Cost-Effective Strategic Planning
So, we have spoken about the importance of understanding financial literacy, economic literacy, and the importance of these ideas to business management. Wrapping these topics up in a concise bundle to actually develop strategy, however, requires an adjustment of mindset and being open to new ideas. Thinking of developing strategy and executing it in a time-effective manner can be thought of like a sprint, where managing the business should be thought of as a marathon, requiring constant training and maintenance. Bringing together the ideas of financial literacy, economic literacy, and the importance of technology to properly develop and manage a business in a competitive environment. The idea of a sprint is not a new concept by any stretch of imagination, but implementing it at a small to medium size enterprise provides a valuable opportunity to learn, experiment, and gain market share moving forward.
In essence, a sprint requires resources that are available at any organization regardless of size. First, a separate room for the sprint team to meet, brainstorm, and work out ideas and concepts. Second, white boards, dry erase markers, and post it notes. While it might seem simple, these supplies are essential for successfully implementing a sprint, and embedding it within the strategic planning process. Third, and the most important resource, is a consecutive 5-day period (one full work week) that can be dedicated specifically to working out the sprint. Identifying a consecutive 5-day period that is available for sprint might seem challenging at first, it might be easier than you think. I know that we all try to sound, and be, as busy and productive as possible, but the reality is that everyone has certain periods of time that are quieter than others. Whether it is seasonally related, client related, or driven by some other factor I can guarantee that you can find a week to focus on strategy and future-oriented business development.
The very concepts of strategy, strategic planning, and executing an organizational vision over a long period of time might seem like an antiquated or outdated notion in the current environment. After all, with the pace of business changing at an increasing pace and influenced by trends in social media, artificial learning, and machine learning, a traditional strategic planning process clearly is insufficient. While that much may very well be clear to managers and entrepreneurs, even the idea and concept of a modified strategic planning process that takes less time might seem like an unusual use of organizational time and money. Put simply, spending time, energy, and money on a strategic planning process, regardless of how it sounds, might seem like something you could live without. Simply competing on the day-to-day, hustling new clients, and trying to bring new business to the firm probably gives you more than enough to keep busy—so why do you need strategy?
Why Strategy Matters
Strategy matters, and it arguably matters even more in a business environment and landscape that continues to experience disruption on an almost unprecedented scale across industry lines. While it might be tempting to focus purely on tactical responses to changes in the market place, customer preferences, and product development life cycles it is important that you do so with an eye toward where you want you and your company to be in the next 3- to 5-year cycle. Think of it this way—would you take out a mortgage on property or relocate across the country without a medium- to long-term plan in place to make the best of that situation? Why should your business and startup be treated any differently? In order to effectively execute and position your firm where you want it to eventually end, you need to know what your goals are, how you wish to achieve them, and specific action steps you would like to take. I am not going to reiterate, for the nth time, the SMART (smart, measurable, attainable, realistic, and time constrained) acronym, and expound of the benefits of having SMART goals—there are entire books dedicated to this subject that do a wonderful job at just that. Instead, let’s take a look at a few of the more practical questions any entrepreneur should ask themselves when developing goals and a strategic plan.
1. Where are we—I do not mean physically, or even the geographic market for your product, but rather where are you in market? Service, goods, wholesaler, retailer, and online distributor are just a few of possible answers to this question.
2. Where are we going—Based on where your organization currently is in the marketplace, what is the current trajectory and path for your organization? Only you are able to honestly answer this question, but here are a few keywords and hints to keep in mind as to where you are going:
a. High end provider
b. Mass market provider
c. Online based and digitally integrated
d. Hands on and customizable
e. Commodity/Utility
Note: unless you have tremendous scale, which by default most small business do not, operating and marketing yourself as a commodity or utility is most likely not an optimal path for sustainable profitability.
