Strategically speaking is a platform to analyze the efforts and effects of strategic planning within different organizations.
This week I read 2 articles in Business in Vancouver that reminded me of why strategic planning is so important, and the affects that the absence of a plan can have on a business.
The first article was about the Vancouver-based Canadian Freestyle Ski Association losing 1 million dollars in sponsorship from Canada post.
The full article is available here: http://www.biv.com/article/20121106/BIV0120/311069954/vancouver-based-ski-association-loses-major-sponsor
The most important parts of the article were : " Canada Post... lost $327 million in 2011".
"Mail volume has dropped 20% over the last five years, and Canada Post is transitioning to a future with more parcels and fewer letters, thanks to email and e-commerce"
It's very easy for me to sit here and say that Canada post should have realized that e-mail was going to reduce the amount of letters sent, and that they were to lose significant revenue if they didn't change.
Somebody in the organization should have thought of the future of mail, and made adjustments way earlier.
Never the less, it happened , and Canada post lost 327 million dollars in a year.
Now they realize the have to adjust their strategy and adapt to trends in the economy.
How much money would your business have to lose before you thought of adjusting your strategy?
They are fortunate that they are a crown corporation that wont be allowed to fail, because if you had that kind of performance as a public company, the board would call for drastic changes a long while ago.
It's most unfortunate for the Canadian Freestyle Ski Association though, who have to go into the Sochi Olympics with a significant chunk of their funding gone.
Moral of the story, keep your eyes on the future, because the business that's there for you now, will not necessarily be there forever.
The next story was about how Honda Canada is being sued by a marketing agency for breach of contract. More on the story here.
In the paper issue of BIV they explained the case more fully. In short: The marketing agency's only client was Honda. They were servicing this client (with 1-30) employees for the past 25 years or so; Recently Honda said they were no longer using this particular agency, resulting in them having to close their doors.
After reading that article I was dumbfounded. How could you not acquire more clients in that time? If not for more money, but as a back up plan just in case this exact thing happens.
Regardless of what happens in this case, the damage is done. This agency, whether they wanted to provide exceptional service to their best client, or had a verbal agreement saying that Honda would be their only client (something I would never do, maybe only car maker, but not only client) is toast.
With all that staff in place, I'm surprised to hear such a tragic story.
In the case of this agency and Canada post, their lack of foresight or lack of strategic planning has put them in a disastrous financial situation.
Don't rely on one customer, one market segment, or one product. There are too many bad things that can happen. Moreover, be sure to look outside your organization when creating your strategic plan to avoid potential pitfalls like the ones I just mentioned.
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