FROM THE BLOG

The One Year, Thirty Minute Challenge :: Week 39 :: Strategic Planning :: Annual Plan

Strategic Plans fail at an alarming rate. According to The Balanced Scorecard, 90% of businesses fail to execute their strategies successfully. According to onstrategyhq.com, 95% of employees don’t understand their organization’s strategic plan and 60% of companies don’t link strategy to budget. If those are the stats, why even engage in the Strategic Planning process at all?

First, there’s value in the process. General, and later President, Dwight Eisenhower said, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.” Every plan, whether it’s for a military campaign or for running a donut shop, is built on informed theory and assumptions. But the minute those plans are implemented, they become vulnerable to forces outside our control. The enemy has more artillery than we anticipated. The muffin shop down the street lowers their prices. Does that mean it’s time to abandon our plan? That all our planning effort was wasted? No, it means just the opposite. If we exercised the discipline to plan thoroughly, we contemplated multiple actions and the anticipated outcomes for each. We chose one, or possibly a couple, of those actions and assembled the resources to execute it. But the real value in planning was that we analyzed all of the possible actions, all of the possible outcomes and all of the resources necessary to execute those actions. Now this knowledge is at our disposal. So, when reality collides with our plan and our initial choices don’t seem so wise, we already have a wealth of accumulated thought on how to readjust and redeploy our resources to still achieve our original objective.

Second, there’s value in the discipline. It is very easy to be caught in the tyranny of the urgent. Crises with employees, customers, vendors, equipment, and money can consume every waking work minute. Dedicating time for deliberate planning gets us off the hamster wheel of constant busyness. The discipline of –

  • thoughtfully examining our human resources – the people we have now and the people we’ll need in the future
  • carefully evaluating our value creation activities – supply chain, transformation activities, vendor performance
  • revisiting our financial management – liquidity, cash management, return on invested capital
  • carefully considering our market – customer problems we are solving, messaging, competitors
  • taking the temperature of our organization – culture, metrics

helps us see things clearly and truthfully with fresh eyes and more accurately plot a new course that moves us closer to our vision for the organization.

Finally, the biggest reason that Strategic Plans fail is lack of execution. Execution must be baked into the plan from the beginning and pursued fanatically through the entire organization as the plan is rolled out. A good Strategic Planning methodology leans heavily to the implementation side.

Let’s jump into this week’s One Year, Thirty Minute Challenge. Clearly you won’t finish your thirty-minute exercise with a strategic plan, but that’s not the goal. The goal for this week’s challenge is to identify the people who will be involved, set up a time and decide on a process.

  • Good strategic plans require input from up and down the food chain. The larger the organization, the more difficult this becomes. As organizations grow, people at the top necessarily move away from important value creation activities and customer interactions. But it’s just those activities and interactions that must inform future strategic plans. The first order of business is making sure that all the information you need to get an accurate picture of the current state of your organization is in the room. Gathering that information and involving people in the strategic planning process who can accurately interpret and advocate for the stakeholder interests represented by that information is crucial.
  • Put in on the calendar and don’t let anything displace it. Find a time and make it happen. Depending on the size of your organization and how solidly your mission, vision and core values are defined, it might take a day, or it might take a week. If you’ve spent time to carefully define your mission and vision and are solid on your core values, you can jump straight into your strategic planning exercise. If those things are new to you, you’ll want to spend time on those first. For a frame of reference, when I’m doing this with a client ($2 – $20 million in revenue), we go at least 3 full days or 6 half days or a bit more depending on what we find as we define the current state of the organization. Once you’ve put it on the calendar make sure you protect the time both for yourself and for those working with you on the plan.
  • Decide on a process. There are a number of good strategic planning processes and tools out there. They range from the one-page variety to more complete and detailed frameworks. Remember, much of the value is in the discipline of the exercise, so no matter the framework, utilize fully, think deeply and create deliberately. Here are the things you want to look for in whatever framework you use.
    • Get an accurate picture of the current state of your organization. One of the most prevalent and most damaging mistakes in a strategic planning exercise is failing to get an accurate picture of where you are now as an organization. You spend a lot of time on where you want to go but not nearly enough on where you are now. How can you make a map from here to there unless know your current location? Find a tool with powerful assessment tools.
    • Create several fully-loaded future scenarios. With your knowledge of the current state of your organization, your assessment of your place in the external environment (with customers, competitors, regulators) and the efficacy of your products or services to successfully solve problems for current and potential customers, craft a number of strategic alternatives. These alternatives might solve a personnel problem, correct an operational deficiency, exploit a market opportunity, recreate an existing product or service or tech-enable your customer experience. Some alternatives might play well with others. Some might be bold and very different from what you’re doing now.
    • Evaluate and choose the best opportunities. Your framework should give you tools to evaluate your alternatives in the light of financial return on investment (measuring the impact on shareholders in the long-term and in the short-term). You should also evaluate your alternatives considering employee experience, customer experience, regulatory compliance and, of course, in how much the alternative will push your organization closer to your vision. This part of the exercise should yield three, or at the most four, initiatives that you’ll be implementing over the next 12-18 months.
    • Execute like crazy. Employ an implementation framework that lets you rollout the why and the what for the selected initiatives to every person in the organization. This framework must enable every team member to connect the dots between their job and the new initiatives. It must include accountability mechanisms and a scoring framework so that everyone knows how the organization is progressing toward its strategic initiatives.

If you want to safeguard the long-term health and viability of your organization, you need to do a regular Strategic Planning exercise. The discipline of critically evaluating your organization and making measured course corrections is the best insurance I know to keep you out of the trash heap of irrelevant, failed enterprises.

If you want more information on the strategic planning framework I use, contact me at mchirveno@clearvision.consulting.

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