Avoid these six pitfalls as you create your organization’s strategic plan.

As you look at your organization’s strategy and your current strategic planning process, it’s critical to understand there are some really large pitfalls out there that you can fall into.

First, do you lack a clear direction? If your organization can’t clearly articulate, “Here’s where we’re going, here’s why we exist, and here’s what we look like three to five years from now,” you may lack direction.

Second, do you know how to say no? Or do you say yes to everything? Look at the latest set of initiatives you’ve pursued over the past year. How many of them have been failures? How many of them should you have walked away from? That’s an indicator that you’re not saying no.

The next pitfall is failure to prioritize. Go look at everything everybody’s working on right now in terms of major initiatives. Are they all properly resourced or are some of them lagging? If you have a bunch of projects that are stalled or are behind schedule, you probably haven’t resourced appropriately and your prioritization process may be broken.

Lacking diversification is another pitfall. When you look at your portfolio of initiatives, do you have excessive concentration either in a specific market or a specific product? Or are your bets spread out?

The next pitfall is starving the kids. Are all of your resources going to the one big core business that generates most of your profits, and all the great new ideas are never getting funded?

Finally, the last pitfall is not revisiting your strategy on a regular basis. You should be refreshing your strategic plan at least once a year. That doesn’t mean doing all of these exercises again, but it does mean sitting down, validating the market, and looking at your spot. Look at your core competencies, your vision, your mission, and ask, “Are these still valid and relevant?”

Let me make this real because these risks are huge. I know a consumer package goods company that failed on several of these dimensions. First, they lacked a clear direction. Everything looked interesting, and they were more than willing to pursue something as long as the financial returns looked attractive. Second, they weren’t very good at saying no. When something came along with a high enough rate of return, they would tend to pursue it. And third, they didn’t look at diversification risk. They were so concentrated on a specific set of new initiatives and new markets they wanted to get into that they took on excessive risk.

The way these failures manifested was that they made an acquisition for approximately $100 million in an entirely new market that they didn’t know a lot about. They made the acquisition based on the fact that the financial return seemed like they would be very attractive. Fast forward three years from that decision and every year they lost between $2 and $5 million. After three years, they realized they couldn’t run the business well. They didn’t understand the market. They wrote off the entire business and shut it down.

So these pitfalls are real. Do the diagnostics and ask yourself these questions as you look at your overarching strategy to make sure you’ve got a strategy that’s viable and will help you achieve your overall goals.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Define your mission, vision, guiding principles, and goals to set the direction of your organization.

When you set direction for your organization as part of the strategic planning process, there are four elements to doing so: Articulating your mission, your vision, your guiding principles, and your goals.

A mission is: Why does your organization exist? What is its purpose in the world? The vision is then saying: If we’re fulfilling that purpose, at some point in time, where are we going to be? What do we want to achieve? What do want the organization to look like at some future point? Your guiding principles are the rules you want your team to live by. How do you want people in the organization behaving, especially when the boss isn’t around? What are the lenses you’re going to look through as you try to evaluate decisions? And lastly, your goals. Try to quantify these. It may be X number of customers by a certain date, or dollars of revenue, dollars of profit, a margin percentage, being able to put out hard numbers by a certain point in time to orient the organization and say, “Here’s what we’re shooting for.”

Here are some of the pitfalls that I’ve seen during this step of defining where you’re going.

First, many vision statements and mission statements are way too long. I’ve seen some that have spanned multiple pages. To the extent possible, make them short, clear, and free of buzzwords.

Next, your guiding principles need to be clear enough that everyone in the organization understands them and can apply them, even to the smallest actions.

And last, your goals need to be aggressive, but pragmatic. If they’re not aggressive, the organization isn’t going to push itself. They’re not going to innovate to try and fill that gap between where they are and where the goal says they should be. If the goals are too aggressive and you’re not pragmatic, people will look at the goal and say, “There’s no way we can achieve that,” and they just give up.

As you define it for your organization and set out that mission, vision, guiding principles, and goals, you’ll be providing clarity for where you want the organization to be in the future.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Create better strategic plans by avoiding these five common mistakes.

Strategic planning takes a lot of time and energy. It is a high-resource type of exercise. Unfortunately, many times that process can be a worthless pain, and the worst thing that can happen with a strategic plan is everybody puts in all this effort, and then it gets archived, put on a shelf, and never looked at again. Here are some warning signs that you can look for to determine if your strategic planning process is flawed.

First, initiative proliferation. Do you have to use multiple pages just to add up all the different initiatives you’re thinking about pursuing?

The second risk is thinking too small. All the initiatives that are on your list are really small, incremental improvements to your business. They don’t really advance you to your strategic goals.

A third is thinking too big. All the initiatives are huge, everything has to line up perfectly, and it’s a really large bet that you’re taking with the organization.

A fourth risk is what I call starving the kids. Many organizations have a large, profitable business unit, and then they have a lot of smaller ideas that are going to be more rapid growth. The risk is you invest all your resources in the big known business and you starve those smaller businesses. The problem is you’re starving your future in doing so.

Finally, I call this fifth risk the random initiative generator. You look at all your initiatives, and they all seem really great, but when you try to figure out where they’re taking you, there’s no clear direction. An example I’ve seen was when I worked in a strategic planning group. When I first arrived in the group, I said, “Let me see our strategic plan.” I was handed a list of 37 acquisition targets. I said, “This is great. These all look like interesting companies that we should think about pursuing, but where’s the plan?” Well, that was the plan. It wasn’t a plan. It was a random list of companies that competed in the market we were in, and we didn’t know which of those acquisitions was going to be attractive and which ones were distractions. Our first task was fixing that strategic planning process, setting direction, and putting some focus to the initiatives that we pursue.

Take a look at your strategic planning process. Ask yourself if you’re showing some of these symptoms and make sure you set direction so that you can pursue initiatives that will add value and help you reach your destination.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Changing your approach in the middle of a negotiation is a great way to surprise the other party and drive value for your organization.

During a negotiation, you can change your approach. You don’t have to maintain your initial approach or your initial position. You can change it at any time. Your opponent won’t maintain their approach or their position, so throughout the deal, determine your counteroffers and your approach. Think about how these might change and how those changes might benefit your position.

For example, you can become more or less aggressive. You can become cooperative. You might change your anchor. In the initial negotiation, you said the price was here, but you know what? The price just went up or the price went down. You can add negotiating points along the way. Just because you didn’t ask for something right out of the gate, doesn’t mean you can’t add it later on. Beware of getting locked into a single negotiating approach. Your opponent can and will use that against you.

We were involved in a very contentious negotiation at one point. In the beginning, we were very collaborative, but our opponent was very combative. We knew the main points we wanted. They were price and deal structure. We also knew that time was our friend and their enemy. Throughout the negotiations, we continued making concessions and we stayed collaborative the entire time as long as price and structure were acceptable to us. But time passed and the other party changed structure. They got very aggressive at one point. But the thing they missed was that so much time had passed. Our position was going to change because time was now on our side. We turned around and got very aggressive in that negotiation. We pushed very hard for additional concessions related to the structure and pricing of the deal. The other party was caught by surprise by our change in approach and overall, it worked out much better for us. Our willingness to change our approach to be more aggressive drove a lot of value for our organization.

As you’re going through your deal process, think through the approach you’re taking and if there are changes you can make. Think about what the impact of those changes might be. Be willing to change your approach, but only do so when you fully understand the benefits and the risks of doing so.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to negotiate. The entire course is available at LinkedIn Learning. Enjoy!

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