3. How are we getting there—After you have done a little homework or research, and figured out just where you are and where you are going, how exactly are you executing on your current trajectory? This can include but is not limited to the following:
a. New product development
b. Expanding current service offerings
c. Engaging more proactively with customers
d. Creating a joint venture or reinvigorating an existing partnership
4. Are we operating in alignment—This has nothing to do with whether or not you have seen a chiropractor recently, but it does have everything to do with your business! Every action taken by your business, larger and small, should be done in alignment with the broader organizational objectives.
a. If the tactical decisions, made day to day by the organization, are not aligned with the longer term strategic plan and goals of the firm, the probability of achieving sustainability success will decrease over the medium to long term.
In short, it should be relatively clear to see that strategy and a good strategic plan form the foundation for how your business will operate, compete, and succeed in the marketplace moving forward. Tactical decision making is naturally a part of business life, and that will never change regardless of how large your organization is, but it is imperative that these tactical and operational decisions are made within a strategic framework. Think of it like this; if your day-to-day operational decisions are how you will paint a certain room, your strategy is how you know which room to paint, what color to paint it, and which tools to use.
Into Action
This book, as I have promised throughout, is a book that is focused on topics that can be somewhat abstract to understand, and difficult to insert into regular conversation; economics, finance, accounting, and the effect of financial literacy on entrepreneurship. One of the key goals and objectives that I had for myself while writing this book was to not only discuss these concepts and ideas, but also provide alternative and options for just how entrepreneurs and small business owners can place these concepts into action. What follows next is an outline and overview of an innovation concept that I have researched, written about, and seen used in a variety of situations with varying degrees of success. That last bit is important to remember; just because an idea sounds good and has been used before with great success does not mean it will always work for you and your business. Always do your homework before investing time, money, and energy into a new idea.
The Sprint
So, you have the space designated for the sprint project, your sprint team (which might just be you and your core employees), and some time to tackle these issues. The first step in this process that you are going to identify is what areas you wish to tackle. The options are as varied as they are important, so it is critical to have an open and frank discussion. It might be producing a new product or service for existing customers, developing items to attract and retain new business, or simply facilitating a conversation with customers and stakeholders. The first step in the sprint, after identifying the target market and objective, is the development of a prototype that can be pilot tested with customers and other stakeholders. A critical part of this conversation is that the product or service need not be ready for actual customer experience and implementation, it merely has to look and provide the impression that your final product wishes to convey.
After developing a demo product or service the next step in the sprint is to engage with customers and other stakeholders to gather feedback. Since the ultimate goal of the sprint is to develop a product and/or service that is appealing to customers at large, seeking and gathering the commentary and feedback from customers is an important aspect of the sprint process. This demo test can be online (for a service), or with a focus group (for a new product), and both options are readily available to be done in a cost-effective manner. Management and entrepreneurs are clearly oriented toward pursuing innovation and strategic innovation in a cost-effective manner, and the sprint methodology of innovation provides a platform that management can use to develop and implement these types of changes. After receiving feedback from customers, the next step is the most important aspect of the entire process—building a product to roll for out for beta testing.
For a small to medium size business, this process can be as simple and as logical as rolling out a new product to test over a weekend, such as a holiday weekend or a quiet time of the year anyway. The specific period of time selected for demo testing does not matter so much as the fact that there is a specified time to measure the effects of the new product. For example, if the website is updated over a weekend, or that is done in conjunction with the development of a mobile application the company can track the number of hits, followers, likes, views, or other examples of online engagement. Based on the iterations, feedback, and information from the customers the management team can make the following critical decision:
1. Move forward with the product or service itself, eventually rolling the product out to full-scale implementation, or
2. Cancel the individual service or product rolled out, and realign resources to develop a new product idea
Internal Benefits to the Sprint
We have walked through how an organization of any size can implement and develop a sprint-oriented strategic planning initiative, and the benefits that can be accrued in terms of rolling out a new product or service. These ideas and concepts, in and of themselves, should be enough to at least make you partially curious and interested in pursuing this strategic planning theory, but there are some other benefits that you should keep in mind. Think about it in the following way—if you reorganize a closet, your garage, or a room in your house, it is never quite the same afterward is it? This exact same idea and concept applies to how your organization and management thinking (should be) after you complete, or at least start, to use the sprint innovation framework. After bootstrapping innovation, and creating an entire business objective and strategic plan in a relatively cost-effective and time-efficient manner, the way your business operates and how you view your business is, most likely, changed in a permanent way. Innovation and new business ideas do not have to cost an arm and a leg, and since that fact has been established, why would ever go back? Saving money, operating efficiently (without cutting corners or being cheap where it counts—with your customers) is always something that every business should pursue. That said, there are some internal and psychological changes that also result from embracing this sprint that we should take the time to discuss at this time.
