Strategy retreats and planning days that start from a ‘blank sheet of paper’ and focus on ‘blue sky thinking’ can get lost in the optimism of what might be possible, and lose sight of the operational issues present which can hinder that achievement.
Risk is the effect of uncertainty on objectives, and so failing to undertake a critical analysis of internal issues or trends means blindly introducing risk to the strategy process: the risk that the organisation won’t be capable of delivering on its aspirations.
The strategic plan needs to be balanced – forward looking, making the most of the opportunities; but also addressing the internal issues and market constraints that can hold the organisation back.
When setting the budget, one thing you are never going to get perfect is for the actual revenue and expenses to precisely hit the budget that you set. There will always be items that are under budget and others that are over budget.
Inherent in the budgeting process is that there are a myriad of assumptions that you make: utility bills will be the same as last year plus inflation; we have a new service/product which we hope will bring in a certain amount of revenue; we need to invest in some IT work to improve systems which will cost a certain amount.
The budget is a series of guesses – well, educated guesses! You have targets and predictions and know what happened last year, so you can usually make a fairly good ‘guess’, but there will always be overs and unders – as compared with the assumptions.
As the great Sun Tzu has pointed out, it is also important to know your enemy, or – for many not for profits – who you are competing against. That is, the other organisations who are working in similar locations and providing similar or alternative services.
What were you hoping that 2020 would be about? What did your strategic plan or business plan say that you wanted to achieve this year? What underlying assumptions did you have in the strategic plan that no longer hold true?
I saw a statistic recently that 82% of the time a strategy fails can be attributed to misleading assumptions. Think of Kodak and how they were left behind in the transition from film to digital photography.
Many businesses have thrown out whatever strategic plan they had for 2020 and have been reacting day to day and month to month as the COVID-19 health crisis and related economic crisis have unfolded. Whatever you assumed in your strategic plan for 2020 has quite possibly already proven to be false. Continue reading…
In an interview the productivity consultant David Allen said that strategic thinking does not require large amounts of time (Clark, 2015). More importantly, it’s space that allows innovative ideas and decisions that will guide the future direction of your not for profit.
Being strategic is one of the most important behaviours that guarantee an organisation’s long term success and almost every leader would like to have more time for strategic planning (Clark 2018). We are all too busy, dealing with the daily fires, and now that many of us are working from home, we feel like we’re working all the time.
Keeping track of our time and setting a regular time aside for strategic thinking and planning can help to embed strategic thinking into our schedule (Clark, 2018). Getting away from our routine and ‘to do lists’ can create some mental space. Encouraging our managers and team leaders to set some time aside for strategy and offering opportunities to share their thoughts and ideas can also foster strategic thinking throughout our organisation. Continue reading…
Question: Why did the thief rob the bank? Answer: Because that’s where the money is.
In this situation, the thief understood enough about his market to know where to find the money!
It’s important for an organisation to have a solid understanding of where the money is in their own market segment before they can maximise their organisation’s potential.
Data on the market can be used to answer a number of questions that lead to better decision making. What is the size of your market? Is it growing or contracting? Why? How is the market evolving or changing? What disruptive forces are impacting the market? How are competitors’ actions changing the market? What are the bounds and scope of the market that you are operating in? Should we look to another market segment in order to continue growing the business? How much should we spend on acquiring the knowledge necessary to answer these questions? Continue reading…
Coronavirus, stock exchange losses, countries going in to lockdown, businesses being shut down, stock shortages in the shopping centres.
We live in unprecedented times with the business models of decades’ old organisations quite literally changing overnight.
The radical changes we have seen over the past few weeks have demonstrated the speed at which market dynamics can change, and the need for businesses to respond quickly.
Boards and management teams are needing to respond with urgency to scenario plan and make decisions with imperfect information as the situation unfolds.
The markets that we operate in and the customers we serve are always changing. Whilst the speed of change is not necessarily what we have seen recently, now is a time not just to focus on the immediate crisis at hand, but to think about how to structure management and board meetings so that market changes form part of the regular and ongoing conversation. Continue reading…
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Community Business Bureau would like to acknowledge the traditional owners of the lands on which we work and live, the Kaurna, Larrakia, Wajuk and Wonnarua people, and the Boon Wurrung and Woiwurrung (Wurundjeri) peoples of the Kulin Nation. We recognise their continuing connection to land, waters and culture, and we pay our respects to their Elders past, present and emerging.