We’re talking today about business plans,
and all companies have them. And specifically, I want to talk about strategic plans, why
companies need a strategic plan. Most companies don’t have one, but even if it’s unwritten,
every company has a strategy. Whether it’s written or not, all activities in the firm
are related to strategy. Story about GM: GM for years has struggled to try to compete
effectively with the Japanese and other off-shore competitors. And only recently have they begun
to really get some traction in trying to create the kind of cars that people want to buy.
And so, one of the keys was getting everyone to understand what they needed to do and pull
strategically in the same direction. The key to strategic plans is they tell everyone in
the organization what’s important and what they need to be doing. If someone’s doing
some activity, they need to be able to come back and say, is it on strategy or off strategy?
If it’s off, they need to try to do something else. Now the key with strategy is that it’s
always long-term. You recognize it because it has to do with investing now for payoffs
in the future. Sometimes they’re trying to develop strategy, businesses get caught up
in what are sometimes called the tactical weeds. Now, tactics are extremely important.
They really are the legs of strategy. They’re the execution of strategy. And strategy gives
the guidance to what the tactics are doing. If you get hung up in the tactical weeds,
it’s easy to get off in a direction that’s not really productive for the company. Strategy
has just three basic parts. So the good news is, it’s difficult to get a hold on sometimes,
but the idea is fundamentally it’s very simple. It has three parts: vision, where are we going;
road map, how are we going to get there; and resources, what’s it going to cost us to make
the journey. It’s really the number one job of the CEO to develop strategy. It tells everyone
in the company what’s important and what they need to be doing.