Imagine you run a business with 40 employees, all of whom operate within a 10-mile radius of each other—just big enough to cause you headaches if people are not getting along or working well together. In addition to the day-to-day operations and headaches that inevitably come with running a business, the sheer number of opinions can make coming to a consensus about anything very difficult. That said, the fact that accomplishing certain tasks is difficult does not mean that you should give up or not pursue these objectives. The sprint innovation framework provides you with a method to effect change in a cost-effective manner. Dividing up different types of projects, objectives, and product offerings for different groups of employees to consider makes the best use of organizational time. Instead of focusing the time of all employees on specific projects, or trying to get employees from different locations to work on the same project (both of which are inefficient), the sprint focuses managerial time and energy.
After the project is over, however, does not mean that the organizational and employee oriented benefits are going to end. Breaking up employees into teams, providing them the time to focus on real and challenging problems, and allowing them the flexibility to tackle complex issues will only improve employee engagement. Especially in a smaller environment it is essential that all employees remain engaged and invested in the success of the enterprise. While this might sound like a fanciful idea, there are tangible costs to not keeping employees engaged and interested in the work. There are costs, but with every cost or problem there is the flip side—opportunity. Think about it in the following manner—if you have a highly motivated and engaged workforce that provides you a sustainable competitive advantage in the market. Let’s take a deeper dive below.
Keeping Employees Engaged
Depending on what survey you review, or which pieces of data are analyzed the specific dollars and cents will be different, but the underlying trend is the same. Disengaged employees, which can take the form of Internet surfing, passively avoiding responsibility, or actively seeking new employment, are a tangible drain on the business. This effect regardless of which data set is consulted, can be measured in terms of billions of dollars, and this is not just an issue for large businesses. Small to medium size businesses are actually even more susceptible to disengaged employees, and here is why. If an organization has 1,000 employees and 5 percent of these employees are disengaged that represents 50 people working for the company are not engaged in improving the performance of the organization. Applying that same 5 percent ratio to a smaller business, let’s say 50 people, this means that (rounding up) 3 people working for the organization are not engaged. The number might be smaller at the small to medium size business, but the effect and ripple effect at this business can even be more pronounced at a smaller business than a larger enterprise.
So, how does the sprint methodology of innovation help keep employees engaged, motivated, and productive for the business owners, founders, and managers? From the perspective of an individual employee the logic embedded within this thought is relatively straight forward. The simple question is—who does not want to work on projects and initiatives that are interesting, forward looking, and taking place in new areas? Clearly, this is not a foolproof method to keeping employees engaged, interested, and happy, but it certainly cannot hurt as you are trying to grow, develop, and expand your business. Employee engagement and motivation are essential to any business that is seeking to grow, and every entrepreneur is always looking to grow their business. As wonderful as these managerial and employee-oriented benefits are, however, financial benefits and advantages of embracing the sprint methodology also exist. Let’s take a look and see what exactly those benefits are!
Financial Benefits of the Sprint
Now the whole concept of sprint innovation certainly presents an opportunity for entrepreneurs and management teams to develop new products and services, but there are also several financially oriented benefits to adopting the sprint innovation platform. Innovation and new business ideas all require capital, continuous funding, and an ability to take into account changes in the marketplace that mean the organization will have to change. Unfortunately, and as a result of the industry that has sprung up around various theories of innovation and management creativity, innovation and developing new products and services, innovation can be expensive. In addition to the costs involved with simply buying innovation (whether by acquiring startups for employees or patents), and contrasted with the sprint methodology, innovation can often put other projects and initiatives under extreme pressure. Summarizing the financial benefits of the sprint theory of innovation include, but are not limited to the following:
1. Cost effective product development, which provides new opportunities to expand market share and attract new customers
2. Utilizing technology to expand and develop the business. Technology is sometimes intimidating to entrepreneurs, and can be perceived as a time wasting tool instead of improving productivity
3. The time compression and pressure that the sprint puts on the organization requires focused effort and energy, which will at least require focusing entirely on the product and service objective at hand.
