I always enjoyed the simplicity of that message, and I thought of it when I received the following e-mail recently from the owner of a mid-sized label converter:
"Elisha: I have spent the last two days analyzing the NALS [the Tag and Label Manufacturing Institute's 2007 North American Label Study] that you presided over and just wanted to say goodbye before heading up to draw a warm bath and slit my wrists."
True story, word for word - and this owner manages one of the most efficient and well run label companies in the industry. He was kidding (I hope), but his e-mail underscores the impact that soul-searching analysis of the current label market in North America is having on strategically oriented label printing executives.
As I have pointed out in this space before, the label industry is mature. Barriers to entry are low. Costs are rising. Selling prices are falling. Customers and competitors are consolidating. The external pressures have never been greater. This is what business today is all about - and to be fair, it is what business has really always been about. It was Vincent Van Gogh who observed that "fishermen know that the sea is dangerous and the storm terrible, but they have never found these dangers sufficient reason for remaining ashore."
If you are like many of the forward-thinking companies in the industry, you have spent the last few years developing leaner operations, upgrading technology, and reducing overhead. You've pursued long term supply agreements with customers to lock in business. You've slashed payrolls and reduced inventories. You've made deals with vendors to soften the impact of raw material cost increases. You look in the mirror and realize that there are no more costs to be cut. And yet, the skies are still threatening. As Thomas Edison told his troops, "There's a better way to do it - find it!" It is time for strategy.
Strategy is not a buzzword. It is a core necessity to corporate survival, as fundamental to a business as marketing or finance. In fact, the best strategies incorporate marketing and finance, utilizing these resources in pursuit of the company's goals. A strategy is critical to every organization that seeks to achieve its goals, and is essential to overcoming obstacles and resistance along the way.
One of the first questions I ask our clients is what are the strategic goals of your company? As funny as it sounds, attempting to answer that question frequently freezes some managers in their tracks. It's not that they don't know their business or aren't managing effectively - it's just that selecting the destination and plotting the course to get there requires a completely different mindset than steering the ship. And for businesses that have been successful for long periods of time, their de facto strategic goal is to stay exactly where and how they have been. But the inescapable truth is, as Will Rogers once pointed out, that "Even if you're on the right track, you'll get run over if you just sit there."
So if you don't have one, or feel the need to update one, how do you go about developing a strategic goal? The first imperative is to clearly understand that your strategic goal is not the same thing as your strategy. Your goals are the destination, and the strategy is the road you select to reach it. You also want to have both short term and long term goals, and have a clear sense of how the short term goals will help you achieve your long term goals. A football team's long term goal is to win the championship. It has a shorter term goal to win today's game. It has an even shorter term goal of scoring a touchdown on this possession. Its offense takes the field with that short term goal of scoring a touchdown. And it is the choice of personnel and play-calling that is the strategy to achieve that goal.
Today's label converter might choose from a list of possible long term strategic goals. It might desire to sell the business for a certain amount of money or transfer the business to the next generation. Or it might seek to remake itself by gradually moving out of label converting and into a different arena. Just about any strategic goal is legitimate if it meets the needs of the shareholders. The key is to define the goal, and then go about developing a strategy to achieve it.
Developing a strategy incorporates both the short-term and long-term courses of action that a business undertakes in pursuit of its defined strategic goals. In formulating the strategy, two oft-confused elements require independent examination.
First, the organization's Vision should be clarified. The Vision is the bulls-eye, so to speak, delineating what you want the company to be at some point in the future, both to company insiders as well as to those outside the business.
Second, you should revisit the organization's Mission. The Mission is the justification, in the eyes of the customer, of why the company exists. It is the Mission that details the goals of the organization to its customers - as well as to its employees, vendors, and other stakeholders.
With the Vision and Mission in hand, you are now prepared to dive into the nuts and bolts of strategic development. Clearly the success of any business is based on its ability to meet the demand for an identified need of a particular product or service. As you seek to ascertain how well your company is positioned to meet this demand, you might undertake a traditional SWOT analysis, which, when effectively exercised, highlights your Strengths, Weaknesses, Opportunities, and Threats from both your company's internal and external perspectives. This information will be critical to designing a series of systemized steps that will take you from Point A (where you sit today) to Point B (your Vision) by succeeding in your Mission.
Typical questions you might ask during a SWOT analysis include:
- What advantages does your company have?
- What do you do better than anyone else?
- Do you have access to any unique or lowest-cost resources?
- What does your market view as your strengths? What does your market view as your weaknesses? Could you improve on these weaknesses … and strengths?
- What types of accounts, products, services, or even employees should you avoid?
- Are there any good opportunities facing you?
- Have you noticed any interesting trends in your industry?
- What obstacles do you face?
- What is your competition doing?
- Are the requirements to meet the needs of your customers changing?
- Do you foresee any technological threats?
- Is your financial position strong enough? Do you have bad debt or cash flow problems? Are financial issues affecting your ability to compete?
- Could any of your weaknesses seriously threaten your business?
SWOT analysis seems so obvious, yet it is a powerful framework for developing a strategic plan. Understanding your business's weaknesses - not just as you see them, but from the perspective of your customers and competitors, can enable you to improve that which can be improved, eliminate that which can be eliminated, and manage around that which can't be improved or eliminated. By focusing on your strengths and weaknesses, you can avert threats to your business while discovering opportunities that might have otherwise gone unnoticed. Often, opportunities arise not only out of your own strengths, but out of the weaknesses of others - especially when you share those weaknesses and are the first to improve them.
The SWOT analysis will hopefully indicate the core forces that will propel you forward, while suggesting potential obstacles that could impede your progress. This will help you craft a strategy that will distinguish your company in the marketplace and enhance your ability to compete. As the strategy takes shape, continue to run viability checks at each step along the way, because a faulty assumption or implausible short-term goal could derail even the most conservative strategy in its infancy.
Keep in mind that even the very best strategy is only as effective as its implementation. Unlike a strategic goal, strategic plans must remain flexible and adaptable as circumstances and environments change. A strategic plan is not like designing a color-by-numbers and asking managers to paint the right colors within the lines. A strategic plan should contain the compass as well as the roadmap, providing the guidance for important decision-making at each step along the way.
As you reflect upon the value of strategic plans, consider the words of former NFL Commissioner Paul Tagliabue, who noted that "The future doesn't just happen; it's shaped by decisions." Strategic development will ensure you get the most out of your own future-shaping decisions.