First, some folks don’t believe you can build a credible strategic plan  because, in their minds, distribution is mostly a reactive business. HVACR distributors react to weather conditions, changes in manufacturers’ programs, competitive actions, and human resource issues on a daily basis. Any planning that pushes the envelope further than a few months out wastes effort and may hinder the company’s ability to respond quickly to shifts in the environment. So, why build a plan?

Other distributor leaders are refugees from the world of big business, where they saw strategic plans used as a club for beating employees. They witnessed plans where someone hands salespeople 67 key performance indicators (KPIs) derived from some consulting session gone astray.

A few plan to build a strategic plan, sometime. The problem is not sometime soon, or sometime tied to a specific date. Whether based on personality style, lack of scheduling abilities, or something else, these folks have plans to develop a strategic plan as soon as they finish their current “critically urgent task.”  Somewhere along the way, these folks never seem to develop a plan.

Strategic Plans Focus Our Attention

Thinking back to those who find themselves constantly attending to “critically urgent” tasks and never quite getting around to issues that are very important but carry no deadline, Steven Covey’s Quadrant from The Seven Habits of Highly Effective People comes to mind. We break life into four categories around levels of importance and urgency. Most of us handle the important stuff, which is also urgent. We sometimes get bogged down with urgent issues that carry little or no importance. Often, we miss the really important things that can be put off till later, but later never happens.

Most of these important points won’t put us out of business any time soon, but they do have a cumulative effect over time. Let’s think about some examples.

Building a solid technological infrastructure is very important but not urgent.  If you wait until the technology becomes an urgent need, it could be too late. Why? Because setting up systems takes lots of time —months, perhaps years —to fully adopt. Data scrubbing, transferring of information between systems, and establishing workflows tied to ERP systems involve people already heavily involved in running the business, training for others and computer and communications hardware.

Ken Abbott, CFO of California-based Geary Pacific Supply, said: “We operate using a series of one-year tactical plans for most issues. But when it comes to business technology, Geary-Pacific uses a strategic plan that ensures we will be in the vanguard of our industry. We have come to realize equipping our team with the right information tools takes time and longer-range planning. For instance, we have employed a smart front end, which serves up customer sales information to our sales team instantaneously.”

Progressive HVACR distributors have already migrated from iPads to more powerful tablets to give their teams customer order information “on the spot.” Others have pushed the envelope to new levels by building “mobile apps” that allow contractors in the field to check stock instantly and place orders 24/7.

Strategic Plans Improve Communications and Unite the Team

Imagine the power of a shared vision of the future —one where everyone in the leadership circle has a clearly outlined picture of how their department interacts with the group as a whole and knows the milestones along the way. Simply creating a workable strategic plan creates a vehicle for communication. Let’s explore this phenomenon.

DeWight Wallace, CEO of Johnstone Supply, shared this: “We believe in strategic planning. Our process is a team effort. We meet with our cooperative owners and store employees to get their perspective and understand their priorities. And, we listen to our customers to see how we can improve our value proposition. Then, we bring together 20 to 25 of our top employees for a two-day off-site meeting to develop our plan. The group represents a workable size for active discussion and represents members of all of our departmental teams. Not only does this allow interaction from throughout the company, but it also gives us a mechanism for communicating our direction throughout our organization.”

Greg Borr, executive director of operations at Lenexa, Kansas-based O’Connor Co., spoke of a similar approach: “We bring together our corporate team and the leaders of our five locations for a planning session. We devote a great deal of time analyzing our current situation information from a Strengths, Weaknesses, Opportunities and Threat (SWOT) analysis and our ongoing customer satisfaction survey data. Our plans focus on a specific plan for the next year and lay out less detailed plans for years two and three. It is from this meeting that we develop four KPIs for the future.”

Strategic Plans make KPIs Meaningful

Earlier, we spoke of large companies getting crazy with the number of performance measures used in driving performance. For a strategic plan, the number needs to be the top five or six areas capable of impacting the long-term future of the company.

Going back to Borr’s comments: “We assign ownership of each KPI to a specific individual on the team. We evaluate waste streams and tie KPI attainment to leadership compensation. I call this aspect, keeping our eyes on the prize.”

