(This article first appeared in the CED Magazine)
As a business leader, your job is to successfully move your organization forward and improve business performance. This requires a continuous process of reflection, analysis, and planning during which you’ll have to answer the following questions about your business:
- What is your business’ current condition?
- Where would you like to take the business in the future?
- How are you going to get there?
These three Critical Questions of Business Planning can be answered using two classic business frameworks known as SWOT” and MOST. Together these tools will help you drive a strategic conversation about your business and help answer these three important questions.
1. What is your business’ current condition? : SWOT (Strengths, Weaknesses, Opportunities, and Threats)
This question will prompt you to evaluate your current “As-Is” conditions such as your financial performance, the economic conditions, your capabilities and resources, and your competitive positioning. As you start to analyze the “As-Is” condition of your business, you can use a SWOT matrix (Exhibit 1) to organize observations and drive discussions about your business’ Strengths, Weaknesses, Opportunities and Threats.
The Strengths and Weaknesses of a company are internal to the business, whereas Opportunities and Threats are external (outside of your direct control). Strengths and Opportunities are positive observations, whereas Weaknesses and Threats are more negative. Business success starts with a solid SWOT analysis because it provides management with the insights they need to better FOCUS their limited resources.
During a SWOT analysis you can start your team on a path towards improved business performance before taking any action. As said by Albert Szent-Gyorgyi (the discoverer of Vitamin C), “Discovery consists of seeing what everybody has seen and thinking what nobody has thought.” With SWOT you give yourself an opportunity to discover the most significant characteristics about your current situation before you take action and get distracted going too many directions.
A FRAMEWORK FOR THE “WHERE?” AND “HOW?”: MOST (MISSION, OBJECTIVES, STRATEGIES AND TACTICS)
MOST is a powerful but simple framework to shape a vision of your company’s future. It helps organizing your thoughts regarding Questions 2 & 3. MOST stands for Mission, Objectives, Strategies, and Tactics. Conducting a MOST analysis focuses your team to view your business from a long-term perspective (Mission and Objectives), as well as a more detailed and short-term perspective (the Strategies and Tactics that will achieve your objectives). MOST can be viewed as a summary of a more complete strategic plan. See Exhibit 2.
2. Where would you like to take your Business? : Mission & Objectives
In the words of the famous psychologist, Dan Gilbert, “To see is to experience the world as it is, to remember is to experience the worlds as it was, but to imagine … is to experience the world as it isn’t and has never been, but as it might be. The greatest achievement of the human brain is its ability to imagine …, and it is this ability that allows us to think about the future”. After assessing the current condition of your company use “the greatest achievement” of the brain to think of the “To-Be” or desired future state of your business. Why are you in business? Where would you like your company to be 5 years from now? Would you like your business to grow? At what rate, with which products? Will you target new customers? How will you track progress? The answer to these and other questions will help you shape your Mission and define your Objectives.
A Mission defines a business’ core purpose and core values. A Mission expresses the reason for existence of your company and it is timeless (i.e. doesn’t change from year to year). Missions can also help your team to feel connected to the overall purpose of the business.
Objectives support the Mission and communicate to your team what you are trying to achieve in the next 2 to 5 years. Objectives tend to be wordy, so how do you track your progress? That’s where goals come into play. The term Goals is used to represent how success will be measured for each objective. Goals are quantitative. Steven Covey’s Four Disciplines of Execution suggests that Goals be written in the following manner: “from X to Y by Z”. For example, if your Objective is “To become the largest dealer in our market”, a Goal for that Objective might be: “Grow revenues from $40MM to $60MM by 2021.” See Exhibit 2.
3. How are you going to get there: Strategies & Tactics?
Once you have agreed upon your Objectives, you are ready to specify how you will get there. In MOST, the S represents “Strategy”. A Strategy is what you will do, the big ideas, to accomplish your Objectives. For example, if an Objective is “To become the largest dealer in our market”, then a Strategy to accomplish growth could be to “build market awareness.” Another Strategy could be to “increase selling skills”. Tactics, a collection of action, are those day to day activities that accomplish each Strategy. Some potential Tactics to “build market awareness” could be to conduct a mail campaign, place ads in key magazines, or launch a pay-per-click campaign on Google, Bing, and Yahoo, etc…
ENSURING ALIGNMENT AND COMPLETENESS
As a final check, we suggest that when you complete your plan’s summary (i.e., you’ve completed your MOST), you ask yourselves an additional four questions.
- Does our plan EXPLOIT our Strengths?
- Does our plan IMPROVE our Weaknesses?
- Does our plan ELIMINATE our Threats?
- Does our plan CAPITALIZE on our Opportunities?
It is OK to answer “no” to some of the questions above – since you can’t do everything, but make sure it’s clearly understood and agreed upon by the team. Sometimes you may answer “no” and you realize that your plan is incomplete and that more work needs to be done.