Remember, strategic planning has never been just about your products and services or your brand and marketing and it's not just about your competition either. A winning strategy, a winning plan is all about your customers; not rocket science, but too often overlooked.
A militarist viewpoint would have you believe that strategic planning in business is about capturing economic surplus in the market before competitors do. And, if competitors are visible and similar in many ways to your organisation, operating in a relatively stable economic environment, that might make sense. The problem these days is that in many industries competitors are not always visible.They're not like you, there's more of them and economic, political and social systems are not stable.
With that in mind the focus of strategic planning must be on something more relevant, more direct, more obvious perhaps - the customer. Strategic planning should be about creating customer opportunities, futures, that only you can service, developing unique propositions to deliver distinct value to a clearly defined group of customers.
"You can't look at the competition and say you're going to do it better. You have to look at the competition and say you're going to do it differently' Steve Jobs, CEO Apple
Knowing you can do something better will work for a while against stable, predictable competition. Doing things differently will set you apart and provide essential differentiation in the eyes of the customer that's difficult for the competition to replicate. Knowing how to do things differently is a combination of customer insight and innovation. It's also about capability to lead customers to a future they may not be able to see themselves. Something the competition certainly can't see. It's about confidence and decision making to keep strategies focused on unique customer value.
"Rowing harder doesn't help the boat if it's going in the wrong direction", Kenchi Ohmae, Organisational Theorist and Author
It's an easy mistake to prioritise an internal perspective above an external one in strategy development and strategic planning. It's maybe easier to focus on competitor analysis, product functions and features, service, risk and returns above almost everything else like: customers, community, differentiation, disruption and innovation. It's perhaps easier to focus on improving what's already being done, rather than inventing a future. It's easy to take the path of least resistance, go with the flow. But surely this isn't 'customer innovation', it's not doing things differently. While there's no doubt product, service and competitors are important, the most important thing of all is what, or rather why you're doing everything - perhaps who your doing it for - your investors, yourself, your staff but ultimately the customer, the bill payer.
Products for customers vs customers for products
Some strategists believe that strategic planning should focus on finding products for their customers, others believe the focus should be on finding customers for their products. Neither of these positions is entirely right and any one of them enshrined as strategy are potentially damaging, encouraging investment in sub-optimal or mis-aligned capability and potentially blindsiding organisations to potential opportunities.
We believe effective strategic planning lies at the confluence of these positions - customer innovation, developing products and services for customers now and in the future. This kind of planning works because it accepts customers don't always know what they want, they don't know the art of the possible. It works because it recognises need for ever deeper customer insight, knowing what customers want to do now and what their aspirations are. It works because it's firmly focused on creating a better future for customers and more importantly, showing them how to get there. It works because it's a more progressive, creative form of strategic planning, not focused on doing something better, but doing things differently.
Think and act strategically and tactically
Strategic thinking and strategic planning, as most planners and strategists know, especially today, is an ongoing, dynamic activity. Maybe once upon a time it was about 1-3-5 year plans, today it's about now and the foreseeable horizon. Horizon planning keeps us centred on customer innovation; everything else from the here and now to the horizon is a form of tactical planning. This blurs any difference between tactical and strategic planning, same stuff, shorter implementation timescale, that's all. With all that said, it doesn't take much to work out that strategic planning needs to be pretty adaptive these days, flexible, able to morph and re-calibrate investment, resources and capability to meet tactical challenges and new or emerging horizons.
Strategic planning is and will always be about making the right choices. There are plenty models and methods to help, some good, some not so good. But rather than limit ourselves and focus just on growth rates, market position (BCG) or industry attractiveness and competitive strength (McKinsey), which is all very well, we contrast uniqueness, capability to deliver, commercial and customer value.
We have used a simple matrix to do this. It was developed to assess the relative value and prospects of value propositions, but has general applicability to compare strategies, market opportunities, products, services, experiences, even brands. It's not a silver bullet, but it does stimulate the right dialogue around relative value for the organisation and customers and is a useful strategic planning tool. It looks like this:
You can position your own strategies, value propositions, product, services, experience and brand in the matrix, rating them on four simple scales:
'Not worth it', is a bit of a 'no brainer', but anything falling in this category should be closely scrutinised. Ask yourself, have we made any stupid assumptions before we abandon this plan or proposition, remove this product or service, stop this experience, bin this branding?
'Maybe not for us', may appear to be a little more tricky. It's a commodity proposition, of little or nominal strategic value likely to be sensitive to price, but still needed by customers. Here, we need to consider investment and exit plans, unless we have capability to deliver commodity products and services for reasonable commercial return. The choice here is to decide whether your organisation or someone else should be doing this, a difficult choice when any substantial existing revenue is at stake.
'Requires work', the innovators dilemma. This is also a tricky one, the organisation can see the value, customers cannot, yet. It's difficult to deliver the proposition, plan or product, perhaps because it's so new - the choices are: invest and persevere, and push toward 'Win-win' and educate customers in the art of the possible. Or, step back and wait for customers to catch up. Don't abandon - develop.
'Win-win', where we'd like everything to be I'm sure. This is the sweet spot, mutually attractive customer and commercial, that we can deliver and that's unique to our organisation - perfect! If there are choices in this category, they're about relative strengths and prioritisation of investment, but again we should scrutinise anything falling in this category very closely. Have we made any stupid assumptions about our customers, our capability to deliver, uniqueness of our proposition, plan or product, have we assessed commercial opportunities properly.