There are other benefits to engaging in a sprint innovation methodology, but the overall theme of the sprint concept, as it relates to financial and economic literacy, is that adopting the sprint requires an increased understanding of financial and economic literacy. These forces, financial and economic drive the small to medium size business, converge to help management drive strategic planning in a cost-effective manner. Especially in a business environment that, whether on a local or global scale, continues to accelerate and be influenced by a broader scope of forces. Building a new business plan, complete with logical objectives, will help keep the business at the forefront of product or service development. Strategic planning, specifically the sprint methodology, is an important tool that must be embraced, or at the very least analyzed by the managers of the business.
What This Means for You
If you are reading this book, and specifically if you are reading this section of this book, then you are most likely an entrepreneur, someone who is interested in launching a startup, side hustle, or just someone interested in learning a little bit more about this area. Developing new products and services, clearly, can very quickly become an expensive time-consuming activity. All that is required is a brief online search of research gone bad, or development projects that have gone awry—even the most successful and high profile organizations are not immune from stumbles along the way. Amazon, for example, had to deal with the fallout and mal-investment of resources and personnel into the rollout of the Fire phone. While Amazon usually is closely attuned to customer demands and expectations, this smartphone was a market failure in virtually every sense of the word. So if even a highly successful organization that routinely produces hits and market leading products and services, can suffer failures, what strategic planning process can you put to use in your startup?
The old adage related to failing fast and failing often is almost an analogy to how any small to medium size business or startup—you must be willing to experiment, try out new ideas, and learn from mistakes in order to develop and sustain a pipeline of products and services for your organization. If you are running and managing a startup, for example, you might be well served by rolling out various iterations and versions of your website or mobile platform, and tracking which versions do better with customers. This is a simplified version of an A-B test, where an organization offers different options to different customers, and then tracks the performance of various options versus each other. Extending this example, and linking back to the idea of sprint innovation, is that this is also an opportunity for entrepreneurs to quantitatively track the changes as they are made. As a quantitatively oriented professional myself, the benefits of quantitative data and data tracking cannot be overstated—this actually tells you what the changes you make to your business are generating for your business.
Big Investments Not Required
Innovation, especially for smaller to medium organizations, is something that might frighten away would-be participants, simply because the idea of innovation sounds expensive. Let’s take a deeper dive, however, and really examine just what you can accomplish from an innovation perspective with a shoestring budget.
1. Build out a new website, or modify your existing one—you are already paying for the hosting and editing service, why not take full advantage of the services?
2. Develop a social media presence—the last time I checked, building out and developing a following and platform on Facebook and Twitter requires no financial investment
3. Engaging with customers—engaging and interacting with customers, current and prospective, only requires that entrepreneurs exert effort and energy, but does not require the spending of finance.
4. Make a video campaign—YouTube costs nothing to join, costs nothing to upload videos to, and provides you with an excellent way to engage with customers and consumers of the millennial and Gen-Z generation. These consumers will only grow more financially important in the coming years; engaging them is essential for future profitable success.
It is, literally possible in the current environment to bootstrap an entire business over a weekend, with a laptop and smartphone, for under $100. You can build a website, develop a social media presence, upload video segments, and start engaging with customers with only having to pay for a phone stand, and possibly some website hosting fees. Whether you are developing a product or a service is less important than the fact that you are starting to promote your business, your brand, and your market position. Services, especially those that can be completed remotely, can actually start generating revenue as soon as customers realize they exist; your startup can be profitable in a manner of weeks instead of months. Even products that must be manufactured and shipped to customers can be advertised, marketed, and promoted from the very beginning. Video advertisements and product reviews, in particular, are very popular with younger demographics—why not create a few short demos and see what the customer reaction is?