By M. Dana Baldwin, Senior Consultant
Once you have completed your strategic planning for the upcoming year, how often should you go back and look at it to determine that the plan is still valid; heading you in the right direction and staying on the course you have chosen?
We suggest you revisit your plan and the assumptions you made while developing the strategic plan at least once a quarter, as well as revisiting the entire plan annually. Why, you ask? Very simply, your strategic plan is based on your knowledge of your business, your business conditions, or environment, and the assumptions you and your team have made about what will happen in that operating environment.
Look at each of the areas in which you made assumptions. First, in each of your market segments you made specific assumptions about how attractive each segment would be in the upcoming years. You made assumptions about any threats, which could make the overall segment shrink. You also made assumptions about the opportunities, which could foster segment growth. Which of your assumptions is occurring and to what extent? Is the overall segment growing or shrinking, and is it doing so at about the rate you thought would happen? While this might be difficult to discern on a quarterly basis, if you are close in your assumptions to the actual rate of growth, then you likely will not need to make any changes to your strategies. If it varies widely, or the direction of the market is opposite to that which you predicted, then you need to step back and re-analyze the situation and possibly modify your strategies for the planning horizon and/or objectives for this year.
Are there any big impacts which have occurred which could have an impact on your future direction? For example: an aircraft components manufacturer might have been focusing on the commercial aircraft segments before September 11, 2001 but afterwards they changed their focus to military segments because commercial segments pulled out of their growth cycle.
In addition to changes to market segments quarterly reviews are where you evaluate any new opportunities that have bubbled up since your strategic planning meetings. For instance, an acquisition has become viable – you evaluate it against the objectives that you have chosen and, if it has higher priority, you add it and take off another, lower priority objective. If it does not have a higher priority, you save it to re-evaluate it in the next strategic planning annual cycle. During the quarterly reviews, you are reviewing the full strategy plan and this is where the items that were deemed “business as usual” or “normal course of business” are checked to make sure they haven’t fallen off the radar screen and are still progressing. It is a chance to pull your team together to think strategically and pull back from the day-to-day.
You also made assumptions about what your significant competitors would be doing in each market segment. How is reality playing out relative to the assumptions you made here? Again, if your predictions are close, you may not need to change anything, but if they are not, this review is an opportunity to make a mid-course correction.
The team also made an assumption about the future average industry profitability in each market segment. How is that assumption holding up? Note that this does not mean your own company’s level of profitability, but the general direction of the industry as a whole in this segment. Is this segment still an attractive place to be doing business? Should you emphasize it more, or less, than originally intended in your strategic plan?
Finally, is there something on the horizon which might displace the products or services you are providing in a particular segment? Are your products like the portable CD players at a time when new products like MP3 players are on the brink of introduction?
One of the outcomes of this monitoring and testing of assumptions could be the realization that you need to develop market information gathering approaches that allow you to better discern what is going on.
Having gone through your assumptions about your market segments, you need to decide what to do and when to do it. If your assumptions are close to reality, you likely won’t want to change anything significantly. On the other hand, if your assumptions are at wide variance with reality, you and your team should go back to ground zero and re-analyze every market segment to adjust your predictions to the latest reality. Where you have made significant changes, you should review your strategic plan for each segment, possibly changing your strategy to reflect the changes that have occurred. If those changes in strategy will affect your Objectives, and thus your action plans, you should modify each changed Objective and action plan to reflect the latest reality, recasting each to take advantage of your new assumptions.
If you are having difficulty in doing these steps, we can help you. Please contact me at firstname.lastname@example.org for guidance in your quarterly reviews. For additional information on execution success please read: Everyone Knows Execution is Important – So Why Do We Fail to Execute?
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. and can be reached at email@example.com.
© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.