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We're talking today about business plans, and all companies have them. And specifically,
I want to talk about strategic plans, why companies need a strategic plan. Most companies
don't have one, but even if it's unwritten, every company has a strategy. Whether it's
written or not, all activities in the firm are related to strategy. Story about GM: GM
for years has struggled to try to compete effectively with the Japanese and other off-shore
competitors. And only recently have they begun to really get some traction in trying to create
the kind of cars that people want to buy. And so, one of the keys was getting everyone
to understand what they needed to do and pull strategically in the same direction. The key
to strategic plans is they tell everyone in the organization what's important and what
they need to be doing. If someone's doing some activity, they need to be able to come
back and say, is it on strategy or off strategy? If it's off, they need to try to do something
else. Now the key with strategy is that it's always long-term. You recognize it because
it has to do with investing now for payoffs in the future. Sometimes they're trying to
develop strategy, businesses get caught up in what are sometimes called the tactical
weeds. Now, tactics are extremely important. They really are the legs of strategy. They're
the execution of strategy. And strategy gives the guidance to what the tactics are doing.
If you get hung up in the tactical weeds, it's easy to get off in a direction that's
not really productive for the company. Strategy has just three basic parts. So the good news
is, it's difficult to get a hold on sometimes, but the idea is fundamentally it's very simple.
It has three parts: vision, where are we going; road map, how are we going to get there; and
resources, what's it going to cost us to make the journey. It's really the number one job
of the CEO to develop strategy. It tells everyone in the company what's important and what they
need to be doing.