Strategic decisions set the overall direction for your business, whereas operational decisions set day-to-day operations. Unfortunately, most of the entrepreneurs who contact me for guidance only seem to work on strategic issues when they are in a crisis, such as losing a major distributor or being swamped with customer complaints. It’s a bit late when strategy becomes operational.
I recommend that every entrepreneur and business owner carve out some time every week to proactively work on strategy. I call it working on the business versus working in the business. Working on the business should not be done in the same ad-hoc crisis style as operational decisions. I suggest a more formal analysis and decision process along the following lines:
- Identify potential next business steps based on trends. Force yourself to step outside the box and come up with a half dozen innovative changes which might improve the business. Ask your team to prioritize these alternatives, based on costs and other impacts. Part of the intent here is to get buy-in from the team that change is not all bad.
- Challenge your team with strategic questions and issues. The process of asking and answering strategic questions is key to getting everyone to think beyond today. Every entrepreneur benefits from out of the box thinking. The “5 Whys” is another iterative technique used to determine the root cause of issues and stimulate in-depth thinking.
- Ask for analysis and feedback based on long-term impact. Often, beneficial changes will have a short-term cost to achieve market growth or competitive advantage. Investors, for example, usually want short-term profit distribution versus re-investing for the future. Thus every analysis needs to chart impact over the strategic timeframe, with risks.
- Look for objective and current data to support your analysis. Many crisis operational decisions are made from gut instincts and emotional reactions. Strategic decisions need to be based on statistically valid samples of complete and consistent data, relative to the decision at hand. The best analysis done on bad data will still yield a bad decision.
- Factor in previous results, best of breed, and known failures. Unlike operational decisions, strategic decisions require going beyond your own experiences to look at competitors, industry experts, and failures in the marketplace. Make sure you don’t repeat your own mistakes, or the mistakes of others before you. Quantify risk levels.
- Don’t allow analysis paralysis to hamper strategic decisions. Always identify your top objective for any specific decision, and use that to drive everyone to closure. Many business owners over-think key directional decisions, to the point where a change never gets made, or conditions have changed by implementation. Time is money in business.
- Make strategic decisions based on your values and goals. After listening to the opinions, suggestions, and ideas of others, strategic decisions have to be made by you, tempered by your vision. Don’t try to please everyone with every decision. You need to be comfortable with your business and your legacy. Only you will be held accountable.
- Every strategic decision needs a “Plan B” for backup. Contingency plans make sense in every case these days, since technology and market factors are moving fast. In all cases, there are factors involved that you can’t control, such as regulatory, economic, or environmental. Having a Plan B must never be a shortcut for not doing a proper analysis.
- Define metrics to assess roll-out progress and value. Tie your implementation to metrics that will allow you to determine whether or not your decision truly achieves your goal. Establish milestones that you can tie to your annual and quarterly objectives. If you track your progress against measurable targets, you can adjust tactics as necessary.
- Communicate strategic decisions to all, with implementation plans. Strategies loudly proclaimed, but without a specific roll-out plan, will be ineffective or will fail. Everyone has to understand what has to be done, how to do it, and who is responsible for each element. Your task is to manage the rollout, and make necessary adjustments.
In today’s business world, making sound strategic decisions is increasingly critical and difficult, primarily due to the current high levels of volatility, uncertainty, complexity and ambiguity in the marketplace. Thus it behooves every business owner to spend more of his or her time on strategic planning, and delegate more of the operational elements. Where are you on this split?