Scenario : You have a good business growth plan – heck, you have a GREAT business growth idea. You’ve just delivered your elevator speech to the CEO and he tells you to pitch your idea to the executive team. You walk into the room and begin. First, the idea, the strategy, the market, the competitive landscape and the financial/operational goals.
Then, the CEO asks you. “How are you going to implement this?” Either you have a series of next-level tactics on hand or you fumble about how different members of your team will keep working hard to make this happen.
The meeting ends with no financing approved. What went wrong?
Here’s what happened : You did not have a series of tactics thought out on how you would implement your strategy. Even worse, you did not have an operational plan for execution. Let’s understand how tactics fit into the work-flow.
Tactics sit somewhere between strategy and day-to-day operations. You break down your overall strategy into digestible executable pieces – those are tactics. Next, you break down those tactics into operational goals to be achieved in a certain amount of time. After that, you have your day-to-day operational activities.
The steps are simple. Once again :
Strategy- > Tactics -> Operational goals -> Day-to-day steps to execute to achieve goals.
Let’s take an example. Suppose your business strategy requires that you launch 2 new products every year to increase penetration.
Tactical Question : What is the optimal mode or route to launch this?
- Do you wait for a competitor to work out a concept, go through the initial pain and leap-frog them? In this case, you would lose your first mover advantage.
- Or, you try testing 100 new ideas hoping one would work? This means that you have to innovate and test new products.
- Or, do you make small, minor improvements in an existing product and launch a variant ?
- Or, do you come out with something totally new?
What next? You’ll have to set tactical goals in place to leverage each function that will contribute to the success of any of the courses of action above.
Next, the operational part. Resource allocations will need to be done, you’ll have to create and maintain a process for the next several quarters (and tactically implementing them one by one). Your sales force will need to use messaging to keep your customers engaged and informed about what you’re planning to deliver to the market in terms of a new product or offering.
Then, finally the execution plan which has time-lines right to the last detail. If you plan to go to market in six months, transition to actual production, before that part testing the prototype, before that the prototype needs to be ready, before that the idea has to be translated into a physical design and so on. This breakdown of tactics into operational goals and a time-line will tell you if the business idea is practical or a waste of time.
Finally, the numbers. How does the revenue model work? Is the revenue model based on some assumption of “we’ll go after ABC market segments and assume that this many people will buy the product”? And, if that is all you have, you might as well hang up your boots. Optimism is a good thing, but in the end it does not pay the bills of a business or contribute to cash flow.
Do your analysis. Have the segments clearly mapped out and understood. If you don’t have this part, the tactics cannot be worked out. Have you done any test marketing? A specific example would be launching a software product aimed at an online retailer. If that category of retailers is a commoditized or generic part of the Internet, how will you acheive penetration? Will you offer a full-fledged service or will just sell the product for in-house use? How will the product be marketed? Will you do it on your own or co-market with another software provider? How will you target the specific segments of large/medium/small customers? For small buyers, how will you price the product? If it is expensive, will you just let them have the product and charge a monthly fee for using it or want a one time, large fee? For large buyers, how would you enter and target the final decision maker for making a purchase? And finally, have any of these been tested in a limited setting or are riding only on assumptions?
Work out these aspects before approaching anyone for funding. Period.
Some key elements to test :
- Revenue model
- Cash flow (will they survive till things take off)
- Profitability (what are the key determinants/assumptions and associated risks and “plan B”)
- Execution time-lines
If you have the above, things will go much better than expected. The executive team or a Vc will be impressed by the level of preparation and your project will be greenlit.
