Page 164 - Finance for Non-Financial Managers

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Business Planning
Strategy—Setting Direction
Once a company has decided its mission, the question likely
arises: “OK, now what? How do we start? What direction do we
move in?” Strategy is essentially deciding what direction the
decision makers take as they begin to pursue their mission.
Strategy is decided when the decision makers make an
assumption about what will overcome the most significant
obstacle to the vision. Abraham Lincoln had to react to the cre-
ation of the Confederate States of America; he decided the best
strategy was military force, because he didn’t feel the
Confederate government would be convinced otherwise. Henry
Ford saw how few people could afford the cars that were being
built at the time; he decided he had to find a way to build a car
that could be sold for $400. Bill Gates perceived that people’s
learning curve and resistance to technology was the prime
obstacle; his strategy was to develop software that had a con-
sistent look and feel and that would enable people to more easi-
ly use all those computers.
In each case, the decision maker assessed his market, iden-
tified the obstacle, and crafted a strategy to address the obsta-
cle. That then sets the pattern for setting specific goals and
objectives, which is a primary purpose of a business plan.

Long-Term Goals—The Path to the Mission
Up to now, the elements of the business plan have been global,
intangible, and largely nonspecific. Once we move into setting
goals, being specific is essential to success. In fact, setting
effective goals requires attention to both the content and the
structure of the goal. This is best demonstrated by an acronym
that many of us have heard in one form or another at seminars
and workshops on planning. The acronym is SMART and we’ve
stretched that a bit to arrive at SMART goals, the kind that get
results. Here are the characteristics of SMART goals:
Specific. The goal is identified clearly, by how much and when.