This brings us to an even more important point: A good strategic plan firmly ties the plan to future action. Experience shows responsibilities tied to groups of people rarely gets the same “care and feeding” as those with ownership by a single individual. Further, responsibilities that we do not fully align with the compensation are often overlooked. Do not overlook Borr’s “eyes on the prize” statement.

Strategic Plans are Management-changing Tools

If we ran the perfect enterprise in an unchanging world, the best plan might be stated as: “Keep well, work hard and continue doing what we are doing today.” The reality for HVACR wholesaling couldn’t be further from this idealistic, unchanging context. We face a reality resembling a swirling whirlpool of new issues.

Competition, whether local, national or Internet-based, impacts our lives. Customer expectations morph each time they browse the Internet or purchase some book or electronic gadget from Amazon. In their quest for continued growth, our manufacturing partners merge, acquire, and innovate, creating new opportunities and conflicts at the customer-facing level. Demographics are changing the lay of the land. Each day, something like 10,000 baby boomers bid their fond farewell to the workforce, impacting experience levels within our industry and changing the customers’ decision-making processes. And, as if this isn’t enough, the HVACR industry is rife with governmental regulation changes. The question is, how do we manage all these transitions?

A strategic plan not only sets a direction but provides a tool for managing change. Researchers have discovered change is stressful for most individuals. An article published by the Center for Management and Organization Effectiveness states: “Change for many people is stressful, but for others it can be tremendously traumatic. … As business leaders, we understand that change is inevitable. So, we must be aware of how change affects our co-workers and steps we can take to make the transition more comfortable for them and, in turn, for the success of the initiative.”

Understanding why the change is necessary, seeking feedback, explaining how the change will be implemented, and enhancing communications are all recommendations for moving the people within the business forward. Nothing provides a tool for achieving these recommendations like a strategic plan.

How to Launch your Strategic Plan

First, in spite of all the consultant-speak on the topic of strategic planning, it isn’t all that difficult to build a plan. Here are some points to think about:

• Who should be part of your planning team?   A good plan doesn’t come from the top down; it involves representative members of all functional departments. Others have discovered representatives from sales, warehouse, accounting, and marketing departments see the business from slightly different angles. Gathering perspective from each department provides a fuller picture of your company’s reality.

• Develop a realistic picture of your company’s current position. One of the most commonly used techniques is the SWOT analysis. To launch your own SWOT, use your team to list out as many strengths and weaknesses (and all the rest) as possible. Be specific. While great service sounds nice as a strength, you must explore why your service is a strength.

• Look at potential initiatives that maximize future opportunities and minimize threats. The big idea is to position your business for a more solid future. Again, brainstorm with the group to build an expansive list.

• Narrow the potential initiatives list to the five or six most likely to provide the greatest impact. This will be difficult. You may need to move some great ideas to the back burner. Not every idea deserves to be reviewed and tracked regularly; everything on your list of five should be worthy of future time.

• Develop a list of action items that move you closer to completing the initiatives identified. Assign responsibility for each action to one specific individual and assign a date by which it must be completed.

• Schedule monthly meetings to track progress. Once the action items are laid out, review progress and stumbling blocks to completion.

Finally, Strategic Plans Aren’t Perfect

I recommend strategic plans that push out three to five years. Yet, every distributor discovers their long-range (strategic) plans are most accurate for the first year. A great many variables can shift plan drivers for the successive years. Expect a need to revise your plan annually.

Secondly, and I know this may sound self-serving, I recommend using an outside facilitator with experience in the distribution field. Why?  Because with topics like current positioning and future direction, it is easy to observe the derailment of the meeting by folks with strong personalities and opinions. If one person dominates the direction, the plan suffers.

Before signing out, allow me to share two quotes from great American Generalsto steer your focus. “In preparing for battle, I have always found that plans are useless, but planning is indispensable,” said General Dwight D. Eisenhower; and, “A good plan violently executed now is better than a perfect plan executed next week,” said Gen. George S. Patton.

I take solace in General Patton’s words.