But planning is indispensable
Former U.S. President Dwight Eisenhower is the attributed source for these words, which in full state "In preparing for battle, I have often found that plans are useless, but planning is indispensable."
What is of critical importance to your business is setting specific, measurable long term goals, and doing so in the context of an ideal world. The intent is to help you avoid ‘creeping obsolescence’ of incremental changes that merely react to events rather than taking a strategic approach to what might be possible for your business.
Of course, the outcome of such thinking may mean major change in your business, so understanding how to implement change is important. Change will only occur when the returns of change, whether they be financial or emotional, are greater than the level of discomfort from the current situation plus the cost of making the change.
I know it is nearly mid-year, but have you asked yourself what you'd most like to accomplish in 2017? We all make those resolutions at the beginning of the year, but then chaos intervenes. I have found it useful as I approach mid-year, to take a deep breath and relook at where I’m going and how far my business has progressed along the path I set. You should do so as well.
Past years have been about completion. Make this year about "creation"; a year where you lay the groundwork for the next phase of your life and for your business. It's a time to decide what you'll no longer stand for and what you're now committed to achieving with your business
I undertook a review of past clients to determine what led them to set major goals which required significant change in their business. Underlying the key drivers of change was a feeling of discomfort. Do you feel discomfort from any of these factors which my review highlighted as the biggest drivers of change?
• Lack of a strategic direction – “I don’t know where we’re going!”
• Lack of marketing skills
• Lack of good systems and procedures
• Poor profitability
Poor profitability becomes the focal point of the pain and discomfort, but profitability is equally the reward for successfully making the change.
If you have done the thinking, now is the time to move beyond the thinking to the actual planning. This means you must become specific about your goals – what are you seeking to achieve this year, and next? And what changes does that mean for your business? Paul Meyer said: if you aren’t achieving what you want to achieve, it is probably because your goals are not clearly enough defined.
You have probably seen the acronym about setting SMART goals:
- Specific - In addition to specific, don't stretching, systematic, synergistic, significant and shifting, round out the picture?
- Measurable - M means measurable, but I also recommend meaningful, memorable, motivating and even, magical
- Achievable - A is an achievable goal but A also needs to stand for action plans, accountability, acumen and agreed-upon
- Realistic - R means relevant, but it also stands for realistic, reasonable, resonating, results-oriented, rewarding, responsible, reliable, rooted in facts and remarkable.
- Time-based - T means time-based and it also represents timely, tangible and thoughtful
Smart goals give you the drive to achieve change.
So you have created your goals, and they’re smart goals. Now for the bad news.
The bad news is about the difference between formulating goals and strategies to drive them, and actually making it happen. Not surprisingly this has led to a number of studies and comments:
• Strategy execution is more important than the quality of the strategy (Ernst & Young, Measures that matter report on 275 Portfolio Managers – 1998)
• “Fewer than 10% of strategies are effectively executed” (Walter Kiechel, Corporate strategies under fire, Fortune Dec 27 1982)
• “70% of failures are due to poor strategy execution by senior management” (Chan and Colvin, Why CEOs fail, Fortune, June 21 1999)
• “Superior execution is required to achieve excellence” (Frank Blount & Bob Joss, Managing Australia, 1999)
• “Execution is more important than good vision” (Kaplan R, The strategy-focused organisation, Harvard Business School Press, 2000)
• 40 times more of the literature is dedicated to strategy formulation than to execution (Dulmanis 2003)
You see the common thread here: businesses develop plans and strategies but they don’t make them happen. That’s why they say the three “Es” of business planning are Execution, Execution, Execution.
So why are plans useless but planning indispensable?
Plans are useless in the sense that the year ahead will always have some unexpected twists and turns, an X-factor that neither you nor anyone else was able to predict. Products change, prospects change, market environments change.
Eisenhower had been a General before being a President and he knew the old aphorism that no plan of battle survives the first shot.
Planning is indispensable because in formulating your plans, in looking at what was completed in the year gone (and why and why not), and what you need to create and change in the coming year you will have examined and analysed all the information you have on your business. Hopefully you will also have looked at what is happening in your marketplace, your local economy, and with your competitors.
Various planning tools such as SWOT and Scenario Planning, which I have discussed previously, are very useful. I’ve also written extensively on the importance on having information and data on your business activities which can be analysed and projected. The knowledge provided from such analysis is a key input to your planning process.
Benchmarking is another tool I recommend - reviewing your business against industry averages in your sector to highlight opportunities for improvement in yourbusiness.
Having that analysis and examination available means that you will be able to hold fast to your direction, to keep focused on your goals even as the reality of twists and turns in your market confronts you.
The indispensability of action
The tag line in my previous business was “improve, change, profit”. More profits won’t eventuate unless you take action to improve and change your business.
Action leads to execution of your plans. Your plans will never be perfect, but doing something, getting it moving, is more important than developing the perfect plan.
The plan is useless if it is not executed, but if you act, the planning you put in will be indispensable.
How Well is Your Business Performing?
When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, they are sometimes held back by lack of knowledge of what is possible. A lack of focus of potential improvements leads to a lack of control over their business, and eight times out of ten that lack of control comes down to a lack of knowledge of what is happening in the business, and what their peers are achieving.
For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand where and how they may change their business to be a leader in profitability, productivity, and competitive advantage. I assist you analyse:
• The strengths, weaknesses opportunities and threats of your business
• Determine where you want to be – clear, achievable goals, and
• How you are going to get there – strategies to achieve your goals
This is sometimes known as the NOW – WHERE – HOW model.
If you would like to discuss with me how you might do that, book a Strategy Consult here.
© Copyright 2017 Adam Gordon, The Profits Leak Detective