Sunday, November 17, 2013
VISION AND MISSION SHOULD DRIVE STRATEGY
The chart below demonstrates the approach for developing a successful marketing strategy. The graphic suggests that a vision and mission should drive the price, place product and promotion marketing components and that once these 4 Ps are identified a strategy can be developed.
It is interesting to ask which of the 4 P’s is most important. To determine value of each of the four Ps requires a vision and mission statement that clearly defines the nature of a business, the market segment to be served and an idea of what success looks like.
For my classes at the University of Houston’s Bauer College of Business I have used the example of an individual with a pressure washer and limited funds wishing to enter into the maintenance business and grow to be a major player in home and commercial maintenance.
This individual might create a mission statement that as follows: 1) To make available quality exterior maintenance service to home and business clients throughout the state of Texas, and 2) Create value and make a difference.
The vision statement might be as follows: 1) Using internal cash flows to develop an organization that provides exceptional quality service at reasonable rates, 2) Create a network of technology and industrial partners to provide innovative and effective solutions for exterior building maintenance, 3) Develop an organization that is highly effective, lean and fast moving and 4) Maximize financial returns.
This vision and mission statement would help determine how the components of marketing would fit together to develop a marketing strategy. Since we know that it is to be a self-financed operation and that the only service now available is pressure washing, identifying the market that can be served now is important. The potential customers are those that need pressure washing but can’t afford or don’t want the services of well-established exterior maintenance companies.
After some consideration a strategy statement might be developed. In this case the marketing strategy statement might be: To market convenient, low price pressure washing service to individual home and small business owners while adding services and markets as cash flow allows.
Here the Ps requiring attention will be promotion to efficiently let potential customers know of the service available. The place P will also be important in that the service should be offered only in areas that can be served with existing personnel and equipment.
It is with the vision and mission driven strategy that the Planning, Organizing, Directing and Controlling components of management can be employed. At this point strategy directs the development of the tactics that are in alignment with the vision and mission.
Planning would start with available resources and describe the process to grow from a single pressure washer driven organization to a statewide organization providing services to a large base of customers. The plan would describe the growth rate based on reasonable customer base growth and new services to be offered. The planning would consider the type of work force to deliver the service (brokered, through other providers, independent contractors, employees and so on).
The plan would describe the internal cash flows and the amount of cash to be used to maintain and grow the business. It would also describe approaches to increase cash flows, incur debt or invite equity partners into the business.
The plan would also describe the whether the types of equipment needed, when it would be needed and if it should be leased or purchased. Finally, the planning process would indentify the methods by which the company would be managed from sales approaches to accounting procedures from quality control to credit management and job logistics.
After the plan is developed and compared with the vision, mission and strategy the business can set the organizational structure, understand how to direct activities and create reports that allow management to gauge how closely actual results measure against planned goals.
This is a simple example but shows the importance of understanding what an organization wishes to do (vision/mission and strategy) before developing tactics.
I recently visited with a young entrepreneur who had a small business that was seasonal. This entrepreneur also had a pretty clear idea of what he would like his business to grow to over time.
Faced with the need to fill in the off-season business cycles he thought he would provide other types of seasonal businesses. While it was a reasonable approach the seasonal business would not move his company toward the ultimate goal he had set for the business. I advised that using an approach of filling available work time with work that didn’t support the long-term goals of the business could change the focus and perhaps prevent the attainment of the long-term goal.
Young entrepreneurs aren’t the only people facing this dilemma. Seasoned CEOs find themselves faced with challenges and responding to market changes and competitors in ways that are not in keeping with the organizations mission and vision. These CEOs are usually driven by short-term profit requirements and analyst’s expectations.
It can be difficult to always go back to check to see if the latest tactics being implemented to address a business challenge support the firm’s mission and vision. It is more difficult to require that mid-level managers spread across many operating units only implement tactical solutions that are in keeping with the firm’s overall mission and vision driven strategy.
However, by not insuring implemented tactics are in alignment with a mission and vision driven strategy is the surest way for an organization to find itself in an unintended business, producing value for unintended markets. This can spell financial ruin in the worst case and in the best of cases it will require a change in the mission and vision statement and direction of the business.