Why hope is not a strategy

ILLUSTRATION BY RACHEL REVILLA

My company and I were supporting the owners of a US-based family business in creating their company-wide strategy for the next five years. When we talked to each of the CEOs of their respective businesses, we asked them about their plans that would connect where they are today with the goals that they wanted to accomplish.

They came back with some fragmented thoughts that seemed more like the pieces of a jigsaw puzzle than any coherent strategy. That lack of proper planning and strategy was the reason why they had not lived up to their full potential, and some of the businesses were performing poorly.

We sent them back to the drawing board a total of six times and guided their strategy. In the end, their final strategy paper was 10 times more detailed than before, as clear as the instructions a pilot goes through before taking off. They were ready.

What Hollywood and business have in common

Most companies plan too little. They spend too little time on strategy and planning, and too much time on execution. Execution is king, but it is worthless if your strategy is flawed.

What most businesses do not understand is that you need to have a very clear and detailed strategy that outlines the path from where you are today to all the steps you need to take to reach the goals that you are trying to accomplish. It cannot be vague. It cannot skip a step.

This strategy needs to be like a movie script that shows what events need to unfold over time to reach your objectives, what people you need to have, what resources must be in place, and who is doing what to reach your desired goals.

In short, if you were a movie director, it is the script that you would use to film the movie of your company successfully reaching its objectives. Yet most companies treat strategy like some vague concept that does not need too much of their attention.

How can chess empower your business?

One of the many reasons why we have been able to consistently achieve radical turnarounds and high profit increases for our clients is that we are ruthless when it comes to strategy and its execution. Your strategy needs to be rock-solid. Coming back to our movie analogy, most businesses have a strategy that looks more like Swiss cheese with lots of holes in it, and so the actors (the people in your organization) do not know what to do, by when and in what order.

Let us go back to the movie analogy once more. If you are the owner or CEO of a business, you must be a mix between a movie director and a battle commander. It is your job to know who does what and when. You also must have enough contingency plans in place so that you can frequently shift strategies—and fast if the circumstances change.

Remember: plans can change, but your goals should not. But how can you make fast course corrections if you have not thought through all the alternatives?

Great chess players become great only because they think through all possible moves the opponent can make in advance. This allows them to come up with the best possible move in any given situation. That imagination and the preplanning of all possible alternatives make a great chess player.

As a business owner or leader, you must do the same thing. When planning the strategy of your business, you must be highly diligent in assessing all possible alternatives to reach your desired goal so you can select the best one.

It is crucial that you also list all the underlying assumptions behind your strategy because if they are flawed, your entire strategy will be. This enables you to check back later and correct your strategy if one of the assumptions changes.

Are you betting on the wrong horse?

Often, what seems like a good strategy from the outside is a movie script that is missing fundamental elements of its plot. One of the most common mistakes in planning is that the strategy does not connect with the numbers.

One of the businesses my team and I were advising wanted to pivot and diversify risk by getting into another industry. On the surface, the move looked like a smart one. Why? Because several trends were converging that favored that new industry. Both trends combined would give great thrust behind new products that would be needed in the consumer industry.

That was correct. But when we started to dig further, something did not add up: the numbers. If you have powerful trends converging, you usually have explosive growth in a new business. But the numbers their teams put together did not live up to that.

As it turned out, what seemed like a good opportunity on the surface turned out to be a terrible idea when my team of experts double-checked the numbers and did some deeper calculations. In the beginning, the owners were dead-set on getting into that new line of business, but now they realized they would have lost millions of dollars in the process.

What does that mean? Do not give in to a superficial strategy that looks good on paper before you have drilled down deep into its viability. Find the holes in the cheese.

The proof is in the pudding

Your strategy can be highly unusual, as long as it works. This is why I am against using a cookie-cutter approach for any business, even if it closely resembles another one that is already successful with a given strategy. You can use others for inspiration but every business is unique, and so must be its strategy.

Unusual strategies can produce great outcomes because the people in charge followed what was best for their business without getting blinded by what others were doing.

Action and next steps: How to use the power of visualization

Good planners and strategists use the power of visualization to see how a given strategy will unfold through time. Here is a simple three-step process you can use to accomplish amazing results and get a grip on the right strategy for your business or project:

1. Visualize your destination. Visualize having accomplished your goals in all of their details. Be as specific as possible but make it fun. Enjoy seeing the final result.

2. Go back from the end goal. Look backward in time to the present day. Visualize what you, your business and your people need to achieve to reach your objective. What needs to happen? What resources will you need? What strategies do you need to take? Stay general first; later you can drill down to reach higher levels of detail.

3. Now, play the movie script of your strategy forward. Visualize all events unfolding as you have planned, but pay special attention to what you might have missed. What are the flaws in your plan? Where do you need more information? Where do you need outside expertise?

4. In the future, when circumstances change or something unexpected happens, repeat steps No. 1 to 3 to see the new strategies needed to reach your objectives. What will have to change? Play the movie script backward from the future and forward from the present so that you become very adept at the different scenarios and can adjust quickly when needed. INQ

Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email

[email protected].