Towards the end of the calendar year, armies of managers march in and out of conference rooms brandishing laptops and wielding PowerPoint templates containing the makings of next year’s strategic plans. The plans generally contain industry data, market patterns, sales trends, competitive intelligence, customer analysis, goals, objectives, and tactics. And all of that means absolutely nothing without the most critical component: trade-offs.
Having reviewed hundreds of strategic plans from both for-profit and not-for-profit organizations, one of the most glaring omissions is a clear and concise list of the trade-offs being made. If the strategic plan contains creditable strategies (I say ‘if’ because I’ve read strategic plans that didn’t actually list a strategy), then the trade-offs should be apparent. Too often, the strategies are generic, cover-all-your-bases, consensus-driven statements that are more descriptive of goals (what you’re trying to achieve) rather than a clear, concise method of how the goals will be achieved. If the strategies in the strategic plan more closely resemble a lengthy To-Do list, it’s a sign that trade-offs haven’t been made. If trade-offs haven’t been made, you have no chance–zero–of attaining any type of competitive advantage.
Three questions can start your thinking about trade-offs:
1. Which potential customers are you choosing not to serve?
2. What potential product/service offerings are you choosing not to provide?
3. Which trade-off factors (quality, service, convenience, selection, experience, price) are you able to provide the most differentiated value to your targeted customers?
Trade-offs are difficult to make. So, many managers don’t make them. Do you?