By Robert W. Bradford, President and CEO
This article was previously published in Compass Points in July 2008
Simplified Strategic Planning was originally designed to be a process used at the business unit level. While it is an excellent approach for optimizing the long-term success of a business, I’m often asked how to adapt the process for use at the corporate level in a business with multiple units.
There are two common models of corporate structure that should approach planning differently. The first is the holding company model — where the corporate level provides some services, but the divisions act largely as independent strategic business units. This type of company should start with strategic planning at the division level and devote time to digesting plans — and giving feedback — at the corporate level. The second type is the integrated company, where divisions cannot always choose strategic direction separately. In such companies, we would suggest starting with strategic planning at the corporate level, and only resorting to a separate strategic plan for a division when it becomes clear that the division’s strategic choices are indeed independent of the corporate strategy.
The integrated company can be much more of a challenge when structuring your strategic planning. Clearly, the framework of the process — addressing the questions “Where are we?”, “Where do we want to go?” and “How will we get there?” — adapts well to the corporate level. The market segmentation framework may, in some cases, work as well. In most cases where simple market segmentation fails to adequately provide a framework for analysis and strategies, you should consider the business units themselves as the starting point for segmentation. But sometimes market segmentation — which is part of the fundamental framework of the strategies exercise — may not easily translate from the business unit level of the organization to the corporate level.
One place where market segmentation and business unit segmentation may fall short is where the business units are not organized in a way that corresponds with varying needs and preferences in the marketplace. For example, geographic business units may make sense operationally, but customers for each business unit may have very similar needs and preferences. In such a case, segmenting by the geographic business unit will not yield usefully differentiated strategies by segment, and focus on a specific segment may not lead to improved results.
One way around this issue — where you have geographic business units but a product or market-segmented strategy — is to do a mini-strategic planning session for each of the geographic business units. It is sometimes possible to save a lot of time in that process by using the strategic planning done for your domestic business unit as a starting point for the others, but be careful that you don’t force the domestic view of customer needs and preferences onto the other business units. You’ll need great sensitivity to the cultural differences of the markets to make this work, however, and you may want to involve a strategic planning professional to figure out how to get the pieces to work together.
It’s also important to be wary of having specialty strategies in one geography and commodity strategies in others — a very common occurrence. When you see this, it may be a symptom of a bigger issue, such as lack of a global branch or loose management of the sales culture. Regardless of the cause, you will find that a lack of specialty/commodity consistency may cause many strategic choices that work in one geography to be counterproductive in others.
If you are considering using Simplified Strategic Planning at the corporate level in your company, don’t let the complexities stop you — the process may help to simplify and streamline your whole organization. Be sure to let us know if you are facing issues adapting this process at the corporate level — we’ve seen many companies succeed with this approach, and we’d be happy to share our insights about what would work best for your company.
For more information on how to take your strategic planning to the next level please listen to our webinar: Why Isn’t My Strategic Planning Working?
Robert Bradford is President and CEO of the Center for Simplified Strategic Planning, Inc. He can be reached at rbradford@cssp.com.
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