- The Discipline of Strategic Planning: 9 Steps for Entrepreneurs - January 25, 2020
There are plenty of startup companies that wind up miles away from their strategic plan. The irony of strategic planning is that too often, it’s not done strategically, but based on instinct. That’s a common and critical mistake.
Going with your gut is the worst way to craft a path forward for your business, particularly as you extend a startup or concept into the next three to five years. It nearly guarantees that you’ll fall victim to cognitive bias — dangerous judgment errors that steer you off course. These biases include planning fallacy (where you assume everything will go according to plan), optimism bias (where you are sure the future will be brighter than it is) and accumulating sunken costs (where, despite red flags and rising expenses, you throw more money when you really should terminate the project instead).
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As you craft a strategic plan, follow these nine steps to stay disciplined:
Establish scope and strategic goals
You need a clear sense of scope, strategy and timeline. First, determine the scope and strategic goals of the aspect of your business you’re evaluating. The longer the timeline, the harder it is to stick to your forecasts and meet specific goals, so on longer timelines, include additional resources, flexibility and resilience.
Gather your people
Gather six to 10 experts to address the potential problems and opportunities you’ve uncovered. You also need people from your team who have the power to make and commit to the decisions reached, and it may be worth it to consider bringing in an independent, outside facilitator to help guide this exercise.
Explain the exercise
Describe all the steps of the exercise to everyone participating to make sure everyone is on the same page about the process.
Envision the future
What does your company’s future look like according to your proposed plan? What resources does it require?
This is the step that becomes a blind spot for too many organizations, especially startups — they arrive here, create a vision and then stop.
Consider potential internal (then external) problems
These two steps will greatly increase the likelihood of a more realistic assessment of your plan.
First, what would the future look like if your business were hit by unanticipated internal problems? List the possible internal problems that might occur and rank them in terms of low to high probability. Then consider what resources you would need to address them — i.e. money, time and social capital.
Each of these potential problems creates its own variation of the future. How much would it cost to address these internal problems? What steps can you take to tackle them in advance? Add up the extra resources needed to tackle various possible internal problems, and the steps you are committed to taking to address them in advance.
To avoid politics, have everyone suggest problems and come up with resource amounts anonymously. Then, discuss each scenario as a group. Average out the differences between amounts. Then, repeat these steps with problems that are external to your business activity.
Focus on potential internal and external opportunities
What would your anticipated plan look like if unexpected opportunities opened up, external or internal? Consider the likelihood of each scenario and the number of resources you would need to take advantage of them.
Now, map out the steps you and your team could take in advance to take advantage of unexpected opportunities, and the cost of these anticipated steps. Commit to budgeting and planning to allow for these. Again, solicit anonymous suggestions and amounts, and average out the differences.
Check for cognitive biases
Check for potential blind spots: cognitive biases on your part or your team’s part. Adjust the resources and plans to address them. As a team, discuss these, and ask your team to adjust resource amounts anonymously. Then average out the differences.
Account for the unknowns
To account for unknowns, add 40 percent to your anticipated resources. Consider how to make your plan more flexible and secure, despite your intuition. And if your team is dubious about that additional 40 percent, remind them of the many possible problems you’ve already discussed.
Take the next steps
Communicate effectively to your team about the additional resources you’ll need. Then, take the next steps that were decided on during this exercise to address unanticipated problems, and take advantage of opportunities by improving your plans and reserving resources.
As you and your team build resilience and flexibility, you’re also better prepared to seize any oncoming opportunities. The result is a healthy business and a well-practiced approach to strategic planning that you can always count on.