Bets, Priorities, and Strategy
What is strategy? Or, what is strategic planning? I’ll give you the sarcastic answer that I always provide – “It’s a $2 billion industry.” Harsh, or am I close to the truth? Here’s what I do know. I think we use the word strategy far too much when we really mean something else. Let me elaborate.
The Core Four of Getting Results
I almost started this section with, The Core Four of Winning Big. I fear that’s a bit too over-the-top. Results? That’s more accurate because anytime we attack our primary aim, we either get great results, poor results, or somewhere in between.
So what are the core four? Again, I’m just a small-town CFO. I don’t have a Harvard background. My opinions are from the field based on 20 years of working with small, family-owned businesses.
My core four to getting results is:
- Big Bet
- Priorities
- Strategy
- Execution
We started with the question earlier about strategy. When I hear that question, my first reaction is to push the pause button. Small business owners either going in a new direction or getting unstuck should never start with strategy first. Instead, we need to merely scratch the brain surface to find the big bet the CEO is wanting to make.
In short, what is the big bet? Why? What’s the payoff. What’s the risk vs the reward? Are there options?
I rarely see or hear about big bets in the context of strategy. But that doesn’t mean big bets are irrelevant. Think about your favorite CEOs. All of them made a big bet before they got big and succeeded. Jobs, Bezos, Walton, Ford, and many others quickly come to mind.
Does strategy come next? Maybe, maybe not.
Priorities
Again, this is opinion only. In my small-town CFO lens, priorities are next in the pecking order once the big bet has been placed.
When it comes to priorities, we’re not talking ten or more. Four at the most. Maybe three. Two are even better. The smaller the team and/or business the fewer the priorities–that’s an absolute truth.
Gary Harpst was the first person I ever heard use the term the vital few. I love that term. I even find myself using that term over priorities as I find it more personal and relatable.
When we prioritize, we are deciding. Deciding what? What we’ll do and what we won’t do.
In Latin, the root form of the word decide means to cut off. Yes, that’s hard. But remember, we have limited resources with alternative uses in small business (time, people, and money). We’ve got to get this part right to getting results, the good ones that is.
An interesting dynamic occurs once you start to get an organization required to align the resources to deliver the idea created by the very person who started it. That person can come back to become the enemy of the success because they continue creating more ideas. Instead of executing well on one, you end up being spread all over the place. This really creates a lot of disruption in the organization and reduces performance.
Gary Harpst
Strategy
Now we can talk (er, write) about strategy. Since there have been five trillion books written on this subject, I’m keeping it simple. Instead of describing strategy, how about answering a few questions first? I think you’ll find that your strategy will quickly get fleshed out.
- What is the dramatic difference of the product or service and how do you know? Yeah, that’s two questions, but both are joined at the hip. Hubris is not allowed. We need hard evidence of the dramatic difference. By the way, a tip of the cap to Doug Hall on this question. I’ve used it for years.
- What is the size of the market? I cannot emphasize this point enough. In my neck of the woods, I discount the number by about 50% when a get a number which is usually a far-too-generous-CEO opinion. Still, it’s a starting point to determining how we go forward and at what speed.
- What is the value of a customer and/or transaction once value is delivered? Hang with me as we’ll use this number to quantify our business model. But to get you started on this question, is the value of a customer $1,000 per year? More, less? Or, answer this based on a per-transaction basis.
I still have not provided a definition of strategy, but I’d still like you to answer the questions above first.
Once you do that, it’s time to get the lay of the land on the competition. Who is it? Don’t have competition (yeah, right)? Then what are the alternatives to using your product or service?
Let’s pause and take a quick break right here. Once you’ve answered the key three questions before addressing strategy, and once you gain insights about your competition, now we can start figuring how to meet our objectives. Is it hitting a certain dollar amount in sales? Is it gaining a certain market traction that you can somewhat measure? Whatever that objective is, your ‘how’ is the strategy.
Notice I’m using strategy in the singular, not plural. I believe every business has just one, big macro strategy. They have a handful of smaller micro strategies.
For example, a macro strategy might be based around being the low-cost producer, or great at providing over-the-top service, or being lightning-fast at something. That’s a singular macro strategy.
We typically find micro strategies in our business processes such as marketing, sales, operations, and customer service.
For example, a marketing micro strategy could be only using online and inbound techniques to find customers or using webinars to source B2B prospects.
