Game strategy - business planning

Camping Magazine, Jan-Feb, 1995 by David A. Hilliard

When I was younger, a friend offered to teach me how to play chess. He taught me that the object of the game was to checkmate my opponent's king. He taught me the rules for moving each piece. What he didn't teach me were the intricate beginning, middle, and end strategies of the game. I focused on capturing all his pieces to win. He employed strategy at every move and beat me every time.

Down-board thinking

As in chess, the key to success in business is planning and strategy. We must be able to envision, in detail, the desired end result, and then develop a strategy for each action that will lead us to success.

There are five key steps in effective game strategy:

* establish a well-articulated goal

* conduct thorough and careful analysis

* set a strategy based on the analysis

* support the strategy with alternate or contingent strategies

* rigorously implement the strategy with constant evaluation and necessary adjustment

Goals

Establish only critical goals. My chess goal was to win the game by taking the king. A long-term business goal at the Wyman Center is to achieve a level of financial independence that allows us to:

* maintain certain camp programs and other services for disadvantaged constituencies, and

* maintain a level of income and reserves in excess of current and forecasted demands for cash.

Analysis

To check my opponent's king, I must capture other key pieces. I must consider the moves of my opponent in every decision I make. Obviously, there are endless choices. The mistake I made as a novice chess player was to focus on taking any and all of my opponent's pieces. My friend, however, analyzed each move, anticipating my next move. The same analysis and anticipation must take place in the business game.

Wyman Center developed objectives to realize its long-term goal of excess cash:

* achieve net income from fees for service to non-disadvantaged clients

* build a substantial endowment

* develop and sell spin-off products and services from existing resources.

We analyzed each objective before we made any moves. Here, I share our analysis of and strategies for our first objective.

To decide how much net income from fees we could produce annually, we analyzed our potential in our competitive environment.

First, we defined what we sell. Wyman Center sells environmental and outdoor education programs, outdoor adventure challenges, meals and lodging services, and training services to other professionals.

Next, we determined whether these programs could make a profit. We talked to our customers, our competitors' customers, and to people not buying these services from anyone. We tried to answer the following questions:

* What needs are these consumers trying to meet by participating in these programs?

* What unmet needs do they have?

* How price sensitive are they?

* How deep are their pockets?

We tested the answers against current programs and conceptual programs. At the same time, we tested for pricing to cover our costs and to reach desired margins. We had to know what occupancy rates we'd need to achieve at variable price levels to make our margins. Could we deliver to the customer's expectation at all levels? Would these customers buy from us?

We studied our competition in the camp, conference center, youth work, day care, and education fields. We had to know the competitions' strengths and weaknesses, their pricing, their market share, and the demographic profile of their market share. The ultimate question was what market segment did we want to go after and could we gain and hold the number one or two position in that segment within our region?

Analysis results

Our analysis showed that our main competitor in the region has a well-managed, modern, up-scale, high-capacity facility. We have a well-managed, but older, mid-scale operation with about one-fifth of the capacity. They have wonderful amenities. Ours are good. Both have very good customer service. Their prices are high-end and their site is a 1 1/2- to 2-hour drive beyond Wyman Center. Our capacity to design and deliver custom programs is superior.

Strategy

After a review of the analysis, our strategy became clear. We could not compete for groups who are willing to pay a higher cost for excellent amenities. We would, however, go head to head on mid-range markets, emphasizing our convenient location, value for price, and customized programming. In our evaluation of the low-end buyer, we determined we would have to increase our capacity to make a profit.

Implementation

Wyman Center increased capacity by developing ideas to reduce time spent at camp while increasing the impact of the program. This allowed us to turn over our resident customers three times per week instead of two. We also leased an underperforming site. Finally, we designed programs that could be conducted at the customers' location.

Action plans to sell service, space, and programs were developed and implemented. Quarterly reviews are held to monitor sales, cost/revenue ratios, and customer satisfaction. Adjustments are made as needed.