4 Steps To Truly Making Strategy Part Of Your Strategic Plan

Such plans were born in the early 1920s to better manage unpredictable business cycles, and by the 1950s had evolved into short-term budgeting exercises. It's time for change.

"We put the ‘strategic’ in strategic planning," said Michael Froehls, a brilliantly creative strategist who led the internal strategy consulting group for Citigroup and was head of strategic planning at MetLife International.

Froehls, as it happens, also just joined our consulting firm, Outthinker. We spent a recent day together in Las Vegas, walking through our approach and IP, when I asked him how he would describe what we do.

At first his response sounded like just a cute, clever turn of phrase, but the depth of his point has grown on me. As the year ends, we are flush with work, helping profit centers, IT groups, and business units design next year’s strategic plans. You are probably up to some version of this yourself. Whether you call it a strategic plan or your business or operating or market or staffing plan, you are bringing 2013 to a close and defining what you will do next year.

The problem is, your strategic plan will probably not actually be strategic. Indeed, strategic planning was never meant to be so. It was born out of the need, in the early 1920s, to better manage unpredictable business cycles, and by the 1950s had evolved into a short-term budgeting exercise. In the late 1950s, strategic planning began extending its foresight, evolving into "long-range" planning and started incorporating game theory, SWOT analyses, and scenario planning. But the practice has always sought to help your business or team understand the environment and decide how to react.

In other words, our tools, indeed our entire approach, helps us react, not shape; predict not change; remove uncertainty, not create the kind of exciting unexpected changes that can really lead us to greatness.

We’ve run maybe 300 strategic design efforts over the past 10 years and, to be honest, an embarrassingly large portion of them devolved into traditional strategic planning processes. They spat out a reasonable, logical, but also predictable strategy.

But sometimes magic occurs. In addition to this reasonable, logical strategy—improve employee engagement, increase efficiency (which, by the way, are the same things your competition is going to prioritize)—sometimes we add some icing to this cake, topping up with a strategic idea that really is disruptive . . . to your market, not to yourself.

After sorting through our 300-odd strategy efforts, comparing those that really introduced something new with those that only clarified the obvious (better products, lower prices, better marketing), we think the journey to a really strategic plan involves four steps.

Step 1: Commit to a different future.
You begin stepping away from the competition when you dream of and commit to creating a different long-term future than others. This means not being a "future taker," not just guessing as to how major trends will evolve and adapt, but to shaping some of those trends and looking to ride trends that others are overlooking. Starbucks didn’t predict a "third place" would be added to Americans’ two places (home and work); they created it.

Step 2: Focus on different leverage points.
Most strategic planning efforts guide your focus toward addressing "issues" or "gaps." The goal is to fix what is wrong, which leads us to strive for the same ideal. We believe great strategies do exactly the opposite. They encourage us to strive to be better by being different. When other technological device firms were all racing to be faster and cheaper, Apple was focusing on a different set of leverage points, like outperforming on the physical experience of their brand from the packaging to that "WALL-E" sound Macs make on start-up.

Step 3: Dream more possibilities.
Many strategic planning processes act like black boxes: You plug in some strengths, weaknesses, opportunities, and threats and out pops a set of activities. In seeking to make a science out of strategy, they remove human creativity. So inject it back in—dream, create, explore new possibilities. Only after you feel confident that you and your team have had the time and space to generate two times as many potential strategies as your competition are you ready to move to step 4.

Step 4: Choose what competitors won’t copy.
It is fascinating to watch how truly strategic leaders behave toward the end of a strategic development process. While many experienced operators ask hard questions to really test how customers will respond and whether we can execute the strategy, the real strategists add a third point of view to these two. They ask, "How will the competition respond?" We are working with a client led by a former Disney executive. He let his team dream big ideas and then repeatedly asked them, "I can see how customers will love this, but couldn’t XYZ company copy this next year?" He did this not to challenge them as much as to sift out the one or two ideas that were truly disruptive because competitors would resist copying them.

The New Year is around the corner, and you will enter that with some kind of plan. It will likely include three to five priorities that are like healthy fundamentals, something like "eat less, exercise more." But these are the same things most of your competitors are focused on as well. This year, add something exciting to the mix, something your customers will love that your competitors will resist copying or responding effectively to. Make sure this year your strategic planning effort involves:

1. Committing to a different future
2. Focusing on leverage points that others overlook
3. Freedom to dream more strategic possibilities
4. Choosing what competitors won’t copy

[Image: Flickr user Chris Fleming]

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  • PathFinder Group

    Who could disagree with the tenets of this paper and for some a disruptive approach to their markets will work well but I submit only for a very few. Not unlike the number of high school wannabes that make it to professional sports. Execution is still the definitive opportunity for most in differentiating themselves from the competitors in their markets. Manage implementation!!!

  • Dean

    If you are so "brilliant" outthinking the competition why don't you have a nicer website?!

  • MikeG

    The idea of choosing a strategy that competitors won't copy isn't new, but definitely not something many people keep in mind. The problem is probably that most people are looking for an inimitable strategy, product, or service though the truth is that nothing is truly inimitable (otherwise there would be a lot of unemployed IP lawyers). The key is to find something that is seemingly irrational. Drawing on the Starbucks example, their seemingly irrational strategy was in the way their individual shops cannibalize business from one another by being built so close together. While individual store sales might suffer as a result, overall market share can actually benefit from it as competitors are squeezed out. Love 'em or hate 'em, you have to admire that kind of insight.

  • Al Steele

    Thank you. I love the idea of time and space to generate at least two times as many strategic opportunities as the competition. We haven't been doing that - until today.

  • aschambers

    This article makes a number of valid points regarding the way that organizations develop their strategy. I agree that leaders get "stuck" on how they develop 'new' strategies.

    One of the approaches our organization uses with clients that is far more effective than a SWOT is to interview the leaders in the business to get a clear view of the current state reality. This isn't about metrics and if they've achieved those, but rather looks at the operations of the business, how the leadership team behaves, if there's alignment across the leadership team and do they have a well-defined view, really clear view of what the company should look like in 3-5 years if they achieve their goals. Then this is drawn out in a sketch so everyone can see where the disconnects or lack of consistency is happening in the business. It's done in a humorous way so that it puts the focus on the issues and not the people per se.

    Painting this clear vision of the current state of the business "forces" the leaders of the business to do things in a very different way going forward. So it's not just about saying - we need to enter a new market, or we need to change our return policy to make customers happier - it's about what are the behaviors, processes, beliefs, etc. that need to change to then support the new strategic outcomes they want to drive. Attached is an example.

    One other approach that leaders can consider is making it safer for people to take risks and try new things that may take the strategy of the company in a new direction. There are ways to do this without causing major disruption in the business. It involves creating "bumpers" for the business and letting people know it's okay to fail once in a while. Big S's (successes) come from small f's (failures). Leaders need to set it up in a way to ensure failures are small, fast and cheap. Leaders must also chalk the field with hardlines, guidelines or no lines, when they most want failure-led experiments to drive change and innovation.