I’ll even go so far and say that lean is not a macro strategy. It’s a micro strategy within operations, supply chain, and logistics. Hopefully, you get the idea – one really big strategy supported by several smaller ones.
Execution
I can’t believe I’m using this word. Next to strategy, execution could possibly be one of the most-used business terms used by CEOs and writers on strategy.
I’m too lazy to think of a better term. Plus, since I’m an occasional sports junkie (hey, I even host a popular fantasy football podcast), execution is the ‘darling’ term used by broadcasters, coaches, and even players. Accordingly, I’m sticking with the term.
Regarding execution, several questions are in order.
- Who owns the strategy that needs to be executed?
- What’s the action plan? Advice – keep it simple, nothing elaborate. If you need complicated software to roll out the plan, baby, you’re doomed.
- What’s the cadence to stay on task? That is, how often will team members meet formally and informally as this action plan is being, well, executed?
If you got this far, well done. Below is a quick summary of my thoughts from above.
FAQs
No, no, no. Don’t we have enough frameworks already?
I created this thought process to help answer, “What is strategy?” Or, “Can you help me with my strategic planning?”
Instead, this is a simple conversation starter that can go a long way that can even shortcut many expensive offsite or consulting dollars that can be spent elsewhere.
Great question, and that’s an easy one. Far too many CEOs I’ve worked with over the years are too ambitious. Yes, they can climb walls and build walls that don’t yet exist. But in many cases, there is not enough focus.
The person chasing too many rabbits catches none. In small business, focus, focus, focus. Never forget the vital few.
Is that a trick question?
I’m not going to overthink this. I’m sticking with the simple answer – it’s one big bet. I live in the Bluff Creek Estates subdivision in Columbia, Missouri. On the outskirts, we have a tunnel car wash. Before it was built, the owner bet big (it cost a lot) that customers would flock to these car washes. And they did. He’s now betting big on subscriptions of which I pay monthly.
The safest answer is just one bet. But don’t be afraid to pivot as needed. Every bet is based on a theory until it’s proven or disproven. In my opinion, that’s the more relevant question – should the bet ever change?
If cadence is tripping you up, then replace it with the word meeting. Brian Jones is my all-time favorite business consultant. He’s the only person I recommend when business unity (or culture) is an issue. He’s a long-time member of Lencioni’s Table Group. Brian says you can learn a great deal about a leader in the way they approach meetings and how they run them.
Your meeting cadence is about achieving the objective. Go back to the big bet. Your objective is always found in that big bet.
Meetings can be daily, weekly, or bi-weekly. Communication will be ongoing.
When it comes to cadence, think direction, clarity, and speed.
Let’s back up first. Did you read the entire post?
What’s your big bet? You don’t need a consultant for that. You need some dedicated fans who will tell you the truth.
Once you’ve placed that big bet, then there is nothing wrong with finding a coach who can help you with priorities. Strategy? Don’t sell yourself short nor your team.
Accordingly, you own the bet. Your team owns the strategy. Then and only then, consider a coach for the priorities and the how-to with your cadence. Even then, they are sounding boards at best.
Yeah, good catch.
In my practice, I have what’s called The World’s Small Financial Model, and it’s a fun tool with only about 5 inputs. It’s typically a model I introduce during my first or second meeting with a CEO in a one-to-one meeting.
In short, it’s an economic model that can be deadly accurate, but also inspiring once we’ve entered the values.
ONce that simplistic model is built, we start building a 2-layer driver-based model that CEOs can access in the cloud.
Let’s just say I like to poke fun at the concept. I’ve heard my friend Ron Baker say is a great idea that’s poorly executed.
Strategic planning is a probative term. It sturs emotion. It’s exciting. It’s a big deal when we pay $100k for a consultant to help us out.
In my world, what’s typically going on is that strategic planning is nothing more than setting priorities. Is that important? Absolutely.
Big bets, priorities, the macro strategy, and cadence. Those are critical to getting desired outcomes. Off-sites with long meetings are not always necessary. Some of the best ideas pop into our heads while traveling, mowing the yard, watching a game, or cooking. Once those eureka moments happen, developing an action plan is needed, and that’s where the meeting time will help.
Yes, I cringe when I hear the term strategic planning in a small business context. Done well, strategy and planning are separate acts. Remember, don’t forget the big bet. Don’t forget the cadence that follows.
I don’t call the above strategic planning.
