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The Leader as Strategist
Leaders are good strategists and planners. Again, what I've found in working with successful men and women in business is that they're very, very good planners. They have taken the time to learn or been taught how to do strategic thinking.
Strategic thinking means taking the long view. It means engaging in what is called “big-picture thinking.” Leaders look at everything they are doing and at all the different things that can have an impact on them They look upon themselves as part of a bigger world. They think in terms of “If I do this, what is likely to happen? How will my competition respond; how will friends and enemies respond; what will the market do?”
What May Happen?
Leaders are experts at what I call extrapolatory thinking. They can accurately predict what is going to happen in the future based on what is happening today. They look at the current trends of what customers are buying today to decide what kinds of products and services those customers will be buying or expecting in the future.
Leaders also anticipate crises. They don't wait till something happens; they are always asking, “What could go wrong? What could possibly happen that could threaten my business?”
Similar to extrapolatory thinking is teleological thinking, which means projecting forward and looking at the different possible outcomes and results before acting. It was said that Napoleon won most of his battles in his tent. He would look at the plan of battle and his maps and consider all the different things that could go wrong and think through what he would do in response to each of those things. In the heat of the battle, when things went against him, he had already thought out completely what to do and was able to give answers instantly.
Good strategic thinkers always have an advantage over people who don't take the time to do the thinking in advance.
Building a Strategic Plan
Leaders must have a strategic plan for their organizations. There are six key questions you must answer to develop an effective plan.
1. Where are you now? Any strategic plan begins with a complete assessment of the company's situation. If you don't know your current situation, you won't know what steps your company needs to take to achieve its strategic goals. Be specific. For each business unit or product area, determine your sales, profitability, assets, trends, and competitive position.
2. How did you get where you are today? Honesty is the key here. What decisions have led to your current situation? What activities are you doing that are important to your current success? What activities are unnecessary to acquire and keep profitable customers? What activities could be outsourced but are still in-house?
3. Where do you want to go from here? Once you've determined where you are today and why (steps 1 and 2), you now must identify where you want to go. Be detailed. Identify, for example, the products you are selling, the customer base you are selling to, and the financial results you'll be achieving in the ideal world five years from now.
4. How do you get from where you are today to where you want to go? Make a list of everything that you would have to do to achieve the ideal future you just described. Every time you think of a new task, add it to the list.
5. What obstacles will you have to overcome to achieve your strategic goals? There are constraints and limiting factors that are preventing you from being the ideal company described in your strategic plan. What are those constraints and factors, and what are you going to do about them?
6. What additional knowledge or resources will you need to achieve your strategic objectives? There are always new core competencies that a company needs to acquire or develop to stay relevant to customers and ahead of its competitors. For example, many companies now have social media experts on their staffs.
The Scenario Planning Tool
One of the best tools for leaders to use for making a strategic plan is scenario planning. The process involves developing three or four detailed scenarios that describe what your company and the business environment might look like five, ten, or twenty years down the road. Each scenario must be detailed in every way, explaining what products you are selling, who your customers are, who your competitors are and what they are doing differently, what outside or environmental influences, such as regulatory bodies, are impacting your business and how. Once you have the future scenario, you work backward to today and figure out what you must do — starting now! — to prepare for the scenarios. If a realistic scenario shows a competitor underselling your product, what can you do now to prevent this situation?
Concentrating Your Forces
One important aspect of good strategy is concentrating your forces by looking at the strengths of yourself, your people, and your organization and focusing them where they can make a major difference. You also want to focus them on the weakest areas of your opposition or competition in the marketplace.
There's no point in going head-to-head with your competition in areas where both of you are strong. But there are always opportunities in the marketplace for a company to take its unique qualities, differentiate its product or service, and go after a specific market segment where its competitors are weak and where it can develop superiority. Though you need to concentrate your forces, also be alert to where you are vulnerable to your competition and give thought to what we call the WPO — the worst possible outcome. What's the worst possible thing that could happen in terms of setbacks? What's the worst possible thing that could happen in terms of markets, interest rates, staff, competitive response, and so on? Think through all of those scenarios so that if the market does throw a ringer at you, you are prepared with a plan.
Strategic planners and leaders have the ability to react quickly because they have thought through what is going on. They are not swamped or carried away by events. They have the ability to see what's happening, take in the situation, and make decisions to redeploy assets and people or to back off in some areas and move forward in others. In many cases, your ability to react quickly to an adverse circumstance is a mark of leadership.
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