Many companies use September and October to create budgets and develop strategic plans for the forthcoming year. It's the one time when everyone sits down, figures out what they want to accomplish, and writes a plan. I've often compared it to crystal ball gazing or pulling a rabbit out of a hat, yet it's something all successful enterprises do. Budgets identify objectives we hope to hit, and strategies provide the design of how we'll get there.

What does it take to create an effective strategic plan, especially amid questionable economic forecasts making everyone nervous? How can we create a plan that provides crystal clarity to everyone involved?

Remember, defining a strategy presents several challenges:

• Confusing definition Too often companies confuse a strategy with a company goal or even a company mission statement. “We want to achieve a 20% increase in revenues” is not a strategy, it's an objective.
• Strategy vs. tactics Some companies also confuse a strategy with the tactics they will use to achieve their objectives. A strategy is a logical and consistent approach to defining and solving a problem. Tactics are the actions that execute the strategy.
• Eloquent BS Finally, some companies describe their strategy using superficial $25 words to imply that the company is visionary in some strange way. “Best in class,” “global leader,” and “maximizing shareholder value” are fluffy words that really don't define a strategy.

How to start defining your strategy
for the coming year:

1. Diagnose the issues Dig down to the real issues your company, business unit, or household is facing. What's going on here? Where are we being killed by the competition? What outside forces are affecting our productivity? You have to identify the issue(s) you're up against. Write them down on a single piece of paper in one or two sentences.
2. Define a policy . Define a policy of how you will deal with your diagnosis. Clearly state what you're going to do and what you're no longer going to do. Strategies often have a “change of course” feel that requires you to state all the things you will stop doing. “We're going to stop heading east, and instead we'll head northwest next year because…” Remember, everyone in your company will see this policy statement.
3. Create an action plan Create a checklist that includes tactics you will employ to change course, speed up, or even circle back, based on your strategy.

How can you recognize a bad strategy? Bad strategies have certain characteristics. First, they use a lot of superficial, nonsensical words that really don't provide clarity. Secondly, they don't clearly and simply define the challenge. Thirdly, bad strategies present goals and wishes rather than the direction a company needs to take. Finally, bad strategies set impossible goals rather than achievable ones. Make sure those four errors are not part of your strategy.

The most important thing to remember about developing a strategy is that it always defines what your organization is going to stop doing as well as what it's going to start doing.

Take a moment and imagine that your company is at stake, evaluate the business climate, and then make choices. Good luck, and get that map out on the table!