No more bets, please. Have you ever been at a roulette table next to the person who bets on nearly every number? They practically cover the board betting the majority of the 38 numbers, 0 & 00 included, not realizing the 35:1 payout is stacked against them. It has probably been a few months since you found yourself at a casino, but as you ready your business for 2021, are you placing too many bets?
Market-leading companies, the top 16%, grow organically faster than the industry and their competition. The secret to success is an agile planning process that adapts to ever-changing business dynamics, not to be confused with ever-changing priorities. Market leaders place a handful of big bets to accomplish one goal: focus. Too often, companies are distracted with too many competing priorities, which leads to partially executed plans resulting in little or no revenue growth.
Leading companies, on the other hand, possess a unique ability to articulate strategy in a succinct manner. More importantly, they stick to the strategy and maintain focus. Leading companies avoid “student body left, student body right” reactions to changing market conditions. Instead, they clearly outline and communicate the big bets to the organization and everyone from the CEO to individual contributors understand how their activities drive the expected outcomes of the bets. Because those big bets are realized over a 3 to 5-year horizon, they are broken down into annual key initiatives, quarterly priorities, and weekly goals. Download this tool to document big bets and develop a programmatic approach to executing the 2021 plan.
To prepare for the 2021 planning process, follow this 4-step process:
- Design Principles: To begin, document the fact base to inform the plan. Use 4 lenses to establish the fact base: Market Research, Competitive Intelligence, Customer Feedback, and Field Data. After setting the baseline, determine the forward-looking expectation through each lens to create the principles of an effective plan.
- Programmatic Approach: Avoid the pitfall of incremental planning. 2021 will be the most challenging year over year comparison businesses have faced. Develop a collaborative process to drive accountability across all revenue-generating functions vs. a traditional cascading deployment of top-down aspirations.
- Structured Decision Making: The strategy of a company is how they allocate time, money, and resources. In the process, there will be great ideas and not so great ideas to consider. Unfortunately, companies who are not market leaders yield to the loudest voice in the organization. To overcome constraint-based thinking, follow the 4 simple truths defined in the next section.
- Alignment: Most companies, 84% who are not market leaders, as defined by Level 1, Level 2, or Level 3 on SBI’s Revenue Growth Maturity Model, often suffer from siloed operations. Alignment begins with the CEO but must be owned by the entire C-Suite with clear cross-functional accountability.
Expanding further on structured decision making, there are 4 Simple Truths that market leaders follow to define and execute big bets:
- Set Numbers Correctly: Too many companies set the plan based on growth over the last year. In 2021, it will be important to broaden that process to understand the Total Addressable Market, Industry Growth Rates, and Competitive Intelligence to set an achievable number for the organization.
- Inventory Potential Bets: Each bet begins as a hypothesis with expected results, learnings, and next steps to fully define the opportunity. They also have an executive sponsor, duration, and definition of success.
- Place Bets: For each identified bet in the inventory, calculate the expected results, required investments, effort level, and time to realization for potential opportunities.
- Monitor & Improve Bets: Big bets will be measured over a multi-year period and continually improved to deliver the results needed for the organization. Measuring actual performance vs. expected results for the duration of the bet is a best practice that market leaders utilize to outpace the competition over the long run.
In the next planning process, strategically place bets where the level of effort and time to realization align with company expectations. Ensure you devote adequate resources to each bet. Track progress and drive accountability across the organization. Most important, maintain focus on a few big bets that yield a high probability of success. The bets in business do not require a 35:1 ROI like lucky number 13 in roulette. Place your bets wisely and confidently, then remember, no more bets, please.
To learn more, contact me and register for our upcoming webinar on how market leaders prepare their 2021 growth strategy. As you launch 2021 Annual Planning or adjust your fiscal plan due to recent market impacts, SBI can provide additional best practices to aid your plan.