The Strategic Plan: Vital Take-Off Ramp.

• Author: Kramer, Robert C.
• Position: Common elements of thriving banks - Column - Industry Overview

Look, up in the sky' It's a bird! It's a plane! Sorry to disappoint you, but it isn't Superman either. Actually, it's SUPERBANK. Bear with me here for a minute.

For the purpose of this article, let's use our imagination and think of a bank as if it were an airplane. Like airplanes, different kinds of banks perform different functions. Both banks and airplanes have different configurations and utilize different equipment and instruments to measure results. Collectively, like airplanes, all banks have one common purpose. They are designed to get from a starting point to a destination, on schedule, using known and quantifiable resources.

Continuing the analogy, thriving banks--like airplanes--combine two common elements, which in physics is known as the principle of "velocity" or forward movement. Velocity has two components, speed and direction. For banks, the component of direction (similar to the function of a compass) is created through the strategic planning process. The component of speed is developed through a sound marketing strategy that includes effective execution. Using this perspective, it's easy to understand why successful "flight" for banks today involves learning how to create and properly many direction and speed. Here's some amplification on this vital relationship.

The environment

Business "velocity" is particularly crucial in an era where change has become the essential nature of business. For example, consider the economics of globalization, deregulation, population shifts, declining birth rates, leapfrogging technology, Internet disintermediation, new patterns of spending money as well as the changing fundamentals of the work itself. Change is a constant. To a large degree, the increasing frequency of mergers and acquisitions prevalent in the banking industry is driven by many of these underlying fortes for change.

Change as the unrelenting business condition poses two crucial questions. First, what methods are available in the current organizational toolbox to create "velocity"? Second, how should these tools be used to maximize "velocity"?

Dispelling a myth

In a sense, "velocity" represents the synergy of overall strategic planning wedded with the marketing plan. It is precisely this synergy that creates the market-winning, customer-attracting dynamics of a business, However, the traditional organizational structure of banks (without marketing and sales departments) does not facilitate adaptation to changes in the customer base. Survival requires that bankers rethink their fundamental purpose and the essential nature of the bank relationship with the customer.

Contrary to popular notions, a company's strategic competitive advantage has much less to do with its unique product and service offerings and much more to do with differentiating itself through its fundamental values, organizational culture and overall commitment to customer service. Accordingly, banks, large and small, have been slow to recognize their strategic direction and competitive market positioning--opting instead for consolidation, large size and financial muscle. This is a high-risk, short-term strategy that makes big banks more vulnerable to rapid market shifts and encourages commoditization through continuous "salting" of the market with new products and services in a quest for increased market share and dominance.

Using the compass

Pilots know their landing destination and file a flight plan. That is, they know where they are going and how they are going to get there. By following the flight plan, they are able to measure their progress toward their destination.

In the same way, profitable and growing businesses know where they are going and follow their plan. These are the "fast companies" and market leaders whose goal is to be different, be the best at what they do, adding value and striving to continually delight their customers. These market leaders understand that decisions made today, before takeoff, are responsible for where they will land, who they will be and what they will become in the future. Planning and strategy are the primary tools of successful business flight. Oddly, few businesses choose this enlightened thinking. Many fail to commit to the rigid discipline required to invest their time, people and dollars in a long-range vision and strategy.

As we start the...