Now that you’ve determined your vision, assessed your strengths & weaknesses and selected the strategy that you want to use to reach your vision, it’s time to actually implement the strategy. Surprisingly, this is where most businesses will fail, and likely where many people will give up on their pursuit of financial freedom.
The main reason businesses fail to implement their strategy effectively is that they don’t get buy-in from their employees and they don’t align individual goals with long-term corporate goals. In order for a long-term, ambitious strategy to succeed, everybody has to know what the strategy is, be on board with the strategy and be working towards the strategy, whether they even realise it or not. In order to do so, companies use various policies and procedures to ensure success. These include things like strategic controls & reward systems.
In order for a company to ensure everybody is on board with a given strategy, they usually follow the 3 C’s of strategic implementation.
- Clarify – The strategy should be clear and obvious. It should have the right amount of detail and answer not only what you are trying to achieve, but also how, when and who is helping.
- Communicate – the strategy needs to encompass every facet of your life. Everybody involved in reaching the goal needs to be on board, otherwise, the strategy is destined to fail. Involving your significant other and anybody else who might be part of the journey in formulating the strategy is extremely important. Without their support, you’re facing an uphill battle.
- Cascade – this one is less relevant to a family but very important to a large business. It involves ensuring you have buy-in from all levels of the family. Since a family typically only has one level (unless of course, you give your children your credit card), there is only one level, you and your significant other. In this sense, cascading the strategy should be pretty easy.
Another reason companies often fail to implement their chosen strategy is that they don’t align their day to day decisions with their ultimate vision. If a company’s vision is to provide the best customer service, hiring inexperienced staff and paying minimum wage is a terrible way to achieve it. A good way to achieve this would be to hire experienced staff, provide one on one training, offer performance bonuses based on customer satisfaction, and so forth. Aligning the smaller, day to day decisions with the ultimate vision is paramount in actually achieving a vision.
As such, businesses like to use what is called a strategy map. This is essentially a kind of flow chart that links smaller decisions with the vision and strategy the company wants to undertake.
Financial Freedom Strategy Map
From a financial freedom perspective, a strategy map could look something like follows:
Now, there are likely way more boxes than I used, especially towards the end of the chart, but it gives you the idea. It starts at the top with the ultimate goal of financial freedom, then breaks it down into the steps that need to be achieved in order to get there. You can see how the small day to day decisions like paying for cable affect your goal of reducing costs, which affects savings, which affects the amount you can invest which ultimately affects when you will reach financial freedom.
The key then is making the necessary small changes to align with the ultimate, much greater vision. While these changes may seem insignificant at the time, they quickly add up.
So what do you do with this? Businesses will then take their strategy map and use it to develop smaller, short-term goals that are easily measured. The key is that, by using the strategy map, these day to day goals will guarantee the business that by simply focusing on the present, their long-term future vision will be achieved. From a personal finance perspective, this means that by simply focusing on the smaller monthly costs like cable or eating out, you should be able to achieve your long-term vision of financial freedom
This is really where most personal finance blogs come in (and where I’ll be chiming in too!). There are innumerable ways to reduce costs and increase income, and everybody has different factors they need to work on. For example, I don’t really drink any alcohol so I spend nothing on that, but others might spend hundreds of dollars a month. As such, this is where you now need to take the reins somewhat.
I’ll be going through many ways you can achieve financial freedom, but everybody’s path is ultimately different, so it’s impossible to give specific advice. They will all, however, go through the same general process of this Business Life series, perhaps without actually realizing it.
Moving forward, the next step in your personal finance journey is really just to gain an understanding of your starting point. In order to be able to set specific targets based upon the strategy map, you really need to know what you’re working with. The next post in this series is going to cover how to start tracking everything and perhaps, if you’re feeling brave, how to start budgeting.