Six guidelines for customer centric strategic planning
There are perhaps six guidelines to this kind of strategic planning that can help improve business prospects and deliver brighter customer futures:
1. Understand customers and behavioural economics
How often do your senior teams and business strategists think through the detail of customer behaviours, analyse customer data and insight looking for clues about how they buy, sell and interact with you and with other organisations? Do you have deep enough insight about customer behaviours, life-time value, customer aspirations? Which customers are getting ready to leave and why, what motivates them to buy from you and not someone else? What are customer willing to pay to be led to a better future? How do you listen to customers, engage them in business development and strategic planning?
What are the rational and emotional triggers, hooks and messages that will engage your customers now and in the future? How do you ensure they reach the customer first and stay 'front of mind' while you build trust and guide them to a better future?
2. Maintain focus on 'customer innovation'
How can you innovate on behalf of customers, reduce prices, increase quality, invent new products and services that meet their needs now and in the future? How do you earn the right to lead customers to better future? How can you supersede competitive offerings now and potential competitive counter-moves to maintain differentiation?
Customer innovation could be seen as a form of 'serious gaming' designed to attract customers and wrong-foot competition, all at the same time. It's about bluff and counter-bluff, building hidden advantage that only your customer get to see first, well before any competitor sees you coming or is able to respond. By creating the future, you create competitive threats for competitors, on your terms. You become the disruptor, at the same time, delivering new value for customers.
Based on your understanding of customers and behavioural economics what capabilities can you offer to help change their lives for the better? What can you do, what do you want to do and why is it important that you do it? Answer these questions and you will be immersed in an effective form of strategic planning.
3. See yourself in a customer future
To equip the business with necessary capability, planners have to see themselves and the business in a customer future. What kind of brand is required, what does it say, how do leadership communicate internally and externally, what processes, networks, information and technology are required, what products, services and experiences need to be delivered? And, for planners at any rate what's the plan to get there, how do we communicate it to everyone and get them to follow it?
Competitive analysis is not useless, it's necessary and is still required, but planners and analysts must see themselves in a future, able to see potential existing and new competitive threats and counter-moves. They need to understand the design and sustainability of these threats and the short term tactics that might be used. They also need to assess the intensity with which existing competitors may react, and how more disruptive threats from new entrants might appear.
It is the ability to 'be in the future' with your current customers and prospects that will sustain your position and dominance in the market. Making connections with new and emerging networks of innovators, accelerators, social scientists, futurists, anyone that can help articulate, visualise and synthesise your customers future will help, You may want to create your own networks, labs and accelerators; however, today there are many available networks to tap into. It's the ability to maintain future customer focus that will help develop the right organisational capability and culture to succeed longer term - that's what we should plan for.
4. Learn how to create and manage opportunities at pace and at scale
Arguably, strategic business opportunities sit at the nexus of insight, innovation, strategy, value propositions and capability to deliver. They are the product of customer innovation. However, many organisations lack appropriate process and culture to act quickly on these opportunities.
Our work suggests that in many organisations that don't have clear customer strategy, capability to manage strategic opportunities is underdeveloped. These organisations tend instead to concentrate on risk and competitive threats, they don't have a sense of urgency. Other organisations with better customer focus have developed capability to discover and act on opportunities, sometimes quickly enough to create commercial advantage. Perhaps only a few can actually generate opportunities, they tend to be market leaders and disruptors that create distinct and differentiated positions in market..
Being able to act on opportunities is not enough, as Andy Grove, Intel, said: "Only the paranoid survive". Organisations obsessed with customer innovation and customer futures feel the need to understand and process faster and more effectively than anyone else - make no mistake this is a race, this is where the competition is! To be a customer innovator, you need to be the first to see and act on customer opportunities, you need do this more often and differently than anyone else.
5. Develop unique capability to do things differently
Anthony Robbins or Albert Einstein, Henry Ford or Mark Twain said: "If you do what you've always done, you will always get what you've always got", whoever it originates from, the sentiment is sound.
So, how do you know what to do differently. If you build capability around 'customer innovation' knowing what to do differently might be easier. It may be bit harder to get things right if your focus is too internal or not creative enough. As a general rule anything and that enables customer innovation should be done, everything that doesn't should take a back seat. That means where you need change strategy, management practice, marketing, distribution or operations to deliver a better future for customers you should.
Capability to change like this is not predicated on agility, it's about adaptability. It's not just ability to change quickly, it's ability to change at a pace where the integrity of the organisation is maintained. Customer innovation as we see it, is about innovating long term, not just short lived bursts of creativity, but sustainable differentiation.
Most large, complex organisations have assets, business today that's valuable, that customers want and need, so it's essential that a more balanced perspective is part of the planning process.There needs to be some maturity in the panning process that recognises the need to for innovation and change but can also see the need for stability. The pivot comes where customer strategy dictates things need to be different, where the products, services, experiences and operations are no longer aligned to customer futures.
6. Be ready to act
Strategies are just ways to think about different options. Plans at their best are road-maps to navigate a future, guidelines and instructions on how to prepare for challenges and opportunities. That's it.
The next steps beyond strategy and planning are the most important ones - acting decisively on the plans, executing them, making sure they can be challenged, keeping focused, but above all being prepared to change anything and everything to deliver a better future for customers.