M Dana Baldwin, Senior Consultant
Is your team being objective about the situational analyses you are making in your strategic planning, or is it looking through rose-colored glasses? Objectivity is key to making good decisions. Objectivity is difficult enough when interpreting the current situation. It is even more difficult when you are trying to generate the best assumptions about an uncertain future situation. The quality and objectivity of those assumptions will determine how good your strategic plan will be.
What are impediments to objectivity the team can encounter during the planning process, and how might they overcome them?
The team shouldn’t be “in love with” the products and services you offer. They can love what you do, but shouldn’t be blind to the weaknesses that each product or service might have in various markets. Capitalize on the strengths, but be sure to acknowledge the weaknesses up front, so they can take the appropriate steps to account for them in the planning process. One dated but powerful example of this is Baldwin Lima Hamilton. BLH made steam locomotives for the railroad industry. They became experts in the utilization of steam for propulsion in locomotives. They were so “in love with” their steam expertise that they didn’t realize until it was too late that the industry was moving away from steam to diesel-electric powered locomotives. By the time they woke up, General Motors and General Electric had a lead that BLH couldn’t overcome, and they basically disappeared from that market.
The team also shouldn’t be unrealistic about the position of their products and services in the market place. When the team does the Market Segment Analysis for each of their market segments, it can be dangerous to select the definition of the market segment in such a way that it appears the company is dominant in its markets. If that is reality, great. But, if it isn’t, then the misrepresentation of the true competitive position can lead to strategies which will not help the company to be a viable competitor in the long run. When the team does the analysis, be sure that someone is skeptical and calls for justification of the conclusions the group has proposed. Step back, mentally, and ask if what has been stated actually reflects what is going on in the market place. If you think you are number one or two in a market segment, and you really are a weak number three or four, the difference in your strategies could be the difference between not surviving in that segment or improving your position.
Pay attention to the changing practices and players in the markets in which you offer your products and services. How many years ago were there many different national chains for electronics and similar products? How many of them have gone away, out of business, because of the evolution of their markets? It used to be that you could go to multiple stores which concentrated in selling TVs, radios, personal electronics, etc. What happened to Circuit City, for example? They simply couldn’t compete with Walmart and Amazon. Best Buy has made changes to its approach to the market, including price matching, so that the practice of “showrooming” (going to a store to check pricing, then going on line to see if the product can be purchased for less) is no longer attractive to serious buyers. Best Buy will match prices and you can have the product right now, without the time and cost of shipping.
You have no need for this list of impediments to be completed to be convinced of the crucial need for objectivity in your situational analyses. If you need guidance in any aspect of your strategic planning, please contact me at: email@example.com.
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M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: firstname.lastname@example.org
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