The Drumstick Theory of Strategic Planning
Many of us served a big and elaborate Thanksgiving dinner to family and friends. If the feast went well, it was because we used a special ingredient that made everything taste good even though it didn’t appear in any of the recipes: planning the menu and its preparation well in advance.
In business, strategic planning serves the same purpose as all the ahead-of-time work we did to get ready for Thanksgiving. The best-managed and most successful firms in our industry get to be that way because they plan for it. They set goals, identify opportunities, anticipate threats, and put a timeline on everything they want to accomplish. Then they execute methodically, evaluating progress at regular intervals to ensure that all elements of the plan are being carried out.
The results speak for themselves in business performance. Printing and packaging firms that rely on strategic planning are consistently among the industry’s profit leaders. One of our current clients at New Direction Partners is a perfect example. It’s not a particularly large firm, but it operates with the same disciplined approach to planning as a Fortune 1000 or 500 company. This attitude has helped it to become more profitable and growth-prone than many of its bigger competitors.
As M&A advisors, we most often speak about strategic planning within this context. But we also tell our clients that it’s an essential step even if there is no near-term intention to sell the business or buy another firm. Planning dictates outcomes at all stages of a company’s life cycle. Printers who need lines of credit or short-term loans discover this when applying to banks, which usually won’t proceed without a written business plan to review.
But, of greater urgency is the fact that because the industry is changing so rapidly that no firm can survive without reinventing itself and adapting its business model to the new realities of the market. A printing company offering the same products and services that it did 10 or even five years ago is a company at risk of falling behind. A company that makes one-, three- and five-year projections of what it will need in terms of technology, personnel and market development, is a company with a down payment on the future.
Written business plans are carefully structured documents, but the process can begin with a simple SWOT exercise: an informal assessment of Strengths, Weaknesses, Opportunities and Threats. To identify them, ask questions. What new markets can we enter? What capabilities should we add? How much capital expenditure will we have to be prepared for? How are we going to handle staff attrition as people retire? Where is the competitive pressure likely to come from?
Owners seldom have all the answers; they also need to be able to draw upon the insights of those working for them. This is why a key component of strategic planning is creating an environment where everyone feels free and encouraged to contribute SWOT intelligence.
The client mentioned earlier does this by organizing twice-yearly retreats in which management team members review market trends and other topics vital to keeping the business on track. Or, it could be as simple as practicing MBWA—Management By Walking Around. An effective strategic plan gets its strength from input by employees at all levels in every operating department. It’s never the product of ivory-tower thinking or sealed-off management styles.
A strategic plan doesn’t execute itself. Carrying it out is the responsibility of every department that has a stake in its success. The owner’s role is to monitor and measure progress toward stated goals, recalibrating assumptions and updating the agenda as changes in the big picture may indicate. This means meeting regularly for status reports. For most plans, quarterly reviews will be sufficient.
Creating and working through a strategic plan is a major commitment of effort, especially for time-pressed owners wearing multiple hats as production managers and outside salespeople. But, nothing else offers a straighter path to business survival and success. When you come to the end of yours, the sense of satisfaction shouldn’t be too different from the pleasantly full feeling you and your guests enjoyed at the conclusion of your well-planned Thanksgiving dinner.