When it comes to business strategy, the bottom line is, you’d better have one, or else. But, having a strategic plan doesn’t mean you’re actually managing your business strategically. Just how do you go about planning the best strategy for your business? And is planning all it takes, or is there more to it?
To answer those questions, Entrepreneur interviewed Michael Canic, business consultant and author of Ruthless Consistency: Aligning Your Organisation to Win…or Else!
Entrepreneur: One of a leader’s many responsibilities is to have a “strategic plan” for their company. Does such a plan produce sustained focus for the leader, their management team and the company’s employees?
MC: Actually, a strategic plan doesn’t produce sustained focus for anyone. What typically happens is that well-intentioned leaders go off-site for the annual “strategic planning” retreat. They plaster the walls with flip chart notes and discuss at length big-picture issues such as mission and vision. When it’s over, everyone breathes a sigh of relief and returns to the “real work” that’s piling up back at the office. The strategic plan is documented and distributed, and then it sits on a shelf and collects dust.
E: So why don’t strategic plans become strategic reality?
MC: Because strategic planning is all about creating “the plan”. Plans don’t implement themselves. Strategy, right through to implementation, needs to be approached as a process. That’s why we created a four-phase strategic management process: to focus on turning strategy into reality.
E: The idea of strategic management sounds good because that puts the strategic plan into action. What are the four phases of your plan and why are they important?
MC: The four phases are assessment, positioning, planning and implementation. They’re important because ignoring any single phase can lead to disaster. Failing to conduct a thorough assessment can mean making decisions based on faulty assumptions. Failing to establish the positioning of a company can result in plans that focus on the wrong things. Failing to plan leaves you with a destination but not a roadmap. And failing to implement means your efforts at everything else are wasted.
1. The assessment phase
The key here is that leaders have to be willing to attack their assumptions, overcome their egos and get to grips with reality. Warts and all! So you start with a question the company needs to comprehensively answer:
“What is our current situation?”
There are three things to look at here:
- The organisation itself from an operational, financial, structural and people perspective
- Market data: current and potential markets and current and potential customers. You want to look at your performance feedback and value drivers.
- The “STEEP” factors: socio-cultural, technological, economic, environmental and political factors that can greatly impact a business.
2. The positioning phase
The question to ask here is, “What do I want to accomplish as a business?” Forget the manicured mission and vision statements. Most of these are too vague, too long and not remembered. Break it down to one, simply worded sentence that captures what you do as a business so that a stranger who hears this sentence could gain a basic understanding of that.
Then develop another simply worded sentence to capture what “winning” would look like. Think of the early days of Apple, when the primary goal was to create the most user-friendly operating system for personal computers.
3. The planning phase
The general question to ask here is, “How do I get there?” This is the phase that has to be information-driven. How much capital is required to support the infrastructure for growth? How rapidly does my business have to grow to survive a consolidating market? Which distribution channels do I need to dominate?
Think of how many promising start-ups have died because they underestimated both the time to establish a significant market presence and the capital required to achieve it.
4. The implementation phase
Here you must answer the question, “How do I ensure it happens?” This is the most important phase and the one where strategic plans fail.
A critical and underestimated part of any implementation is alignment – ensuring the factors that impact people (from skills, authority, resources and incentives to processes and structure) are all aligned with the overarching goal. It’s alignment through the eyes of the people, not just leaders, that counts.
A second critical aspect of implementation is commitment building. Here, we like to structure leaders’ regular communications and engagement with employees. Our underlying belief is that information, input and involvement together help to build commitment.
The last part of this phase involves execution management. The leadership team should meet for a few hours every month to track and manage the implementation of the plan, and then every 90 days to recalibrate the plan. Reality changes, and the plan or elements of the plan can become irrelevant.
So every three months it’s critical to question the assumptions upon which the plan was built and make adjustments as necessary. Have you lost a key customer? Has a new competitor come into the market? Has a promising investor bailed out on you? What has changed the reliability of your supply chain?
Unsurprisingly, when a company vigorously adopts a disciplined strategic management process, it’s much more likely to achieve the right ambitions.
What’s The Worst That Can Happen With A Disgruntled Silent Shareholder?
Whether a shareholder brings capital to the business, experience or connections, you need to ensure everyone has the same vision and values.
While we often hear that it can be bad to have a silent shareholder that does not want to play ball, it is not often that we make enquiries about how the governance of a company can be hindered by a disgruntled shareholder.
Most of us assume that as long as they own more than 50% of their own company, they are entirely in control of all aspects of the company and how it is governed. This is not true: Even if you are a majority shareholder, holding less than 75% of all the shares in your company can still result in headaches if a minority shareholder, holding at least 25% of the company, becomes disgruntled and neither participates in the decisions of the company, nor consents to the decisions being made.
What is set out below highlights, among others, why it is so important to give shares in a company to prospective shareholders over a period of time, rather than from the outset. This allows for shareholders to prove their worth without you potentially placing your company in a position where it could be held at ransom for many years.
The illusion of holding more than 50% of the shareholding in a company
- Many people assume that by holding more than 50% of the shares in a company they are free to do with the business as they please. This generally only holds true for basic decisions of the shareholders, such as the removal and appointment of directors. The most important decisions of a company are based on special resolutions. A special resolution requires that shareholders, either individually or collectively, holding at least 75% of all the shares in a company, vote in favour of a specific decision.
- Examples of decisions that require a special resolution include:
- Amending a company’s Memorandum of Incorporation
- Approving the issuing of shares or granting of other similar rights
- Authorising the basis for determining directors’ salaries
- Disposing of company assets
- Mergers and acquisitions.
So, what does this mean for you and your company?
- If you are a start-up looking to raise funds, apart from some exceptions, you will not be able to issue further shares to new shareholders or anyone other than existing shareholders if there is a shareholder that is effectively dead weight.
