Be Different or be dead

January 27, 2010

Why a great business plan starts by deciding ‘HOW BIG’ you want to be

Why a great business plan starts by deciding ‘HOW BIG’ you want to be.

Traditional business planning methods have issues; they’re all screwed up.

This is one of three questions that must be answered to create your strategic game plan. It is a proven and practical process that incorporates the answers to three critical questions.

It begins with the “HOW BIG do you want to be?” question.

Traditional strategy-building methodology typically begins with an analysis of strengths, weaknesses, opportunities and threats. It then moves on to developing an overall strategic direction.
Objectives and action plans are struck. Finally the expected financial results are produced. They are the output of the strategy-creation process.

In my experience, the financial results get scrutinized by the top executive and often get modified as the CFO and CEO decide they simply aren’t aggressive enough. Sound familiar?

As a result, higher growth and financial numbers are driven out of the tabled strategy by changing input assumptions to the plan, rather than by adjusting the strategy to deliver more aggressive financial results.

BIG mistake

This is a huge mistake. Assuming that the assumptions behind the plan are reasonable and acceptable, forcing more aggressive numbers from a strategy without increasing strategic risk is a fool’s game.

The expected higher performance numbers will not happen.

The strategic game plan process is to treat growth and financial expectations as inputs to the strategy-building process. Do you want to grow top line revenues 25% over the next 24 months? Or would you be satisfied with growing at 10%?

Clearly the former target would require more resources and would entail greater risk than the more modest scenario.

In addition, the character of the strategies would be different. The 25% growth strategy would require a different set of actions than the 10% incremental option.

For example bolder growth expectations might require new markets and strategic partnerships that might not be necessary under a modest growth plan.
The bolder the plan the more you have to move away from organic growth.

So declare right up front the growth and financials you intend to achieve and THEN develop the strategy to deliver them. And if you have been growing at 10% don’t expect doing more of what you have been doing will be good enough to deliver on a 25% plan.

It won’t happen. You will have to be more creative, more aggressive and be more accepting of more risk. If not, suck it up and be prepared to stay with your 10% strategy.

HOW BIG rules

Creating HOW BIG is a challenging task. Here are the guidelines to keep in mind as you do the work:

▪️ A growth goal should be bold enough to drive innovation and creativity. If you don’t have to stretch and create new tactics and programs to achieve your revenues target, it’s not good enough.

▪️ If HOW BIG is “realistic” — which means you already know how to achieve it — its not appropriate. Pick another number.

▪️ Your chosen growth goal should make you perspire; yes, it’s risky but worth it.

▪️ HOW BIG is a declaration of intent without a specific idea on how to get there. It forces you out of your comfort zone.

▪️ A growth goal should disrupt past performance not trend line it. Trend lines imply predictability, and who thinks performance and goal achievement can be predicted in a world of uncertainty and uncertainty?

▪️ HOW BIG detests extrapolation. Another way of saying trend line analytics are dangerous.

▪️ Choose a 24-month plan period. It better aligns with execution and allows for faster response to unforeseen events. The problem with long planning periods is the mistaken assumption that you can put off action to the later planning years and not have to worry about doing something NOW. You need to be forced to ACT, and act in the moment not 4 years from now.

▪️ HOW BIG has no time for 5-year plans. The 5th year never shows up even though people can be sucked in to rationalizing underperforming behaviour today by saying it will be picked up — the hockey stick theory — in the latter years of the plan.

HOW BIG is the lynchpin of a process to replace traditional strategic planning.

Cheers,
Roy
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• Posted 1.27.10 at 01:52 pm by Roy Osing
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