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Jul 09
2005

Separating Strategic Planning from Operational Issues

Posted by: Steve Marr

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A key challenge for business leaders is avoiding the temptation to become mired in operational details at the expense of addressing key strategic or planning issues. The first step is to realize that strategy issues are inherently different from operational issues. We can derive an important principle from the apostle Paul, who wrote, "We are no longer to be children, tossed here and there by the waves, and carried about by every wind and doctrine" (Ephesians 4:14, nasb). In business, if we focus too much on day-to-day operations, in effect we become tossed about like a boat in a storm.

 

Bill, the owner of a small bakery, operated a retail store attached to the bakery, and supplied restaurants and other establishments with fresh, high quality breads, rolls, and desserts. As the business grew, he managed a staff of 22 employees, including bakers, helpers, delivery people, and counter sales clerks. Bill worked many 15-hour days, rarely taking a day off. His time was spent attending to every baking detail and delivery schedule while little time was devoted to addressing strategic issues.


Bill owned two delivery trucks and employed two drivers to meet the demand. With the cost of the vehicles, drivers, insurance, gasoline, and repairs, delivery costs soon escalated to $75,000 a year. Bill compensated by adding margin to his prices to cover delivery costs, and he micromanaged the delivery schedule to improve efficiency. When I suggested that he rethink his delivery system strategically, rather than focusing on incremental issues, Bill was able to make several quick strategic adjustments that had a major impact on his business. First, he added a delivery fee for smaller customers to cover his cost per stop. Next, he hired a local delivery service for customers farther away-at a lower cost than using his own truck and driver. Finally, he made deliveries more efficient by contacting customers and negotiating changes in the schedule. Ultimately, Bill was able to employ one delivery truck full-time, and one part-time, reducing his delivery costs by $30,000 a year.


By necessity, most business managers focus their time on working through operational issues, and that's fine. However, they must also realize the importance of strategic planning and decision making, and devote adequate attention to those separate issues.


Martha's company designed and implemented Web sites for commercial clients. She struggled to increase sales. Although she called, sent letters, and visited prospects, new customers were few and far between. I worked with her to separate her sales strategy from the implementation steps. First, we determined the core strengths of her company. Next, we identified target customers that would benefit from those strengths. One of Martha's key strengths was her company's artistic creativity, so we decided to specifically pursue customers that placed a high value on creative Web design. Database management, on the other hand, was not a key strength, so prospects that required a high level of database work were not targeted. Additionally, we made strategic decisions about the optimal size and geographical proximity of customers.


Next, Martha was able to address a tactical plan, the implementation steps to support her strategic sales initiatives. By targeting customers that fit the strategic profile, she was able to close sales much more frequently, but she constantly had to overcome her tendency to mix up strategic steps with sales implementation.


Step one is to acknowledge that strategic planning and decision making are very different from operational or implementation decisions and tasks. When faced with an issue, first determine whether the problem is a strategic issue or an operational one.


Also, business leaders, from line managers to CEOs, must set aside time to review and plan strategic issues-and separate that time from operational discussions. In leading management meetings, I have found it helpful to identify right from the start whether an issue to be discussed is operational or strategic, and then focus the discussion accordingly.


If your company takes time for management retreats, be careful to keep the agenda and discussion clearly focused on strategic planning and development. Do not allow the meetings to degenerate into discussions about operational issues that can and should be addressed on a daily basis. At one management retreat I attended, the discussion devolved into how the mail was distributed from the receiving department to each manager.


Every manager would do well to take some time-even four hours a month-to think through strategic issues. Four hours is less than two-and-a-half percent of a standard work month. King Solomon wrote, "The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty" (Proverbs 21:5, nasb).


Managers: Diligently separate strategic decisions from day-to-day operational issues. Then, if you focus your time to think through and plan effectively on strategic issues, business improvement and success will follow.

Steve Marr, Your Christian Business Coach

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