Strategy

“We have been endowed with the capacity and the power to create desirable pictures within and to find them automatically printed in the outer world of our environment.”—John McDonald

One of the interesting aspects of strategy is the infinite number of possibilities available to best position your business, or even your career. Even in our current economic situation, it is possible to find a few businesses that are profitable and continue to grow. The difference in almost every case is that the businesses that continue to grow have a strategy for success. Those without a clearly defined strategy are at the mercy of the economy.

Strategy is one of those terms that people use, but are hard pressed to give a definition. Often, the terms strategy and plan are used synonymously, or conjoined as in strategic planning. Planning is a formalized procedure to predetermine the activities and events needed to produce a result. It is the process by which one attempts to control future events in order to create a desired status for their organization.

Strategy is the clearly understood intent to realize a specific outcome in a complex environment. Strategy pursues a vision. Once understood and articulated, strategy provides the direction and integrated decisions to systematically advance the organization toward the future vision and make it an eventual reality.

Strategy answers the question: “What needs to happen?”

Planning answers: “How will it happen?”

The first step toward crafting a better strategy is to identify your current business strategy. This is important because it allows you to understand your current situation and what needs to happen to create the best future position for our organization. In some cases, it may be better to cut your losses, and one of the best analytic tools you can use to know whether to build on your current business model or start anew is called “zero-based thinking.”

This type of thinking takes you back to zero so that some penetrating questions can be asked to determine the viability of your products, services, or business concepts; the dependability of your people, vendors, or lenders; or the practicality of your equipment, processes, or resources.

Ask: “Knowing what I know now, would I start this business up again if I were going to start over?” “What would I do different?” What people or suppliers would I keep on board, and whom would I let go?” “What processes add value to our customers’ lives, and which ones detract from it?”

Zero-based thinking even examines your customer base to ask: “Are there any customers I am serving today, knowing what I know now, that I would not take on in the future?”

The importance of ongoing strategy formulation and planning revision can be illustrated with this story. The Nobel prize-winning physicist Albert Einstein was teaching at Princeton University in 1951, and he had just given an exam to his advanced class in physics. Einstein’s teaching assistant was carrying the tests while he walked back to the office. The assistant curiously asked, “Dr. Einstein, wasn’t that exam you gave to this class of physics students the same exam you gave to the same class last year?”

Einstein thought about it and replied, “Yes, it is the same exam.”

“But, Dr. Einstein, how could you give the same exam to the same class two years in a row?”

Einstein’s response was classic. “Well, the answers have changed.”

The point of the story is that the strategy and plan you developed last year may have been right on when you created it, but rapid developments and changes in a complex environment may create different consequences from what you envisioned last year.

According to the American Management Association, 70 percent of your decisions in business will turn out to be wrong over a period of time. They may have made sense when you made the decisions based on the existing situation, but over time the answers changed because the business situation has changed dramatically. Zero-based thinking can help you come up with better answers to fine-tune your strategy and develop a better plan of action.

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Do you have an updated strategy and plan that you use as an integral tool to better position your organization? Do your people know the strategy and understand how their position directly contributes toward following the plan and accomplishing the goals? On May 1 we will facilitate a brainstorming session to find solutions to the challenges in the CNMI’s dynamic environment. You’ll learn how to create a powerful strategy and plan to improve your profitability. It is available to any interested business owner at no charge. To reserve a seat, e-mail us at rikv@bizresults.org.