In Part I of this blog series, we talked about how strategic planning is essential for your integration business. Today, we take that discussion a step further to explain why integrators should conduct strategic planning every year.
Many times, we don’t start planning for adverse events until they appear, or when we are already in the middle of them.
Neither situation is conducive to great planning.
Let’s look at these two conditions separately.
Often, we think about strategic planning as something we should do when we recognize our business environment is changing:
- New competitors enter our markets.
- Our core technology changes.
- Our internal competencies no longer match the market needs.
- Our suppliers are going directly to our customers.
- We enter a changing macro environment (growth or recession).
- Globalization changes our industry.
Regardless of the cause, by the time we recognize the need for change, change has been forced on us under duress.
More often, we start planning after we are well into our current fiscal year. The thinking goes something like this:
“Whew, we made it through last year. What should our budget be this year? How many people do we need to hire, resources to invest in? OK, so what revenue plan would make that work to our target net income?”
From here, we build a budget and consider initiatives that might lead to success. We then have lots of initiatives, but they are:
- Not aligned to a coherent strategy,
- Not prioritized, and
- Not “funded” with resources, time, energy, and relentless pursuit.
There is a better way
“Create and settle into a business rhythm that conducts annual strategic planning, that looks ahead 3 to 5 years and that determines the next destination which aligns with your vision, values, and purpose.” Joel Harris
Each year you can learn, adapt, adopt, and evolve your strategic plan but always within the framework of a longer period that mitigates the pressures of the current budget year or quarter.
With this rhythm you can chart a course of annual objectives that will guide you to your destination and that builds on each succeeding year.
Then you can develop an annual operating plan that achieves that year’s objectives. This includes not only the planned business results, but also the limited key initiatives needed to build your companies competency and capability to achieve next year’s plan.
Finally, you then build out an annual operating budget that ties the impact of the operating initiatives to the bottom line.
Once you have this plan in place, you execute it quarter by quarter. It is a variation on the old joke: how do you eat an elephant? One bite at a time.
Developing and executing strategy is best done when it is built into your natural business rhythm, not as a one-time event.
Stay tuned for Par III of this blog series, The Missing Strategic Imperative.
Read Part I of this series:
Strategic Planning Is Essential for Your Integration Business
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