S+ra+egy: do you have one?
Planning is vital to compete in this construction market
When FMI asked contractors what they thought about long-range planning in the face of the 2009 recession many of the answers were bleak.
Although most everyone was concerned with survival — often referred to as “hunkering down” — at that point, there were also those who affirmed the benefits of long-range and short-range planning.
Given the outlook today, what will your strategy be five to 10 years from now, or even over the next three years?
Hope is Not a Strategy
These days, we often hear people say they hope business will get better. Who doesn’t? However, I am not an advocate for sitting by and hoping. I have learned that many firms have a strategic plan but no real strategy. We often say, “your firm is perfectly designed to get your current results,” but consider the potential benefits of focusing like a laser on just one strategy — ensuring excellence in your operations. It is a low-risk strategy with high rewards. Here are a few things to think about when beginning the strategic reinvention process:
* Identify where and why the game has changed for you, and review your capabilities:
• Where are you strongest?
• What do you do best?
• What is your number-one competitive advantage?
• Which do your clients value most?
• What strengths are missing from your team?
* Examine what you should be doing to create an organization that is sustainable in good times as well as the inevitable bad times.
• Develop a foundation to respond quickly to changing context or economy.
• Align your organization with your strategic direction.
• Analyze your current human resources to leverage their individual contributions.
Strategic Thinking for Better Strategy
For some senior executives, their own thoughts about strategy are inextricably linked to the firm’s strategy — even if that strategy is not written into a formal plan and shared with others. It is easy to see strategic thinking and strategic planning as the same thing. However, they are two different but complementary processes, and both can be learned and put to effective use. Briefly, here are the differences:
Traditional strategic planning tends to be:
• designed to generate a tangible work product (an action plan),
• usually conducted every few years and forgotten in the interim,
• often systematic and linear, and
• often conducted by the most senior members of an organization.
Strategic thinking is:
• focused on the process as the ultimate deliverable,
• aimed at developing a mind-set and way of seeing the world,
• a process that brings value through individuals’ ability to identify both opportunity and risk,
• emergent and adaptable, and
• necessary at all levels of an organization.
Strategic thinking is not hard to describe, and some of the keys elements include:
Vision. The ability to envision a future is a fundamental skill of strategic thinkers. Without it, leaders are purely opportunistic and reactive.
Strategic thinkers practice the ability to reframe their perspective to look at systems, processes and markets in a unique way.
Pattern recognition. Strategic thinkers must be trend spotters, able to recognize patterns that emerge in social, political, economic and technological change. This ability to “connect the dots” among seemingly unrelated trends, think through the implications for the business, and react quickly and appropriately is essential to strategic thinking.
Seeing risk. A key component of strategic thinking is the ability to take a clear-eyed, realistic view of an organization’s risk profile. Strategic thinkers have a constant, restless sense of low-level paranoia that drives them constantly to test their assumptions and beliefs about the risk of the business.
Creating purpose. One less-frequently mentioned ability of strategic thinking is the capacity to create a unifying sense of purpose in an organization. Purpose adds depth, richness and direction to strategic action.
Innovation. The fragmented nature of the construction industry and a generally shared belief that construction is fundamentally a tactical business limit the infusion of innovation as a competitive advantage. Strategic thinkers practice the ability to reframe their perspective to look at systems, processes and markets in a unique way.
Developing sound strategy requires a firm understanding of the context in which the company operates. One of the first steps is to prepare the background information to define your company’s environment. Before you can understand where opportunity exists, you must fully understand the 4Cs of context:
The 4Cs of Context:
• Climate: All the external factors and forces that influence your business, e.g., economic forecasts, surety capacity, commodity prices, politics, demographics.
• Customer/Market: Everything about customers, e.g., changes in buying behavior, unmet needs, drivers of their business and industry.
• Competitors: Everything about competitors, e.g., entry/exit, strategies, management, aggressiveness, pricing patterns, key staff changes, etc.
• Company/Capabilities: Internal considerations, e.g., strengths, weaknesses, aspirations, resources, key differentiators.
I have often found that many executives in a firm believe they have a pretty good understanding of the 4Cs for their firm off the top of their heads. However, with deeper research and discussion, they are often surprised at what they didn’t know or didn’t think about that might impact their strategies.
Brian Moore is principal with FMI, management consultants and focuses on consulting with contractors and construction materials producers Contact: 919-785-9269; email@example.com.