Executive Summary: Mistaking a revenue-and-expense financial plan for a strategic plan drives companies into unsustainable, funding-focused wars of attrition. The ability to find and spend money is never a unique competitive strength; success is determined by the effectiveness of a solution and its alignment with company strengths. Through strategic planning, an organization must answer two foundational questions: what is our differentiating solution to the market problem, and what specific operational strengths across people, process, technology, and data must be built to deliver it.
Strategic planning is often misunderstood and underutilized, leaving too much potential on the table. A company could choose the suboptimal option of relying on a revenue- and expense-focused financial plan and calling it a strategic plan. The optimal option is to go in with a strategy-led plan that dovetails with operations.
Calling financial plans "strategic plans" often occurs when growth is tactical and not strategic. The tendency to depend on unprofitable growth tactics has proven unsustainable. Even Softbank's Vision Fund had to pull back on its "money moat" approach, which was intended to set up portfolio companies with plenty of cash to outspend and outlast competitors. Many of those investments yielded poor returns due to a fundamental lack of operational discipline.
Every company can access the same tactical ideas and tools with a quick internet search. They can easily deploy these tactics with cash to spend. There are sprint bootcamps that churn out people with basic sales, marketing, coding, and data management certifications. Staffing outfits are easily accessible, and every company buys their services. So, where does any company's advantage come from if everyone has cash to spend and access to the exact same tools and tactics?
Funding-focused tactical growth is largely a war of attrition. It is winnable for one or two parties at best. Critically, it does not encourage companies to put on an investment-effectiveness hat. The path of attrition is often chosen because the tangible value creation in the market is simply not high enough.
For example, why do most consumers complain that ride-sharing prices have gone up so much? In fact, some of us are back to taking traditional taxis by hailing them through an app. The reality is that much of the initial value creation from ride-sharing models came from unsustainable deep discounting. The ability to find and spend money has never been a unique competitive strength.
Every company must focus on sustainable solutions built on tangible, unique strengths. If we cannot objectively answer the question: What makes us special? Then strategic planning offers the time for real soul-searching. There are two overarching questions to answer through planning.
Market opportunities are great. But the success or failure of most companies that validate a solution to a problem is not determined by market size. In fact, there is nothing wrong with a simple and small market opportunity. Window washing in urban areas is still a business. It is a perfectly fine business model if it is sustainable for all stakeholders.
Our obsession with market opportunity comes from the extrinsic market share price we hope to generate. But if we are creating a strategic plan, we are focused on operating the business. For a business with $5M in revenue, talking about a $20B addressable market is not a good use of strategic planning mindshare. The real success factor is the effectiveness of our solution to the problem and its alignment with the company's strengths. The path from $5M to $100M in revenue is treacherous.
Beyond basic funding needs, throwing an excessive amount of money does not buy an optimal solution that creates tangible value for customers. We must solve the problem in our own unique and sustainably executable way. A key guiding question to build a strategic plan must be:
What is our differentiating solution to the market problem that aligns with who we are as a company?
In the age-old analogy about helping someone looking for fish, we could offer them fish, we could teach them how to fish, or we could create a mechanism for them to procure fish from a third party. Similarly, every problem has a range of solutions, and each company's solution must align with its strengths. A market problem could be addressed by employees repetitively performing it for customers, solved through software, or remedied by teaching a more optimal execution approach to the customer.
There is no single correct solution to a market problem. A good solution aligns the market problem with what the company can actually deliver sustainably and profitably while creating real customer value. To deliver an aligned solution, we must also have the internal strengths that set us apart.
The path to value creation must be built on a company's strengths. Our strategic plan must articulate that unique internal value chain that creates customer value, along with how we will build and improve it over time. Do not assume that ideas used by competitors or similar players will work for us. They almost never do. Any company's strengths rest on two aspects: its people and its operations.
First, there is an oversubscription of certifications and bootcamps in our business ecosystem. Raising access levels to skills is important. But minimizing critical operational skills to a piece of paper or association with household brands is a troublesome, overconfident approach. Practical experience and top-tier skills are not easy to find, and they never go out of fashion. It is imperative that organizational design understands and accounts for the depth of skills necessary to deliver on your unique value chain. A real hiring plan must focus on skills that align with the organizational strengths necessary to deliver tangible and sustainable customer value, not just bodies in seats.
Second, there are endless sources offering advice on sales processes, marketing funnels, and what good looks like when building offerings. There are endless tools to buy to track work and report data. These are fine reference points. But none of them represent your specific market problem or the unique group of people trying to solve it.
Through strategic planning, a clear operational design must serve as the starting point. Every company must lay out a path to evolve this operational design, which must be treated as one of its primary investment channels. This design and evolutionary plan must be unique to each company's operational strengths, not a carbon copy of generic playbooks.
What are the necessary operational strengths around process, technology, skills, and data that must be built and expanded to deliver the company’s unique solution to the market problem?
It is critical to refresh our framing of the solution to the market problem and the operational blueprint before focusing deeply on budget allocation around existing or new spending. What good does that spending do if it does not align with the blueprint required to create customer value?
As simple as this sounds, every company must focus on what it is good at, or what it can realistically learn to be good at. Let others handle the things we are not built for. Getting distracted by what everyone else is doing while failing to capitalize on our own strengths is the fastest track to irrelevance.
John Oommen is an electrical engineer turned company-level evolution architect who partners with private company investors and middle-market CEOs to mature and transform portfolio companies. He is the author of Congruence: The Playmaker's Guide to High Value Companies, creator of the underlying proprietary Congruence mindset, model, and method, and pioneer of the Playmaker Capability, which is a must-have value injection mechanism that dovetails purpose, strategy, and operations.
Over more than two decades, John has led company-level transformations, M&A integrations, and operational turnarounds across dozens of mid-market, VC and PE-backed, and Fortune 100 companies, including General Electric, Accenture, Blue Ridge Partners, and Capital One, as well as enterprise clients like Emerson, Ferguson, Cox, Avaya, and Nortek, alongside numerous mid-market companies. He specializes in addressing business-to-business market problems spanning industrial manufacturing, distribution, technology, and tech-enabled services. John holds an MBA from Northwestern University’s Kellogg School of Management, is a certified Six Sigma Black Belt, and is based in Chicago.
