Why do manufacturers need actionable business strategies?

By Andrea Olson
'Strategy'has been a term bandied about by many an agency and consultant for years. It has lost it's luster with some small-to-mid sized manufacturers f...

'Strategy' has been a term bandied about by many an agency and consultant for years. It has lost it's luster with some small-to-mid sized manufacturers for a multitude of reasons. Many times, strategic consultants will come into a company, implement a high-level evaluation of markets, competitors, and industries, and deliver a thick document, outlining the details of their extensive research and interviews, including an executive summary on areas for the business to focus on. All good and well, but here comes the rub.

More often than not, once these strategies have been developed, the organization has few tools, resources, or skill sets to take the strategy from concept to reality. Entering new markets requires efforts from virtually area of the organization, from product development to sales. Rebranding efforts can be costly investments that show returns only in the long haul. Recommendations such as 'develop a marketing plan' only create more challenges, as the organization often times doesn't know how to go about developing and implementing one effectively.

It's the ultimate Catch-22 - a 'strategy' is the essential roadmap that lays out a plan for growth, but the tangible value only comes when that strategy can be translated into an actionable plan and executed. This is where most mid-sized manufacturing companies fail. Once a strategy is in place, it tends to become a document on the shelf, which collects dust and doesn't truly change the organization's actions, initiatives, or organizational behavior.

With the continual and transformative changes going on within the industry, from re-shoring, to government investments, to advanced technologies including IoT, 3-D printing, data, and robotics - manufacturing is amidst a new revolution. Now more than ever it is essential for manufacturers to capitalize on today's opportunities for growth. Yet without the right strategy that not only points the organization in the direction of growth, but also is digestible and executable, many mid-market companies will find themselves losing out on profitable growth.

There are 4 essential aspects to designing an executable strategy for long-term growth that can effectively be implemented within your organization:

1) Define the Real Questions to Answer - If your organization is struggling to increase profits, there are many reasons why this may be occurring. While experts can come in and identify your strengths/weaknesses and hone in on new areas for growth, this doesn't directly translate into something your company can implement. In addition, there is always more than one reason why a company isn't profitable, whether it's antiquated operational infrastructure, paper-laden processes, internal culture, or lack of organizational streamlining. The key is to first identify where money is being made in the organization, where money is being lost in the organization, and why. The key is the 'why'. This 'why' isn't because of lack of sales, for example. The 'whys' are typically a multitude of upstream issues, causing the downstream lack of sales. This could include anything from sales incentive programs/structure, to lack of marketing support, to product quality and delivery. Find out the real questions you want to answer before diving into your strategy development.

2) Understand Your Current State - I've seen many manufacturers identify those 'major changes' that have been on the to-do list for decades, and once they finally pull the trigger to implement them, they can become costly failures. Take for example the implementation of an ERP system. The need for the technology is often crystal clear, and it's very easy to build a case for the investment. The bigger challenge is understanding and knowing your organization's skill sets and talents - has your team been dealing with paper invoices and Excel spreadsheets for 20+ years? How will they effectively and efficiently adapt to a new computer-based system? What people to do you have in-house to help lead and support a rollout of this kind? Is there anyone tech-savvy enough to help people in the day-to-day with learning and utilizing the system to it's full capacity, or are you planning to rely on the basic train-the-trainer offering from your suppler and hope for the best? Change is a long road, and most organizations underestimate the capabilities they have to digest it. Taking the time to understand your current organizational state, identifying gaps and filling them early in the process, will set you up for more successful strategic implementations.

3) Identify Short-Term Needs and Long-Term Needs - Many strategic plans look only at the big picture, or where the organization will be in 3 to 5 years. Yet too many companies are mired in the day-to-day of putting out fires and keeping quarterly numbers at projections. While manufacturers do need to examine where and how they want to grow long-term, your strategy needs to have an actionable plan for that time in-between, and how those efforts will help fund and support your long-term goals. These short-term strategic tactics also need to be used as the building blocks for change, leveraging them to begin changing behaviors, processes, and operations. In addition, they need to serve to build immediate revenue gains, taking small steps into new areas, where the organization hasn't previously treaded. Short-term needs can range from simply leaning out internal processes to reshaping a pricing structure. These small and simple-to-implement changes not only prime the organization for things to come, but serve as the foundation for larger organizational initiatives down the road.

4) Fill In The Gaps Between Strategy and Implementation - People very often get strategy and implementation confused. A strategy is a plan of action designed to achieve a major goal. While strategies often have recommendations for Implementation, there is consistently a gap between the 'what' and the 'how'. For example, a manufacturing strategy might note that the organization should move into a new market and acquire 10% market share within five years. That's an excellent goal, but how do you achieve it? The gap between strategy and implementation in this scenario is large and rife with obstacles. Where do you even start? How do you identify ideal prospects and develop a list of contacts for sales to attack? What should be your pricing architecture for this new market? What about distribution and sales channels? How do you position and message your products in this new area? All of these questions and more need to be answered to translate the strategy into a true implementation plan. Many mid-market organizations don't have the resources or the skills in-house to take a strategy to the implementation level. Finding a partner and/or resources that can help bridge this gap will help you get the most out of your growth strategy.

While manufactures often believe that developing a strategy is something the organization doesn't have time for, it's essential to have for long-term growth. A strategy doesn't have to be a document that looks out beyond the foreseeable future - it should be a clear roadmap with milestones and plans that can be easily translated into action, and more importantly, returns. Without a strategy, manufacturers will continue to focus only on today, and miss out on big picture, long-view growth opportunities. It's not about just creating a strategy, but an actionable plan on how to achieve it.

Andrea Olson is CEO of Prag'madik and author of No Disruptions: The New Future of Mid-Market Manufacturing.


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