CFO Studio Magazine, 3rd Quarter 2012
By Aldonna Ambler, The Growth Strategist
Are you tempted to skip a round of strategic planning to save cash and avoid disruption during this extended period of uncertainty? If so, maybe you need to demand more from your company’s strategic planning process.
The irony is that businesses need clear strategy more during periods of uncertainty, not less. All it takes is a negative story on the evening news or a customer complaint or a whiney spouse to shake the confidence of employees, customers, or vendors. Folks around the company need to be reassured that the leaders are looking for opportunities, analyzing resources, updating the strategy, making adjustments, and are confident about the future of the company based on current information. How much momentum is your company losing when employees doubt, wonder, worry, pause, hold back, or start polishing their resumes? How about when customers decide to try a competitor? Or vendors change their terms?
If the folks all around your company are enthusiastic about your future, then convene to go straight into growth strategy mode. If there is still doubt or worry, build problem-solving processes into the strategic planning.
Often the CFO is the member of the executive team who can see the tangible evidence of unresolved problems, because it shows up so clearly in things like gross profit, capacity utilization, revenue/head, repeat business, average sale, employee turnover/recruitment costs, etc. but just hoarding cash and continuing to avoid problem solving won’t turn the situation around.
Sadly Out of Touch
A company recently brought us in because they were very excited about a new product they had launched earlier in the year. Their best customers had been extremely loyal for a long time. They were convinced that it was time to dive right into growth planning. But when we conducted our interviews with those same loyal, long-term customers, we learned that the overwhelming majority were actually annoyed, didn’t like the new product, felt taken for granted, and were quietly shopping the competition. The leaders of the company had absolutely no idea.
We offered to conduct more interviews and used control groups to make sure we hadn’t been misled. The customers didn’t want to hurt the feelings of the leaders of the company. They had become friends over the years. The customers were choosing sustained friendship over continued purchases. Wow! It sure was helpful that we insisted on some market research. The client had come close to refusing to let us do that step.
They are not alone! Perhaps your company is also making important decisions based on outdated information. If it’s a few years old, the data is pretty worthless in most industries. There have been dramatic changes in customer buying patterns due to financing, advances in technology, generational differences, and so many other factors.
Strategic Planning Solves Problems
We’ve noticed that many of the baby boomer CEOs and presidents of privately held midsized companies (particularly the family-owned ones) are still basing their strategies on the way things were when their best customers were first acquired. They’re hoarding cash, and hoarding cash is not the answer.
Other companies have a chronic recurring problem that has little to do with the economy. It is oft en referred to as the “elephant in the room.” You know, a revolving door in sales management, an outdated it department, too little repeat business, or few referrals. If one of those “elephants” defines your situation, maybe you, the CFO, would be more likely to embrace strategic planning if the process included more focused problem-solving. That way, strategic planning could actually make the business some money in the short run as well as guide the generation of improved results over the longer run.
Or your company could be experiencing telltale behavioral symptoms that would sabotage the success of just about any strategic plan. If you have a blaming culture, indecision, silos, low accountability, and room for excuses, the strategic process should address those issues to have a positive impact.
The point is, strategic planning can be done in a way that features parallel processes for updated information to guide important decisions, resolve chronic recurring problems, and/or replace self-sabotaging behavior. It’s more important to expect more from strategic planning now. This is not the time to avoid it. A real CEO seeks the input and involvement of the CFO during strategic planning…and so do real strategic consultants.
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