STRATEGIC PLANNING IN AN UNCERTAIN MARKET

The tools for strategy are generally market reason, cash flow analyses, value chain analysis and most importantly, a predictable course of events. Mortgage executives live in a market of uncertainty and if paralyzed by it abandon disciplined strategic planning altogether. Underestimating the uncertainty of financial markets in order to formulate a strategic plan makes no sense either. Even in uncertain markets it is possible to set a basis of action and develop the tools needed for implementation. The following guidelines can help you put logic to strategic planning in an uncertain market.

Market Research –

What We know

First, identify what you know, such as borrower demographics and corporate mergers. These factors will assist in the beginning stages of market research. Borrowers in certain age groups act a certain way when buying their first home or considering retirement. Often, a large bank merger will drive borrowers away. These two examples are not interest rate driven factors. Analysis of this kind can not identify what will absolutely come to pass, but it does help establish solid probabilities. .

The Unknown

There are many reasons a company takes strategic position not to play at a “big bet” but still reserves a place at the table when facing the unknown. Reserving the right to play is a key strategy to staying in business. An example is performing a pilot program to capture new business before launching headlong in that direction spending mega dollars on advertising. Another example is entering into a joint venture for new business or breaking into a new market, thus minimizing cash investment. A company who reserves the right for a seat at the table can be an ‘early mover’ when market impulses improve. Actions of reducing costs, building skills and market analysis taken during this time produce the leverage that competitors not using this strategy will not have. .

Before embarking upon any strategic plan in an uncertain market consider setting the following goals for the plan itself. Your plan should: .

Lower uncertainty and create order out of chaos

Maintain strategic flexibility

Gain competitive advantage

Designing a strategic plan is not as difficult as it may sound. The resources to do so are often readily available in and around your business itself. The following steps are simple adventures in talking, listening and taking notes. .

Borrowers

Borrowers divulge information that begins your “external environment” analysis. Develop ten questions that you can ask borrowers. It is important to point out that these do not have to be your borrowers or former clients. Interviewing anyone who has recently purchased and financed a home will reveal needed information and sometimes it comes with more than you expected about the competition..

Good examples of questions you might ask borrowers: How many mortgage companies (or loan officers) have you worked with to obtain a home loan in the past ten years? What does high quality service mean to you? Is service all that matters, if not, what else? .

Write up a one page document, a matrix if you prefer, to capture what you heard in your interviews. Make this document factual only with easy to read bullet points. .

Competitors

Put together a list of business analysis questions to ask your competitors. Steer clear of questions that would reveal detailed information about their business. Questions could be asked at industry events, on the phone or over a business lunch. The important thing is to keep consistent and ask each competitor the same questions in the same way for better analysis of their responses. .

What borrower trends are you experiencing? .

Write up a one page document, a matrix if you prefer, to capture what you heard in your interviews. Again, make the write up easy to read using bullet points and no emotion. .

Internal Environment Analysis

Employees

Begin your internal analysis by interviewing your employees. Again, for consistency, ask the same questions of each one you interview. The best questions are ones that will help you understand what the employees see in the workplace and in the market place surrounding them. .

Brainstorming

Gather six to eight positive attitude employee for this 2-3 hour session. Lock yourselves in a conference room. No phones! No pagers! No interruptions! Share with the group your one page market research analysis, your competitor sheet, your borrower information sheet and employee interview feedback. .

Using an uninvolved meeting facilitator is highly recommended. If you lead the meeting the responses may come back less than honest and more slanted to merely please you. List on a whiteboard, from their point of view, their reasons or critical issues that are stopping your company from being as successful as possible. Discuss what success means to them and narrow the discussion down to a sentence that describes the definition of success for the company. Ask the group members to develop a plan of attack to reach this shortly worded success goal while keeping in mind the critical issues, customer statements and competitor feedback. The meeting facilitator records all pertinent data for your historical review. .

A couple of hours of group work will produce a ‘working document’ for your business strategy plan. The group must prioritized their suggestions and set dates when they will be addressed. Addressing two suggestions or ideas a week will keep the group’s momentum in the workplace and will in turn beef up continuous improvement..

You

Your next available quite time – perhaps the next Saturday morning or midnight on Sunday – don’t wait too long or the information will become stale….reread everything. Let it sink in. Think about your business one year out, then in three and five year segments. Plan where you want to be by being specific on number of loans, number of offices, what products to add…then roll up your ideas using the market research and your group’s specific concise statement. Difficult? Yes. However, putting a stake in the ground at the point is the basis for implementation of your strategic plan. You have at your fingertips very powerful tools, which are:

Current Market Research

Competitors Viewpoints

Borrower Revelations

Employee Guidance

A Workplace Design

Only you can envision three to five years out by using what every business owner has from day one – courage and foresight. Following through on the details in the subsequent months is essential and builds the company culture that the employees themselves can see and be part of. But then, is it over? No. The plan should be reexamined every six months and the entire process done over year after year. Not only will you feel serious about obtaining the strategic goals but your entire company has now a stake in the outcome and positive feedback becomes a standard event in your company.

Client Tip ID: 4