Making the Competition Irrelevant
Taking Advantage of Strategic Planning
As far as business books go, Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne has clearly changed the way we see our business.
The book focuses on adjusting elements of a business to reach customers in a unique way. Oftentimes, a company’s management can limit itself by being a follower of the competition. By doing this a company can find itself in highly competitive environments described in the book as “Red Oceans” – comparable to shark infested waters. In these environments, companies have a difficult time maintaining profitability and some even face extinction during recessionary periods.
Would it not be better to direct your business into a “Blue Ocean” where the competition is irrelevant? Blue Ocean Strategy highlights successful business models such as Cirque du Soleil, famous for adding fascinating drama to the mundane circus performance, improving the venue with more comfortable seating and heightening the theatrical elements of the show. By modifying elements of the common circus, the company transformed the circus experience into a unique entertainment event. The result created an unrivaled business within an already very competitive entertainment industry.
I Can’t See the Forest for the Trees
Most of us desire to improve our businesses. Often what happens is we get so focused on the day-to-day operations we naturally lose sight of where we are headed or what might be coming in this ever-changing marketplace.
It could be that your business experienced a tremendous falloff in revenue. Or that slowly the market is changing and your business has not kept up with the changes. Whatever the case, making the competition irrelevant as a goal and launching into “Blue Oceans” does not happen without taking the time to plan and developing a practice of implementing new strategic ideas into your business.
Ultimately, strategic planning should incorporate a collective effort of multiple people within your management team to plan and communicate that plan throughout your organization.
What issues do we currently face that could impact our business now or in a few years from now? What resources do we possess that are either underutilized or misaligned? What are the main areas of improvement that could impact our business revenue or income by more than 5 percent annually?
Steps in the Planning Process
Most of us look back on the year before and budget into the next year hoping for an improvement in the economy to buoy our efforts. Unless your management team gets intentional about strategic planning, your business could severely drift into the “Red Ocean.” Even if you’re already there, it is never too late to chart a different course.
The following steps could help launch your business into a proactive mode of strategic planning:
- Discovery. Brainstorm ideas within each business segment. A typical brainstorming technique is to do a SWOT analysis.
- Evaluation. Management collaborates on the best ideas to develop into strategic focus areas. They enhance areas where your business is already strong, and eliminate or minimize areas in your business that drain resources. Filter through the list of ideas by developing a list of pros and cons, resources needed, reasonableness, adequate leadership, etc.
- Develop the plan. This should include a written plan with clear objectives, strategy, and action plan. The plan should cover a short period of time such as three years with 6 month projects. It should also be flexible to incorporate changes and new discoveries. Periodically communicate the plan throughout your organization. This will provide the necessary accountability and feedback needed to improve the plan.
- Independent review. Find someone you trust outside of your organization to give you independent feedback on your plan. This could be a consultant, attorney, banker, member of your industry association or even your CPA.
- Implementation and Revision. The greatest weakness of all plans is not getting them done. Unless your business incorporates some method of follow-up, plans will go from the back burner to the garbage can.
Strategic planning is simply an essential business activity. The time to start is now. Even if keeping a journal of ideas or evaluating a new way to approach the marketplace, strategic planning should not be put off for too long. It should be a part of your normal business routine if you ever want to reach the “Blue Oceans.”
Phillip J. Hayes is a Managing Partner with Berman, Hopkins, Wright and LaHam, CPAs