Getting Started With Strategic Planning

Coca-Cola has been a leader in the flavored sugar water market for 130 years. They have a current market cap in the same order of magnitude as Netflix ($206B vs $210B in October 2020), yet their flagship product is essentially unchanged. OK, that's definitely an oversimplification, but the point is it takes outstanding strategic planning to maintain leadership in any market, and doing it for 100 years is clearly impressive. Examples like this are rare, but they get my inner strategy nerd excited about improving my own 'strategic mindset', and I hope it does the same for you.

They say practice makes perfect, and the more I do it, the more I think strategic planning is enjoyable. It is kind of like buying a stock, except I get to participate in the results. While the appeal of 'beating the market' with overnight success is universal, I'm definitely in the 'buy and hold' camp. The long term view forces me to imagine what the future could be, and more importantly, what I want it to be. And who doesn't like to dream a little?

The Purpose of Strategic Planning

Besides giving one a chance to dream, the 'why' of strategic planning is the profound impact that coordination over an extended period of time can have. Going back to Coke for a second (I swear I don't own their stock outside of index funds), think of the thousands of employees Coca-Cola has employed since 1892. Think about the millions of tasks and ideas and decisions. Yet, they've managed to stay coordinated and organized enough to build and sustain market leadership. It's really an excellent case study of what is possible.

Getting Started

Coming up with a list of plans we can 'buy and hold' over the long term is a pretty ambitious undertaking, so I like to jump start this process with a TOWS matrix. TOWS, not coincidentally, is SWOT backwards. If you are at all interested in strategic planning, you've probably heard of a strength, weakness, opportunity, and threat (SWOT) matrix. A SWOT matrix is a great tool for assessing the current situation, as it enables you to break down the problem and look at it from 4 different angles.

But what do you do with that information? A TOWS matrix arranges the SWOT analysis to show how the 4 SWOT components are related to each other. Considering these 4 key connections is an intuitive springboard into brainstorming high value plans and goals.

A TOWS matrix arranges the SWOT analysis to show how the 4 SWOT components are related to each other. Considering these 4 key connections is an intuitive springboard into brainstorming high value plans and goals.

Strength and Opportunity: What Can We Do to Capitalize on Our Position?

You presumably have some strengths. You presumably have some opportunities. Take decisive action!

Strength vs Threat: What Can We Do to Protect Our Position?

Outside forces can seriously impact your position in the long term, so don't wait until you have no choice but to react. Do something proactive to meet the challenge on your terms.

Weakness vs Opportunity: What Can We Do to Improve Our Position?

You can't be good at everything. But you also can't be negligent. Find the things which are holding you back and improve them.

Weakness and Threat: What Will We Not Do?

This is the most important question. This is where you have to say, 'No', which isn't natural for most people. But it is important. You may have identified some plans and goals which have value, but which conflict with your overall plan.

Keep it Simple

The first casualty of any battle is the plan

There is a military maxim, 'the first casualty of any battle is the plan'. The message for the civilian world is that when the daily grind starts to heat up, we tend to fall back to our comfort zones, our old habits, our old ways of thinking. So keep the goals clear and the plan simple. At the end of the process, you should have 3-4 clear strategic goals to 'buy and hold' over the long term. This doesn't mean we have to only pick easy goals and plans, it just means everyone has to have a solid understanding of the plan and end goal. The guiding questions in the TOWS matrix are so simple and intuitive that they can apply as much to a personal investment strategy as they can to a large corporation. The only difference would be the depth and sophistication of the supporting analysis, assessment, planning, and communication.

Final Thoughts

Speaking of depth of analysis, I will close with a reminder that the TOWS matrix does not do the work for you. Strategic planning is still a challenging process. Plan several sessions. Assess, brainstorm, assess, brainstorm some more. Sometimes what we think we know is actually a flawed assumption, so ask a lot of questions. Be curious. Do your research and homework. Look for non-obvious insights. Let your inner strategy nerd have some fun. The key is to get started!

By: Matt Wright 8/10/2020

Tags: leadership, Strategic Management