Every CEO has an idea where they want to take their company. In really good companies that idea is written down in some detail in a document so that everyone who can advance that idea can see it clearly and avoid confusing interpretations of verbal pronouncements. That document is called a strategic plan. A good strategic plan outlines the company’s vision, mission, strategy and long term goals and objectives. A better strategic plan will have a detailed operating plan to support it, describing in some depth what will be done in the next year to move the company one year closer to the strategic idea in the CEO’s mind. For most companies that do formal planning, that’s as far as it goes. And that puts their companies in the top 10% in terms of best management practices.
A great strategic plan, however, takes best practices a step further. It begins with understanding what challenges need to be overcome and what unique advantages the company enjoys to help it overcome those challenges. That understanding is best achieved – maybe only achieved – by performing a SWOT analysis at the very beginning of the planning process. SWOT, or Strengths Weaknesses Opportunities and Threats, helps the company’s leaders focus on what might get in the way of the goal, and what might help to achieve the goal.
For example, a solid distribution system for getting your products to market could be considered an internal strength, while an inexperienced sales force would be considered an internal weakness. A research breakthrough by a university that opens up a new market for your products could be seen as an external opportunity, while aggressive cost cutting by the competition could be seen as an external threat. Since challenges and advantages are both inside and outside the company, it helps to see it graphically, like the image above. The idea is to use the “Good” to best advantage and counteract the “Bad” as best you can with the resources available.
And then follow the plan. You’ll be wealthy, powerful and free in no time at all. Probably.
As always, I welcome your comments and feedback.