Recently, through work with my firm Insight to Action, I’ve noticed a troubling B2B pattern: management’s desire to focus on immediate commercial results (e.g., within the next six months) and to avoid long-term market strategy and strategic planning. While top executives require a one to three-year horizon in market strategy and strategic plans, middle management are skeptical or reluctant to engage with this timeframe.
Short-Term Vs. Long-Term Planning Case Study
We recently assisted a foodservice client with its 2016-2018 Commercial Business strategic plan. The firm has a complex business and operates in fifteen market segments, comprised of six food product categories and three distinct market verticals:
- Commercial Foodservice
- Industrial Food Manufacturing
- Supermarket Retail
Unlike many businesses, this client’s revenues and profits are split fairly evenly across the 15 segments, so a simple 80/20 rule does not quickly winnow down their strategic landscape.
After years of growth, the foodservice market is now rapidly evolving, with my client seeing many of its customers consolidate through acquisition. For instance, the pending Sysco-US Foods merger will result in a combined 27% market share. This, in turn, puts pressure on margins and may increase cost to serve, as larger clients require additional support to maintain or increase business.
With this market pressure, a more strategic and disciplined commercial strategy is needed to prioritize the verticals, the categories, and also to identify expansion horizons. While the highly experienced and capable management team engaged with the Strategic Planning exercise, we found that they prefer to analyze the current business in their separate business domains, and that they actively avoid prioritizing across the firm and participating in overall firm strategy conversations. They also dislike forecasting over the next three years, preferring instead to focus on the most recent year.
Fortunately, the client bolstered its team with a marketing and sales executive from outside the firm who brings those skills, and this individual was able to lead the team through the process. The end result is a much more disciplined strategy with clear priorities. However, constant reinforcement will be required to remind the team to execute against those priorities rather than chasing all emerging opportunities with equal effort.
From this work, we conclude that a successful B2B Strategic Planning and Market Strategy Development will need to address the prevailing preference to focus on the current market and to overcome organizational resistance to looking forward, even over a relatively near one to three year horizon. Here’s the process we followed to help our client team look beyond the next six months:
- We started our first work session with a market trends presentation covering the next five to seven years. This allowed the group to become acclimated to a “nearer” one to three-year horizon.
- In breakout teams, we asked the group to think about and analyze what the trends meant for them today and over the next three years.
- As a group, we asked them to prioritize which two to three trends are most important to the business and what they can do over the next three years.
- For inspiration and perspective, we discussed other industries, such as automotive, that plan further into the future.
While the challenges of a near-term focus are not unique to B2B, we believe they may be more pronounced in this space. We welcome comments from other B2B strategy professionals who have faced similar situations, along with their tactics and strategies to overcome them.