- Should you manage to vote a new director to the board, you will not be able to determine the basis on which they are compensated (their salary) without a special resolution.
- If you intend to merge with another company, you will not be able to pursue this without a special resolution.
- If you plan to raise money by disposing of or selling most of the assets of your company you will, once again, be prevented from doing so.
Accordingly, it is always best when starting a venture to vest your shares over a period of time. This means that, for example, shareholders are only entitled to have their shares allocated to them after a certain period of time to avoid a situation where you have a dead-weight equity shareholder hindering the governing of your company, and requiring possible litigation to remove them.
There’s More To Team Management Than Leadership
When you’re running a business you need to ensure that your employees are on your side, helping you to make profits. Giving them job security, taking them seriously and treating them with respect, will go a long way in enhancing loyalty and productivity.
The staff that work for you determine:
- How happy your customers are with your business
- The quality of the things that you sell
- The costs that you incur to sell your products and services
- Your risks – the things that can go wrong and how much it costs you
All of these things determine your profitability and how competitive your business becomes. How do you ensure that everyone is on the same side and helping you to make profits?
At work everyone believes that they are getting something (such as money) and are giving something in return (such as time and effort). They are weighing up in their mind “how much am I giving, how much am I getting in return and is this fair?” If they believe that they are:
- Giving too much or
- Getting too little
- Then this is unfair, and they won’t work well (poor productivity – how much they produce).
The manager needs to:
- Know what people are thinking about what they are giving and getting and
- Manage the giving or getting side
- So that people become more productive
In a smaller business you sometimes cannot afford to pay more or provide the sort of benefits (pensions, medical aid, bursaries etc.) that larger firms can and so the staff may be unhappy, not be productive and be on the look-out for something better.
How do you increase happiness without money?
- Job security – knowing that you will still have a job next year – and that you will get paid on time.
- Contributing to the success of the business. If you train staff to have the knowledge and skills to do a better job and you then encourage and support them to do this then they are happier, and you increase profits. If you then share some of these profits with the staff that helped you to make them then everyone wins!
- To be taken seriously and treated with respect. If you do this then staff are happier, and they will also treat your customers with respect.
- To be part of the team. You can often do this by having a regular briefing on what your plans are and discussing ideas. Because staff are doing the actual work they will often have good ideas and then will be motivated to implement them – it was their idea after all!
Staff leaving you all the time is a can destroy significant value. If you implement the strategy above, you will have happier staff that are more productive and a more profitable business.
Jeff Bezos Reveals 3 Strategies for Amazon’s Success
One of the richest men in the world shared his leadership tips for running a company.
“It remains Day 1.” That’s how Jeff Bezos, founder and CEO of Amazon, signed off in his 2018 letter to shareholders. He’s been propagating the “day 1” mantra for decades, and it’s meant as a reminder that Amazon should never stop acting like a start-up – even though the company now boasts more than 560,000 employees and more than 100 million members of Amazon Prime, the company’s paid service for free shipping on select items.
Here are some of the most useful nuggets of wisdom Bezos shared in his letter and during a recent onstage interview:
1. Standards are contagious
Bezos says he believes high standards are teachable rather than intrinsic. “Bring a new person onto a high standards team, and they’ll quickly adapt,” he writes. “The opposite is also true.”
If a company or team operates with low standards, a new employee will often – perhaps even unwittingly – adjust their work ethic accordingly.
He also says that high standards in one area don’t automatically translate to high standards in another – it’s important for people to discover their “blind spots.”
Try making a list of your duties, then ask trusted colleagues to tell you which responsibilities are your greatest strengths. If certain things from the list don’t come up during the conversation, it might be useful to think about how you can up your personal standards in those areas.
2. Set clear, realistic expectations
If you’re looking to raise your standards in a particular area, the first course of action is to outline what quality looks like in that area. The second is to set realistic expectations for yourself – or for your team – regarding how much work it will take to achieve that level of quality.
Exhibit A: You won’t find a single PowerPoint presentation at an Amazon company meeting. Instead, teams write six-page narrative memos to prepare everyone else for the meeting.
Bezos says the quality of the memos vary greatly because writers don’t always recognise the scope of the work required to reach high standards.
“They mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more!” Bezos writes.
3. Stay involved with the people you’re serving
Whether you’re selling a product or service, it’s a good idea to make sure you never lose touch when it comes to the people you’re serving – no matter how high up the ladder you climb.
Bezos says he still reads emails from his public inbox (firstname.lastname@example.org) as a way to keep his finger on the pulse of what’s happening with Amazon customers.
He says he believes focusing on what customers are saying is much more important for success than focusing on what competitors are doing, and he often compares customer feedback to company data to see where they misalign.
“When the anecdotes and the data disagree,” Bezos said at a recent leadership forum at the George W. Bush Presidential Center, “the anecdotes are usually right.”
This article was originally posted here on Entrepreneur.com.
Technology2 weeks ago
3 Things Africa Must Get Right If It Wants To Leapfrog Into The 4th Industrial Revolution
Lessons Learnt4 days ago
What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew
Company Posts1 day ago
Two 20 Year Olds Reshape Entrepreneur Landscape With New Social Investment Platform
Business Landscape1 week ago
How Schindlers Attorneys Became Involved In The Landmark Cannabis Case
Branding2 weeks ago
Why You Should Prioritise Brand Image
Get Organised1 week ago
How To Multitask Like Tim Ferriss, Randi Zuckerberg And Other Very Busy People
Increasing Productivity2 weeks ago
Take Responsibility For Your Company’s Culture To Boost Productivity
Entrepreneur Today4 days ago
AlphaCode Awards R16 Million To Fintech Start-ups In One Of SA’s Richest Start-up Initiatives