There are hundreds of books on strategic planning. Most of them describe it as starting with the vision, defining your values, and setting your goals. This approach works — for individuals.
For businesses, it doesn’t make much sense. A business is not a person. It doesn’t have values, and it doesn’t understand the concept of goals.
A business is a tool with one purpose: to make money for the owner by solving customers’ problems.
Most businesses that actually have strategic plans spend months developing them. Then, they put them away on the shelf (in the cloud) to never be looked at again.
This is not the way.
A business strategy that doesn’t solve a problem is not a business strategy.
A better approach is to return to the business’s original purpose: to make money by solving customers’ problems. With this in mind, a strategic plan for the business is simple.
It has four parts:
- One or more problems to solve.
- A list of possible constraints.
- A hypothesis about how to solve the problem.
- List of actions to take to prove a hypothesis.
Let’s break down each of these parts.
A problem to solve.
It is impossible to overstate this. The purpose of a business is to make money by solving customers’ problems. A business strategy is a plan to solve two types of problems:
- Customer problems, i.e. The air conditioning in my car is broken.
- Business problems, i.e. Our bakery has only one flour supplier.
Customer problems are product/service problems. Business problems are sales, delivery and operations problems.
Decide which problem you are going to solve first.
Interesting note: solving customer problems ultimately leads to more business problems. For example, if you create a snack that kids love to eat, other parents will hear about it and buy more of your snacks. This will create several business problems in the areas of manufacturing, distribution, quality control, etc.
All good problems to have since they directly relate to the original purpose of a business.
A list of constraints.
When you have a problem, your first thought is about a possible solution to this problem. Your next step is to try to find a solution, fail and repeat the process of finding a different solution. You either do this in your head or physically.
One of the most underrated tools for quickly finding the right solution is thinking about the constraints first.
Answer this question first: What can prevent you from solving this problem?
Listing these answers will show you a collection of other problems that you may need to solve first.
If there is a constraint that will prevent you from solving your current problem, figure out how to solve that problem first.
A solution hypothesis.
We jump to solutions right away, with the assumption that it solves the problem. This is a natural process.
The problem is that we don’t know if the solution will work. So, all we can say for sure is that we think our solution will work. We don’t know.
All we have is a solution hypothesis.
Problem: How can we manage an increased volume of customer support calls?
Constraints: We don’t have enough staff and don’t have the budget to hire more.
Solution Hypothesis: If we create an online FAQ portal, we can reduce the volume by 50%.
A plan of action.
This is a simple list of steps you need to take to prove your hypothesis and who can do these steps.
You can do this in two ways:
- A high-level overview of what needs to be done - initiatives.
- Detailed work breakdown structure that lists every step needed.
Your plan of action will depend on how big your team is. If it’s just you, you will likely need to make a detailed action plan. If you have teams to do the work, you can create high-level initiatives and leave the teams to figure out the detailed work plans.
Today’s Action Steps
Here’s how you can act on this advice today:
Schedule a strategy planning meeting with your team or yourself if you’re a one-person business. In the meeting:
- Write down your customer’s problems.
- Write down your business problems.
- Decide on one problem to analyze from both categories.
- Follow this framework and analyze each problem.
- Implement the action plan.
- Review the results.
- Improve your process.
- Rinse and repeat.
Outro
The main purpose of the business is to make money by solving customers’ problems. Keep that in mind when you create your strategic plans.
The main purpose of a strategic plan is to solve problems.
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And that’s all for this week.
See you next Monday.
P.S. I’d love to hear what challenges you are facing in your business. What can I write about to help you personally?
Reply back to this email to let me know.