing on RENEWAL, with the main aim right now being to remain VIABLE.
Every business will have had a shock to its system and ‘bau’ is unlikely to be sustainable or viable.
There are 3 main steps to a renewal strategy:
In a more stable and predictable environment many business would have a business plan with a SWOT and a PEST analysis – looking at the external factors that provide opportunities for their business and also thinking about the risks and how they can use their strengths to overcome these. Businesses ideally would anticipate the challenges. However no-one would have seen this pandemic coming! Therefore, it was about reacting as quickly as you could.
A key priority may be to economise to preserve your financial viability. You may have to strip your business ‘back to basics’ and cut out unnecessary costs. With government support during this pandemic many will have some of the initial worry removed, however as the future remains so uncertain this will only be a temporary fix. So, take this time to really understand your business model, and look at where you can become more efficient and strip out cost.
It would not be a renewal strategy without building in growth. The ‘grow’ part of this strategy may seem at odds with stripping back, however, now is also the time to think in terms of future viability. You need to be ready to adapt your business model to the “new normal”. By working on your growth plan in conjunction with your renewal plan you can make sure you are not stripping out any resources that you need to help you grow the business again.
If we refer back to the table, the current environment for most will be highly unpredictable. This means there are two choices for your growth strategy:
- Adaptive – be fast
- Shaping – be collaborative
Which you chose will depend on how ‘malleable’ your industry is. If you think you can collaborate with others in the same industry to innovate and “re-write the rules” then follow a Shaping Strategy. If you think your industry is hard to shape then you need to be agile and respond to changes quickly, taking advantage of opportunities when you can.
If like me, you are a SME, don’t be afraid of strategy or planning – it is especially important at the moment. Together we can simplify the approach to suit your business and help you to RENEW, ADAPT and GROW.
Please get in touch for an initial chat on how I can support you to develop the right strategy to grow your business in our new unpredictable world.
*Your Strategy Needs a Strategy: How to Choose and Execute the Right Approach; by Janmejaya Sinha, Knut Haanaes, and Martin Reeve