Strategic Planning - Business Executive Essentials - Part 3 of 12

Posted by on February 25, 2011

The previous edition of this article series (part 2) went into an overview of what a strategic plan should address - at a minimum. In that same edition, a graphical depiction of the elements of strategic planning was introduced. In this edition of the series, we will begin walking through the layers of the graphical model, relating to the “business ecosystem”.

Ecosystem Analysis

The business ecosystem is comprised all of the functional areas that are involved in  developing and delivering the offering to the marketplace.  The term originated in 1985, when Harvard's Michael Porter introduced the value chain framework in his book, "Competitive Advantage".  From a planning standpoint, it is important to assess is how the business ecosystem operates and more specifically, how decisions within one segment of the ecosystem can impact (or have consequences on) the enterprise as a whole or to specific segments of the chain.

Since strategic planning models are intended to manage the strategic actions of an organization, the graphical model shown below offers a simplified view of the major dimensions that the strategic planning process should account for.  Each dimension will likely have plan components that relate to specific organizational actions.  These actions may be offensive, defensive and proactive in nature.  Reactive maneuvers do not fall into the strategic category, but are sometimes required and appropriate.  Strategic actions should be mapped against several dimensions, including:

• Value creation
• Value proposition(s)
• Brand equity / Sales and marketing
• Industry direction / momentum
• Market transitions
• Innovation
• Organizational competencies
• Employee competencies
• Technology
• Socioeconomic conditions
• Scenarios and contingencies

For the focus of this post, let us look at the first four dimensions that strategic actions should map to from the list above.

Value Creation & Value Propositions

In most cases, value creation and the organization’s value proposition are inexorably linked and are closely related to brand equity as well.  Planning in this dimension allows a shift to occur towards the customer “Key Outcome” mindset.  Key customer outcomes are measurable results / goals that are oriented to value we can add for our product or service consumers. With the corporate mission and vision statements as guides, the planning process can be adjusted towards viewing strategy and goals in terms of key customer outcomes such as product or service innovations.

• How can the organization increase the efficiency of customer interactions?
• How can we improve the cost-effectiveness of our product or service?
• How can we develop better customer / client intimacy and grow customer loyalty?

These are but a few examples of questions that should be triggered when thinking about strategy with a key outcome mindset.  Reiterating an earlier point, when an organization can define and explain their value proposition succinctly, strategic goals related to innovation and value creation can more easily be developed and ultimately implemented.

Brand Equity / Sales & Marketing

Brand equity is the intended outcome of marketing strategies to create name awareness for products and services.  Strategies to create positive brand equity help strengthen sales, bolster pricing and product margins, promote customer loyalty and potentially lower customer acquisition costs.  Strategic planning models should always include a competitive analysis.  Michael Porter’s 5-Forces Analysis looks at factors like:

• Competitive rivalry
• Threat from new entrants
• Bargaining power from substitutes
• Bargaining power from customers
• Bargaining power from suppliers

This type of an analysis can be done at the brand level to drive strategic goal setting in the corporate plan and well-informed and factual marketing and sales operational plans at those levels in the organization.

Join again for the next post to continue the discussion.

Get caught up on other sections of this article series:

• To View Part 1 of this Series, Click Here
• To View Part 2 of this Series, Click Here
• To View Part 3 of this Series, Click Here
• To View Part 4 of this Series, Click Here
• To View Part 5 of this Series, Click Here
• To View Part 6 of this Series, Click Here
• To View Part 7 of this Series, Click Here
• To View Part 8 of this Series, Click Here
• To View Part 9 of this Series, Click Here
• To View Part 10 of this Series, Click Here
• To View Part 11 of this Series, Click Here
• To View Part 12 of this Series, Click Here

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For permission to use or reprint any portions of this copyrighted article, contact Method Frameworks at articles@methodframeworks.com.

About the Author:

Joe Evans is the President and CEO of Method Frameworks.  Joe is a published author, frequent speaker and recognized expert in corporate strategic planning. To contact Method Frameworks about scheduling Mr. Evans about an upcoming speaking engagement, visit www.methodframeworks.com/business-speaker or email requests to media_relations@methodframeworks.com.

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