Monday, November 10, 2014

Planning - Assessing Your Current State

November is Planning Month at Industrial Solutions and we are blogging about steps you can take to make your planning as effective as possible. We are focusing on strategic and operational planning most of the week, but you might also be interested in reading some of the article links that can be found on the Industrial Solutions LinkedIn page as well. There is an interesting article there from Harvard Business Review warning readers that strategy is not planning. Instead, we use planning to build and implement a strategy.

Hopefully you have gathered information on your results as suggested in my last blog. Have you identified your current state in terms of comparing your progress to your goals. We suggested you look at year-over-year financial results, progress you have made in areas such as employee development or market penetration, and measurements around operational efficiency or product development.

There are a number of planning tools that can be very helpful in assessing your current state and guiding your thought process around strategy development and operational planning.  In my opinion, the SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) is a critical tool for this process. While other tools such as Porter's Five Forces, PEST Analysis, BCG Matrix, and Life Cycle curves (Product Life Cycle, Consumer Adoption, Market Stage), have their advocates, I have found it most beneficial to integrate the thinking around these other tools into the SWOT analysis instead of attempting to have multiple tools each utilized in a stand-alone fashion.

The SWOT Analysis challenges you to honestly determine the strengths and weaknesses of your organization. You should begin by looking at areas where your organization is highly competent. Are there sustainable advantages you have over the competition? Do you perform amazingly and consistently well in specific functions? Do you have unique product features, intellectual property or unique processes? Are there investments you have made that are cost prohibitive for most competitors and therefore a roadblock for new entries in the market? Do you have a commanding marketshare or favorable position in a specific segment of the market? These are all areas to consider.

Now consider your weaknesses. Essentially consider where your organization is less than superior in areas of operations, finance, sales, products, distribution, capabilities, skills, knowledge, management, marketing, service, communication, structure, culture, attitudes, viewpoints, or location. Any of these could be areas of weakness. Remember, you are listing items that are within your control - even if you don't know how to fix them or believe it will take a very long time. Consider your organization in light of the market, economy, competition, suppliers, buyers, 

Next you will consider your external threats and opportunities. These are circumstances typically outside your control but which may have an impact on your business.  

Threats and Opportunities come from circumstances or changes within the market. Porter's 5 Forces suggest areas such as competition, suppliers or buyers. In addition, the PEST Analysis tool suggests considering how changes in economics, technology, society, and the political/governmental environment can impact your business. Be sure not to 'discount' threats that seem far-fetched or those with a long horizon. There very well might be reason to consider doing something now to stave off these threats. In addition, don't discount opportunities because you don't think you have the resources or ability to capitalize on them. This is NOT the time to limit your thinking or fail to consider all potential avenues. As an example from my own experience, a new technology was listed as an opportunity multiple years in a row before the organization decided to allocate any resources toward applying this technology to the business. If someone had decided to leave it off the list, then the organization might have missed an entire year of development.This handicapping of the SWOT data will happen AFTER you have completed collecting the info in as much detail as possible.

Next time we will talk about performing a GAP Analysis which is the real power for applying the information you have collected in your SWOT Analysis. If you would like more information about planning or think you could benefit from a third-party facilitator, feel free to contact me at Industrial Solutions. or via phone at 630-403-8326.

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