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Making Sense of Strategic Planning Part 1
Some hotel owners and managers do lose their way, not because of any lack of ability or effort, but due to the fact that they don't fully think through what it is they are trying to achieve. They might talk about their ‘goals' for the business, but they fail to really define what these are in practice, or indeed to plan how to realise them. Sure, they might have a general idea of where they are going, but this can be as loosely defined as to ‘outperform our competitors' or ‘maximise profit'. Such operators, whilst working very hard, lack focus and as a consequence end up trying things for a few weeks or months but when immediate results are not seen, they quickly change track. They run the risk of falling into a damaging cycle of meaningless change driven by an endless search for the next big thing. Next big things are few and far between in the hotel business today.
Achievement in any walk of life is all about focus and direction. In business terms, this means knowing the desired end results - not just for this year, but for a number of years ahead - and planning back from that. In other words, it means having a strategic map. A strategic map involves, in the first instance, identifying specific and measurable business goals and then directing all activities towards realising them. Having a map helps to shift the focus away from the short-termism which has inflicted many operations today; it is well known that goal orientated individuals tend to achieve more and the same principle applies to enterprises because effort and achievement are not the same thing.
Lack of direction in any business clearly increases the risk factor. The owner of a small family hotel recently explained to me why he had added a Spa to his operation, "My main competitor opened one last year and they seem to be doing very well, so I didn't want to be left behind." Think about that for a moment: a large chunk of family capital invested with little research or feasibility undertaken to support the move. The danger here should be pretty obvious. What you might not realise is that, although an extreme case, it is far from unusual in hotels both large and small.
Without a framework to guide decision-making, owners and managers are essentially making things up as they go along. Worse still, they can be tempted into following their competitors' moves in the hope of getting to a better place - wherever that may be. In the case of this family hotel, it was not a simple change in the offering, or a minor addition to the service mix, but a move posing potential risks for the future survival of a well established business. Now, the owner in question was undoubtedly a smart guy, yet he made this particular decision on a whim, with no apparent rationale other than to keep up with the Joneses'.
Keeping an eye on competitors is of course a must; doing what they do is not, unless it fits with your own goals. If it does, then you should question why you didn't get there first. Do you want to lead, or follow? Operating a hotel solely on the basis of what others are doing, or taking uninformed decisions leads to trouble in the end because what seems like a smart move today often turns sour tomorrow. That said, not everything in business life can, or indeed should be, planned and analysed to the nth degree. Gut feeling is good and has inspired many great decisions but it shouldn't be the sole driver of business decisions. Yet it is, in my experience, the norm rather than the exception in many small and medium sized hotels. Without focused, goal orientated decision-making, a business is essentially drifting; potentially into trouble.
A strategic map helps the business to become outcome-driven and as a result, this reduces (but of course cannot eradicate) the risk of failure. It will always be necessary to respond to changing circumstances; for example, most hoteliers undoubtedly have to take difficult decisions to get through the current recession. However, armed with a strategic map, any such short term decisions are not taken in isolation; the map creates a context for all activities and informs every decision taken.
ELEMENTS OF A STRATEGIC MAP
Developing a strategic map can at times seem a very convoluted process; google the topic and prepare to be bamboozled by terms like vision, mission, strategic options, goals, strategy, programs and plans. Phew, that's enough right there to put you off. But strategic planning doesn't need to be so daunting and an army of highly paid consultants isn't necessarily required. There is an easier way to look at how to go about it.
It's all in the mind
The ability to create a realistic strategic map for any business begins with a mindset; everything else stems from that. It is as much about how you think as it is about what you later do, so having a certain mindset supports the creation of the strategic map. Some operators view their hotel from the wrong perspective, believing that because they have a hotel, they have stakeholders such as customers and employees. The best operators, I have found, take a completely different approach. They see their stakeholders as being an integral part of their hotel, not external to it, or a result from it. They recognise that without certain stakeholders, they do not in fact have a viable business.
Becoming totally stakeholder focused is therefore a pre-requisite to creating a realistic strategic map and any hotel has a variety of stakeholders:
The differentiation between Primary or Secondary stakeholders is simply the degree to which they exert influence over, or have impact on the running of the hotel. Those who have significant influence and/or impact are seen as primary stakeholders and as such require most attention. Secondary stakeholders are not unimportant, just that they are unlikely to have the same degree of power over the choices made; however, their needs do need to be considered and addressed where appropriate.
The foundation stone of creating a strategic map lies in placing these primary stakeholders at the forefront of thinking, in terms of the business decisions taken. It also means recognising that the path to success lies in satisfying their needs because in doing so, you are ultimately satisfying your own. Think of it this way: one of your employees' needs is to feel valued and respected. If you don't deliver on that need, this will affect their ability to offer excellent service to your customers, which in turn will sooner or later impact on profitability, which eventually directly affects you. It is this inter-connectivity of stakeholder needs which provides the rationale for the creation of a strategic map.
Not only can the process of strategic map making seem confusing at times, but it is also riddled with concepts, models, frameworks and terminology. Worse still, everywhere you look you will find different interpretations of how best to go about it; it's enough to drive you to distraction and make you want to bang your head off the wall. But when you strip away all the complexity and jargon, strategic planning is essentially about trying to answer four age-old but vital questions:
Things start to make a bit more sense when viewed this way. Clearly, it is somewhat more challenging in practice, but by keeping these basic questions in mind you won't go far wrong. Building a strategic map is also based on a simple conceptual model of Think, Do, Review:
It is important to re-emphasise that a strategic map is not written in stone. Changing economic or competitive dynamics will naturally require revisiting where you want to be or adjusting how to get there part. That is not to say that a strategic map will constantly change from year to year, for that would mean there wasn't one in reality, but it is a fluid process which is revisited continuously based on internal and external feedback. Even when forced to make adjustments, at least you will do so in light of your strategic map which is a far more logical approach than random, impulsive decision making.
In Part 2 of the series, the focus will shift to exploring how to create or revise a strategic map in practice by examining how to define, in broad terms, where you see your business going and preparing useful, but widely misused, tools such as Vision and Mission statements. We will, however, end Part 1 with a warning. A strategic map can help a viable hotel to grow and prosper; unfortunately, nothing can turn a frog into a prince. Seeking to develop a strategic map for an operation which is based on a bad idea, in the wrong location, at the wrong time will be about as useful as rearranging the deck chairs on the Titanic.
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