How to Develop a Compass-Driven Strategic Plan
Last week I gave a presentation on “goal-free” Strategic Planning to a group of professional speakers, all of whom are sole practitioners. Over the course of 90 minutes, I discussed many concepts, including the one I write about here: Compass-Driven Strategic Planning.
Fundamental Business Activities
All businesses, no matter what size or industry, have four fundamental sets of activities (also known as “processes” or “capabilities”):
- Develop Products and Services: Research & development, intellectual property creation, product design and development, etc
- Generate Demand: Marketing, sales, customer acquisition, customer service, etc
- Fulfill Demand: Manufacturing, distribution, inventory management, service delivery, etc
- Plan and Manage the Business: Strategy, finance, technology, etc
As a starting point for your business, generate a list of all activities that fall within these four fundamental processes. Click here to view a sample one page list for a professional speaker.
In order to create a sustainable business, proficiency in all four areas is necessary. Sole practitioners tend to focus their attention on only one or two of these processes, exposing their company to great risk. Here are some of the most common pitfalls:
- Excessive focus on the delivery of product or services (fulfilling demand) leaving limited time to create and maintain a pipeline of work (generate demand).
- Mismanagement and neglect of finances due to a lack of immediate priority.
- Reliance on one product or service with insufficient time for the development of new products. One sure way to end up out of business is to rely on one product indefinitely.
Why are sole practitioners so susceptible to these pitfalls? As with most companies, but more notably with small organizations, resources are at a premium; time being one of the most precious commodities. The challenge is that there is never enough time to directly manage every piece of the business. One solution is to focus on differentiators and outsource the rest. However, the real solution, especially for a small business, is a bit more complex.
In the Goal-Free Living secret, “Use a Compass, Not a Map,” I discuss the concept of finding your compass: This is the intersecting point between passion (what you love to do), skills (what you are good at), and value (what creates value – for you and others). These three attributes should drive your planning strategies.
We will start with the two dimensions that are more personal in nature, passion and skills, then overlay the value dimension later.
Create a 2 x 2 matrix. One axis is passion—from high to low. High passion implies this is an activity you love to do; low passion is something you would rather not do. The other axis is skills—from high to low. High skills are the activities where you have the necessary skills; low skills are those where you do not.
Now, that you have this 2 x 2, plot your previously listed fundamental activities onto the matrix.
Then, let’s look at the resultant quadrants.
Low passion/low skill: Outsource: If you don’t like doing something and you don’t do it well, then the best solution is to “outsource” this work. Find someone else who enjoys this task and has the skill set to execute it at a higher degree. This can be done through bartering, hiring employees, using contractors (I use elance.com), summonsing friends and family, revenue sharing, or any other creative collaborative strategy. In short, get someone else to do these low passion, low skill activities.
Low passion/high skills: Minimize. If you don’t want your job to become work, you probably want to outsource these capabilities as well. However, if you are starting out and finances are an issue, you may want to continue doing these activities for now. To keep yourself motivated, try to find a way of getting yourself excited about these activities. One way may be to turn them into a game. In general, you want to “minimize” the amount of time you spend on these tasks.
Low skills/high passion: Learn. If you love doing these activities, then you may wish to acquire the necessary skills. This can be done through a variety of means including training, mentoring, or researching. If you anticipate a steep learning curve, you may wish to find a partner during the learning process who possesses these talents. This will help to ensure that your business keeps moving forward while you gain the necessary skills.
High skills/high passion: Target: This is the sweet spot of your business. “Target” these areas. If you love the work, are good at it, AND it adds value to your market, put most of your energies here. If this is your core business, then you have chosen wisely. If not, maybe it is time to re-evaluate the business you are in.
These last two quadrants should reflect your business priorities, with an emphasis on the high skills/high passion work. By combining passion with skills, you are likely to be more effective, efficient, and satisfied in your work.
Once we are clear where our skills and passion lie, to ensure success, we must now overlay one additional dimension: value.
The final test is to validate your priorities against the “value” equation. Just because you love to do something, does not mean it is vital to your business. Conversely, some less than desirable activities may be critical to your business success.
Although there are many dimensions of value (e.g., value you create for customers, revenue you generate for your business, etc), for our purposes here, we will focus on “strategic” importance. Strategic activities are those that define the organization’s special nature, differentiate them from the competition and are fundamental to the direction of the business. We will define activities that are not strategic as being “tactical.” Tactical activities support the business, but are not THE business.
Unfortunately, determining whether an activity is strategic or tactical is not necessarily black or white as there is a range of “strategicness”. For example, if you are Apple Computers, financial work would most likely be tactical. It adds value, but it is not strategic. Although Apple’s ability to manufacture high quality iPods is of great importance, their ability to design innovative products is most important. Therefore, design is clearly strategic and manufacturing falls somewhere in between the two ends of the spectrum.
If we add in “value” to our matrix and plot our tactical activities, we end up with some new strategies that look something like this:
high passion/high skill: Extend. If you are passionate and skilled in a particular area and it is not currently strategic, consider how you might “extend” that capability. Ask yourself, “How can I make this a strategic part of my business? How can I create extraordinary value for customers by leveraging this expertise?” Perhaps one way is to offer this service to others who are in a similar business. For example, professional speaking is my core business. However something that I am both skilled and passionate about is securing business with large corporations. Therefore, I could potentially offer this as a service to other professional speakers as a source of additional revenue.
high passion/low skill: Apprentice. If you are passionate, but not skilled in a tactical area, these activities will become a distraction to the business if you invest too much energy in learning. One alternative is to use the apprentice model, whereby you hire someone to perform this activity, while you learn from them. In the future, you may choose to do this activity yourself.
If we add in “value” to our matrix and plot our strategic activities, we end up with some new strategies that look something like this:
For strategic activities with low passion: Rethink or Partner. If you find that the predominance of your strategic activities involves work that is not of interest to you, you may need to “rethink” the business you are in – especially if you lack the necessary skills. Although it is difficult to be successful in business where you are neither skilled nor passionate, this does not mean you are fated for failure. Maybe you hate sales, yet the sales function is critical to the success of your business. In this case you may wish to “partner” with someone who enjoys this work and excels in this area. In this sense, we are moving beyond the traditional outsourcing model where activities are transactional in nature, such as: hiring someone to build your website, do your taxes, or create marketing materials. Here, the partnerships are more extensive and deeper in that your collaborator becomes part of your business. Their role is strategic. Bottom line: build a strong relationship with a compatible business partner, and your business – and your partner’s business – will thrive.
[NOTE: I discuss targeting and levels of value in depth in Chapter 7 of my book, 24/7 Innovation.]
By focusing your energies on those areas that matter most, you create a greater opportunity for success. When you leverage your personal skills and interests, you not only become more productive, motivated, and creative, your work becomes less stressful. This, in turn, will give you more energy and perhaps boost your desire to “work” longer hours. When you are focused on what you love, work is miraculously transformed into fun. By surrounding yourself with capable people who are committed to your success, you end up with a repertoire of skills and talents to compliment your own. In doing this, you create a more flexible business with the ability to respond quicker to changing market conditions and evolving personal needs. This means that you need fewer plans and can operate from a more “experiential” perspective. You become more successful with less effort. Isn’t this what everyone wants? This is Goal-Free Living.