Business Services Director, Growth
After dozens of strategic planning engagements with smaller Virginia manufacturing firms, I’ve learned a thing or two through hard experience. Firstly, words matter. Turns out “strategy” isn’t just a buzz word, easily implemented, as you see in social media. There’s a lot of talk out there. A lot of words. Very little action.
Fortunately, at GENEDGE, we are driven by process and our results are measured. That’s why I work here. It’s different. We recognize that our Virginia manufacturers are not consumer businesses. Magic words don’t make them invest suddenly (or divest) in barrier-laden markets or the latest technologies. Smaller manufacturing firms – many of them “job shops” – are extremely risk averse when it comes to tougher, strategic decisions, especially when their industries begin to change or customers begin disappearing around them.
One of the more challenging areas of strategic planning decisions involves the collection of value-added insights from market research. It’s challenging because, to formulate a statement of strategic intent properly, it must address a threat or opportunity faced by the business in 3-5 years plus. That’s what makes it strategic; the research and planning addresses a more distant, fuzzier horizon. The “SWOT” analysis is one of the primary go-to tools for synthesizing that research, but most facilitators fail to feed the exercise first with rigorous scanning of the external business environment. This requires a specific type of research which reveals insight into “what could be,” versus internal process research that measures “what is.”
More specifically, the examination of trends, and threats they create, equip leadership with enough information (never perfect) to help re-organize business priorities today, given that their industries continue to change rapidly into a very different future. Routinely and continually analyzing “trends” is one of the most powerful exercises we deploy with firms during strategic planning.
Once a trend is recognized, or predicted, the process takes over and leadership can challenge their teams to address several key questions which serve as inputs to market strategy:
- TREND IDENTIFICATION: Does this observation meet the definition of a trend in our industry?[1]
- PROBABILITY OF RISK TO OUR BUSINESS MODEL: If yes, how likely is it that the trend will impact our business model in the next 3-5 years?
- IMPACT: If likely, what is the magnitude of impact?
- STRATEGY: If the impact is a threat to the competitiveness of our business model, what changes can we make now to position our firm to win (against competitors) with specific customers in the future? Do we even want these customers anymore, or do we want to begin building new customers?
Download the GENEDGE Research Trend Guide>HERE
Obviously, the research and strategic planning sessions also require skillful facilitation and fact-finding; but, once a trend is recognized, it can be evaluated quickly to get everyone on the same page with new or revised project priorities. With knowledge and process, it becomes slightly easier for leadership to stop activities that now seem less value-added, then replace them slowly with new activities aligned with the likely industry shifts.
In my facilitations, after trend research and threat/SWOT analysis, this typically culminates with an “organizational trade-off” chart listing the activities of each key leader today, their time spent on those activities as a percentage of their day/week, and juxtaposition of a new set of activities they are tasked with tomorrow. After strategic planning, tomorrow’s time allocation chart should look different than today’s. If not, leadership should question whether this was a strategic exercise versus operational improvements.
But why is it much tougher on small businesses when it comes to turning research insights into action, even with tools and experienced facilitators? Why won’t they change, or take risks with capital? Is there more risk with smaller manufacturing enterprises, versus larger? Not necessarily.
In the 1980’s, Sears (and Montgomery Ward and JC Penney) knew about the trend of discount retailing. They had the research. The trend had been brewing since the late 1950’s; yet they did nothing, until it was too late. In 1999, Circuit City and Blockbuster each knew about the rapid adoption of digital streaming media by consumers. They studied it. There were frequent articles in leading business journals of the day. Why didn’t they change? Do larger players have less to lose when facing new industry trends? The question answers itself: not only did those firms perish, but their tier-two suppliers, and beyond, were hurt badly as well. Entire industries were disrupted, including small domestic manufacturers.
Looking back, it seems there was little excuse for not acting, except that organizational change is one of the hardest undertakings on the planet. However, once trend research is complete, and threats are isolated, a thoroughly informed, transparent SWOT exercise can begin, yielding clear insights for leadership to evaluate threats. Why begin with threats? Almost every facilitator and consultant I’ve seen begins a SWOT exercise with “strengths,” primarily because it’s an easier, more comfortable facilitation. However, there is no use documenting a company’s strengths if they don’t counteract a threat to the business brought about by changing trends. This is one of the keys to successful strategic facilitation missed by most “strategic” planners.
When strengths finally are considered (preferably last in sequence), I define a strength as “a unique combination of people, process, technology or information that we have, but no one else has.” Suddenly, the strategic SWOT exercise becomes much tougher, and challenges everyone in the room to think about “why” someone would choose us versus the competition. In today’s world, “we have great people” or “we have the best quality” will not pass muster as a strength.
Similarly, a team research review of the external environment, and what potholes could be lurking, is the key to understanding how trends are shaping your industry. You will be surprised at how involved, engaged, and motivated your team becomes once you send them on this task. To get started, and make things a little easier, try this simple research technique to take a deeper look at trends and trend research. Then, meet with your team – or call a GENEDGE regional growth manager – to move forward into a less fearful future.
[1] Trend (def.): An irreversible shift in demand, within the context of a defined industry, due to some social, technological, economic, or political factor.
