How are you going to grow revenue this year?
September for many managers is the start of the business planning process. That means making a lot of predictions about the economy, consumer behavior, and competitors.
Instead of being a truly thoughtful exercise, business planning is often an exercise in busywork. Rather than discern real possibilities for innovation, managers populate forms with minutiae that becomes absorbed in the bureaucratic abyss. And the discussions can often be a rehashed version of previous years. The outcomes usually come down to how to lower costs or grow revenue based on the research data available. It’s a lot of the same old, same old.
If you’re finding yourself going back to the same approach as always when it comes to business planning, it might be time to consider a different way.
Effectuation is the process expert entrepreneurs use to grow new ventures. It can also be used by corporate managers and introduces a new way of thinking to the business planning process. Instead of relying on data to predict what might happen, it provides a methodology for creating opportunities.
Companies apply Effectuation by using the Assets to Action™ Model.
This model has been called “an actionable SWOT”. It is divided into 5 key parts.
Successful implementation of Effectuation rests on commitments. Decisions to invest money, time, effort, etc. depend on whether or not one attains commitments. A commitment is the act of putting skin in the game. Nothing is done without a commitment attached to it. The more varied your stakeholders and the deeper the commitments, the more likely your success.
Start with an internal audit. List your strengths. Then think bigger. Consider things that you own, things that you can access. Look at your processes, culture, values, goals, etc. Write these items on the left. Whatever you’re willing to commit towards the innovation process, pull into the center “commitments” square.
Rather than forecast expected return, identify what you’re willing to risk in pursuit of revenue growth. This has tangible and intangible components. Of course you’ll want to consider how much money you can spend in pursuit of your ideas. But you’ll also want to think about the social capital and brand equity you want to expend while experimenting with your ideas.
Make a list of people / groups / brands you currently have relationships with. These are entities that already have a vested interest in your success. How might you approach them to join in your pursuit of revenue growth? What could you develop that would be mutually beneficial? Engage entities at the idea formation stage. When you get commitments, move these into the center as well.
Look at all of the possibilities in the commitment center. Connect and combine options. Pull in stakeholders to help with this. Reach consensus on a go-forward idea that involves stakeholder commitments. Now choose specific action steps you can take to advance your idea. These action steps should be concrete and measurable. Track your outcomes and learnings.
The results of these action steps serve as validation for your innovation. They provide real market feedback, instead of guesswork, as to your idea’s acceptance. And they provide evidence that becomes the basis for a valid business plan.
One organization that used this process discovered that they had space that was dormant 20% of the time. They had a partner they approached to talk about revenue growth and this partner expressed interested in “renting” the space on the off hours. An agreement was reached to pilot this in a limited way. Once there was evidence that it was working, they built a business plan leading to the creation of a new joint revenue stream for both organizations.
You have an opportunity this year. Why fill out another SWOT that doesn’t lead to action or revenue growth? When you’re faced with the kick off of another business planning cycle, consider introducing a new approach – the Assets to Action™ Model.
--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC