Strategic Planning Prompts Questions to Answer
We are asking different questions of small business than we did in the past because the environment is very different.
As we enter the fall season, many companies are looking forward and conducting strategic planning sessions with their teams. Today’s strategic sessions are very different from those in past years because in many cases, companies are very busy working to meet customer orders and struggling to find people to support the growth in their business.
However, the most successful companies today are those that do not allow anything to come between their strategic planning and execution. Today, with the uptick in most manufacturing segments and the strain to meet customer demand, there is no more important time to plan.
Forecasters in key industries are looking forward to significant growth. Predictions are that the next 18 to 24 months will be very busy replenishing products that people didn’t purchase in the last 3 to 4 years. Volumes in industries, such as automotive, will return to 16 or 17 million units and will remain high for a couple years. There are several products in all industries that are being renewed because of the lack of renewal during the recession. However, this product cadence will level off in a couple years, and things will return to a normal cadence, allowing large companies to manage their investment more effectively.
Manufacturers at all levels have scaled back capacity and reduced labor, and now with the growth, they are cautious to reinvest at too vigorous a level in order to maintain the profitability they are starting to enjoy. But the pressure from their customers is getting tough, so as they look to invest, the questions become “What is the right kind of investment, and how should it be made?” This is why strategic planning is so important.
Will the industry continue on this growth curve or will things level off, and if investment is made, will we fill capacity in the future? What will my customer require of me in the future? Some questions we ask small businesses are the following:
What value do you bring to your customer in terms of differentiation? Most companies cannot compete on price alone, and frankly, most don’t want to—it’s very tough. What can your company do to differentiate itself and actually demonstrate the value of service to your customer in a different way so they understand the need to evaluate more than price? The process of what can we do differently and how can we make our customers better through our expertise needs to be evaluated and determined in order to separate your company from the rest.
What does your customer require of you in the future? Most companies will sit with their customers each year and ask them about production forecasts and new models for the next 12 to 18 months. They will talk to them about how their company can support the forecast and then come back to their own business and build that into their model. The question that should be asked of customers is what will be your expectations in 3 to 5 years. Tell them your company is doing long-range planning and that you want to evolve as a long-term partner with them. What type of R&D should we be investing in, and what will help separate us from the competition in your eyes? What type of materials will be required? Will you need more engineering support?
How big do you really want to be and what are you willing to say no to? Many companies are still struggling with trying to be all things to all customers. They need to ask themselves what the future customer looks like. What characteristics are critical to us from our customers? It can be as simple as customers needing to be financially strong and pay bills on time. It could be how much they value the services you provide. Whatever it is, companies need to define those characteristics to define their customer base, and then focus sales and marketing efforts in that direction. Many companies are afraid to narrow the focus, but generally, this will provide a more profitable set of customers and products.
Has your company started their planning sessions? Many strategists will tell you that you need to put a detailed planning book together and take a bunch of time off-site to develop it. That’s simply not true. Even if it is only 1 day, set the time aside with your team to talk about the future, and define what success looks like in the future with three to five simple bullets. Then build the plan to get there.