This is my fourth and final column in this series which addresses how to begin the process of thinking strategically about your business in the difficult economic times of 2009 and beyond. This advice applies to any type of business of any size and is posted “for what it’s worth” to help readers to plan more effectively and to become more successful.
Successful companies are able to plan effectively in difficult times, and in fact use these times to prosper. One of the best approaches I know is the following step by step model:
- Know what you stand for and what you do best
- Understand what is paying the bills now and for the next 1 – 2 years
- Have a clear vision of what you hope to be in 10 years
- Establish a “base camp” 1 – 3 years in the future that bites off a big chunk of achieving your 10 year vision
- Use elements of Scenario Planning to learn more about the future
- Boil everything down to an action plan for the next year
The Fourth & Final Step
- If you have been following along, we have taken three steps so far:
- Identifying your company’s Core Values, or What You Stand For, and
- Discovering what your company’s Core Purpose is, or What You Do Best
- Having a clear vision, and Establishing a base camp
The fourth step in this process involves two key activities:
- Using elements of Scenario Planning to better plan for possible futures
- Boiling your plan down in an A3 Format developed by Toyota
This process has been around for many years and has its roots in military strategy. It was popularized in the 1970’s by Royal Dutch Shell and is famous for helping Shell predict the Oil Embargo initiated by OPEC that led to scarcity of oil and dramatically increased gasoline prices. By developing scenarios, Shell was able to prepare for this particular scenario and use it to drive growth in their business for over 10 years, largely at the expense of their competitors.
The three components of Scenario Planning are:
- Driving Forces (that impact your business), typically:
- Predetermined Elements (What you know that you know), like:
- Critical Uncertainties (Found by questioning assumptions about Predetermined Elements), examples:
- US Economy
- Consumer Buying Power
- Pace of Globalization
- Material Costs
- Disruption in Retail Channels
The way to use these components is to think about how all three structure how you view the future for your business and then ask yourself the following questions:
- When you think about the concerns, uncertainties and priorities you currently have about your business, what three questions would ask a clairvoyant about the future?
- If the future turned out favorable to your business, how would it change your three questions?
- If the future turned out unfavorable to your business, how would the questions change in this scenario?
Answering these questions will give you some insight and possibly some initial answers about how to project the most important scenarios that could affect your business in the future.
An A3 Plan is a simple but very effective approach to action planning developed by Toyota which follows the Deming Model, or the Plan, Do, Study (Check), Act approach to continuous improvement. After you have done all the previous five steps to think more strategically about the future, it’s necessary “close the loop” on your planning and develop a measurable action plan.