If your strategy’s off track, complete this four-step process to put your business back on a growth path.
Growing a company is complicated, so it’s often helpful to go back to the basics and get your management team to agree on the plan to grow the business. The key is alignment: The senior leaders must agree on a common view of the facts, the opportunities and the path forward to create value.
Achieving alignment requires four basic steps. The process can take up to three to six months, depending on your management team’s priorities and whether you’ve engaged in a strategic plan in the past.
Step 1: Align on the facts
When companies lack a clearly defined strategy, a conundrum typically arises: The members of the management team develop different views of the key facts around the business.
This includes some elusive facts about the market—such as market size, growth potential and what drives value for various types of customers. But it also often includes readily available facts about the business—such as the revenue composition, growth trends and cost to serve of various customer segments.
It’s surprising how often management teams who have worked together for years have different assumptions about their core business. The first step in achieving alignment is simply laying out the facts of your business, then challenging differences in assumptions.
Where there are unknowns or disagreements, it’s important to consider what one would have to believe for one assumption or another to hold true and align on a conclusion for each scenario. The end result is a common fact base for making strategic decisions.
Step 2: Align on the Management Agenda
A management agenda defines the top three to five opportunities that will contribute most of the value growth going forward. Often, these opportunities can and should be quantified, in terms of the potential value they would bring to the business.
Retaining a top customer, for example, can be compared with entering a new market or improving sales force productivity. Aligning the team on the highest-value agenda items should be driven by the common fact base you developed in step one above.
Step 3: Align on the Investment Choices
Each item on the management agenda has an investment choice or set of choices. For some, the choice may be simple; for example, if expanding geographically is a high-value agenda item, we need to determine which market to invest in.
For others, such as improving sales force productivity, the choice may involve “investing” in a process or a technology that will enable the goal.
Step 4: Align on the Targets, Timelines and Accountabilities
Finally, when the team has aligned on the way it will achieve value growth, it is essential to align on targets, timelines and accountabilities. The most perfectly crafted strategic plan is worthless if the business doesn’t follow through. Assign responsibility to each of the items on the management agenda. When the management team is aligned, it can take quick, coordinated action.
A growing company needs to be aligned on a logical, clearly defined strategic path that maximizes value for the business. Resolving to follow this four-step exercise with your management team can put the entire organization on the right track to create long-term growth.
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KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark