All across the country, in companies large and small, in public organisations and private firms, strategic planning keeps executives awake at night. We spend hours in meetings, setting objectives and reviewing budgets and resources. Finally, we present the completed strategy with optimism and confidence. And then … too often, we don’t follow the plan!
Of course no one just throws the whole proposal away. We hold on to our action lists and our objectives. It’s just that changing events and new circumstances lead us away from our original policies. As a result, we often focus on actions that lead us off-course, although they may feel right at the time.
Tempting opportunities may not fit the plan, but they look easy or profitable and we follow them anyway. Why? Because we missed something critical from our strategy: alongside our long term targets, we also need a clear picture of other possibilities from which we should steer clear.
The worst best deal I ever saw
I know a software start-up which fell badly into this trap. They had prototyped an excellent cloud-based product which effectively simplified some complex business functions. They worked out a sound strategy and raised enough investment to get their project under way.
The problem, which finally defeated them, did not look like a problem at all in the beginning. In fact, it appeared to the CEO as a great opportunity. He had planned for a tough start to their business: winning a number of small deals and gradually growing their customer base. However, within a few months, one early customer - a huge insurance company - was so impressed with the software that they signed a very large contract. The CEO was delighted. They could now fund their operations without asking for more investment, with a guaranteed customer for their planned new features.
Within a few months, this one client provided a significant proportion of their revenue. And, as good engaged customers do, they had feedback and feature requests and proposals of their own. Within the first year, the original roadmap for the software had been overhauled. The developers mostly worked on fixes or features for the one golden customer.
Reviewing their original plans, the CEO knew they were off-track, and they needed more investment to pay for new development for the original planned cloud service, while also supporting their influential client. But as one potential backer said, “We invest in software vendors, not in service providers.”
The answer? They found another large customer and so their story continued. While other start-ups were growing rapidly on the cloud and finding attractive exits, our friends had no IPO in sight and lost their best staff to more exciting opportunities. They settled down to be a just a supplier to a few large companies. I expect they will soon be acquired cheaply by one of those large customers and became just another part of the corporate IT environment.
The heart of a strategy
What went wrong? Simply this: they missed out the one element which I believe is essential to a strategic plan. They did not know when to say No.
Most of our strategic plans are built around what we intend to do. But I suggest you also need a useful definition of what you are not going to do. If your strategy is to attract thousands of customers to a moderately-priced subscription service, be clear that you will not sign up a single major customer, because they will lead you off-course. If your success relies on selling to major enterprises, don’t be distracted by some easy wins in the mid-market.
In every plan I work on, from a single-feature specification to a multi-year corporate strategy, I insist on at least one simple paragraph describing “non-goals.” Like any other element of your proposal, non-goals require research, work and negotiation. But once you have crafted this clear map of where you will not go, the journey becomes much easier.
The goal of non-goals
When you know how to say 'no', you are less likely to run into dangerously attractive offers that hide unexpected problems. With a good set of non-goals it also easier to evaluate your original strategy, because you will be following it more clearly and with more responsibility.
Of course, things go wrong in any project. Non-goals not only give you greater accountability, they also enable you to speak to mistakes and strategic errors with more authority and integrity. In contrast, when you drift away from your original strategy, the reasons why, the mis-steps along the way, and the consequences, are all much more confused.
In short, learn to say 'No' when creating your strategic plans. And ensure you make that clear in every policy you draft.
By Donald Farmer, vice president of innovation and design at Qlik