In a recent article we discussed strategic focus, the idea that companies should first develop a laser-focused strategy, i.e., a definition of precisely where and how they intended to compete, that provided the best path to achieving the company’s goals and objectives. Perhaps the greatest purpose of strategic planning is this second part of strategic focus, that the strategy needs to be clearly and consistently communicate to the entire organization and then used as a guiding light for the allocation of resources – capital, energy, thought, and actions – to maximize the likelihood of implementing and achieving the plan.

Some years ago, a client invited me in for a discussion about how to grow their business; more specifically, they wanted to talk about finding new customers. As I began to learn about the company and its business, I found different views of what they were and who they served. Most concerning, when talking to the sales director I was told that they were looking for anyone that bought plastic products. Of course, this demonstrated that they had no strategic focus at all and explained why they were struggling and needed help.

They were a part of an industry with thousands of competitors and tens of thousands of customers. Without having a clear definition of where and how they wanted to compete, they often found themselves competing for business based on the lowest cost for customers that had little expectations of value desired. While they competed for lots of low-price business, they had a substantial engineering function which was a requirement of some of their best customers but which few of their competitors offered. This represented a higher cost that was often not valued by many customers. They also a sophisticated quality and process control system, again representing a higher cost than the run-of-the-mill competitor. Without a strategy and strategic focus, the more business they gained, the more their net margins declined.

As we dug into this project, we naturally needed to begin with a strategic planning process. As part of this process we spent time talking about the need for strategic focus in order to be successful and maximize profitability. In defining their strategy, the where and how to compete, and the ways in which they wished to differentiate themselves from the mass of competitors, they decide to keep and build upon their strong engineering capability and the quality and process control standards. This led them to define their desired customers as manufacturers who would attribute value to an ability to re-design, consolidate, and improve the components that they purchased and would attribute value to the superior quality and consistency of parts.

This planning process and the subsequent communication process brought most of the team together, marching to the same beat of differentiation and serving a select set of customers. In the process, they learned some new language to use in evaluating business opportunities and decisions about allocation of resources.

The organization share this focus except for one person, one person who was key to the implementation. The sales director was either unable or unwilling to adopt the same focus as the rest of the organization. Throughout the planning process and subsequently he saw his role as “finding any potential customer that bought plastic parts.” In conversations with the company president, I pointed out this problem. In spite of the fact that the sales director and the company president where close and long-time friends, we agreed that he would be better served finding different employment. I then introduced them to a potential candidate that I knew would embrace the importance of focus and would be driven to find the right customers as defined by their strategic plan.

As a result, their profitability shot up and the business over the next few years grew from one plant to three plants. The right strategy was helpful, but strategic focus was the key to this company’s turnaround.

Does your organization have an appropriate and well-defined strategy? Does your organization understand it and have they rallied around it to develop strategic focus?