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What Strategic Planning Can Do For You

Recently I attended a party for one of our local arts organizations and had the opportunity to meet a businessman who, like so many others, was lamenting the impact of the state of the economy on his business. When he learned that I was a strategic planning consultant, he immediately seized the opportunity to question me about the role of planning given the current national financial situation. Of course, he was trying to bait me and like any good fish, I bit.

As you can well guess, I started pointing out the benefits of strategic planning. Just like my agitator, you have probably heard these benefits before. Quickly I explained that strategic planning would help him to identify the changing needs and expectations of his clients, uncover the changes in the competitive marketplace, re-discover his core services, reassess his business priorities, and adjust his strategies to meet the changed environment.

“Yes, but” he quickly interjected, “isn’t that the same way you plan than during good economic times? Doesn’t the current economy call for us to plan differently?

This stopped me in my tracks. I didn’t have a quick come-back and my only response was “that is a very interesting question.” Luckily his wine glass was empty and his departure for a re-fill gave me the opportunity to retreat to the safety of some nearby friends.

Since that evening I’ve thought a lot about his question. While I would like to be able to respond “of course” to his question, my mind keeps telling me “no, strategic planning shouldn’t be any different during an economic downturn.”

Before you decide that this proves that strategic planning is an over-rated exercise, let me explain. Strategic planning should be just as rigorous during successful business times as it is in tough times such as these. It’s true that no strategic plan could have anticipated and planned for the meltdown in the financial markets. However, a business with a strong strategic plan during good economic conditions will be better positioned to make adjustments and keep moving forward when the economy turns bad

If your business already has a strategic plan, you need to dust if off and re-visit it. The environmental assessment needs to be updated to reflect the changing financial markets. Consumer spending habits are changing; do you understand how these changes are affecting your business now and how they will impact you down the road? And, don’t forget to review changes to the competitive landscape; tough economic conditions mean that some old competitors won’t survive, but you also need to proactively anticipate the emergence of new, more innovative competitors.

Now is also the time to critically examine volume, revenue, market share, and future demand by service. You must concentrate on your core business, which means that you will need to make informed decisions about which services should stay and which should be eliminated or downsized. In tough economic times, it is even more important to heed the warning that you can’t be all things to all people.

This re-examination of the assumptions that your plan was originally based on will more than likely mean that you need to tweak your priorities and strategies. This is OK and is even a necessity. Strategic plans are not static; plans are meant to establish your direction and guide you along the way. Just like on any journey, you have to be prepared for detours and respond appropriately.

The next time someone asks me “Shouldn’t strategic planning be different during a recession,” I will know what to say.

By the way, if you don’t have a recent strategic plan, the economic downturn should be the push you need to develop one. According to Michael Porter the Bishop William Lawrence University Professor, at Harvard Business School, a “company without a strategy is willing to try anything.” Unfortunately, companies that try anything, usually succeed at nothing. Be sure to read my next article in which I discuss what separates a good strategic plan from one that actually works.

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