The Ultimate Guide to Strategic Planning
What Is Strategic Planning?
It's not a goal, it's not a sales target, and it's certainly not planning.
An effective strategy will:
Capture your understanding of the world your business occupies.
Arise from your deepest motivations and your most precious objectives.
Establish the point of difference that makes your business special.
Look to the horizon, five or ten years from now, to prioritize short-term moves.
Push you out of your comfort zone.
And it only works if you can convey it to your employees, make it real for them, and empower them to contribute with everything they've got.
Capture the world your business occupies
Bring to life your deepest motivations
Let your employees in
In this worldview, managers accept that good strategy is not the product of hours of careful research and modeling that lead to an inevitable and almost perfect conclusion. Instead, it’s the result of a simple and quite rough-and-ready process of thinking through what it would take to achieve what you want and then assessing whether it’s realistic to try. If executives adopt this definition, then maybe, just maybe, they can keep strategy where it should be: outside the comfort zone. (Harvard Business Review [HBR])
It’s hardly surprising that only 13% of the executives surveyed felt that top managers were effectively engaged in all aspects of strategy development at their companies —from target setting to debating alternatives to approving strategies and allocating resources.(HBR)
A common temptation is to sketch out possibilities only at the highest level. But a motto (“Go global”) or a goal (“Be number one”) does not constitute a strategic possibility.(HBR)
How Should You Plan?
In many organizations, Strategic Planning has become a routine, periodical exercise that does little more than rubber-stamp the status quo.
When you make your Strategic Plan truly meaningful, it becomes a navigation system for your business.
You want it like the one on your smartphone. You want the whole map, with a blinking blue dot indicating your present location.
You want to zoom out to see where you are relative to the entire city. And you want to zoom in to locate street names right where you are.
People need the whole map in order to understand where they are and where they're going. If the phone just told you to "go straight until I tell you to turn left," you wouldn't use it.
But many Strategic Plans end up sounding top-down and boring in just that way
Instead, your Strategic Plan should clearly relate to the work your people do, and as they learn more about your customers, it should change accordingly.
That way, it becomes a fundamental part of a positive feedback loop. Employees will love it and your customers will feel it. That's how to make your Strategic Plan drop directly to your bottom line.
Lay out the whole map for everyone
Clearly relate it to day-to-day work
Ignite a positive feedback loop
The Need For A Meaningful Strategy
Many executives have grown skeptical of strategic planning. Is it any wonder? Despite all the time and energy most companies put into strategic planning, the process is most often a barrier to good decision making. (HBR)
[L]eading an organization to constructive change begins by setting a direction -- developing a vision of the future (often the distant future) along with strategies for producing the changes needed to achieve that vision. (HBRLeadership Insights 2015)
Mistaking planning for strategy is a common trap. Even board members, who are supposed to be keeping managers honest about strategy, fall into it. They are, after all, primarily current or former managers, who find it safer to supervise planning than to encourage strategic choice. Moreover, Wall Street is more interested in the short-term goals described in plans than in the long-term goals that are the focus of strategy.(HBR)
Where Do You Start?
Start at the top. If you're reading this, you're probably one of those rare leaders intent upon engaging your team so that all of you enjoy your work more -- and accomplish more while you're at it.
That attitude gives you plenty of credibility with your staff, but for your Strategic Plan be credible, you need hard facts about your competition, your industry, and the laws and regulation impacting you.
Resist the temptation to skip this part. The London Business School found that most business people don't know the basic facts about their industry -- even when they are quite certain that they do.
Accepting that you might not have perfect knowledge can establish the mindset of openness and curiosity you'll need to conduct an accurate Industry Analysis.
Handled correctly, the analysis will enable you to determine which Strategic Priorities you ought to develop. It will also indicate which people should be held accountable for their development.
And that, of course, will include you right along with everyone else.
Start at the top, in the C-suite
Fill your Strategic Plan with hard facts
Establish your priorities
Strategic Planning Begins At The Top & Includes Everyone
Four kinds of behavior account for 89% of leadership effectiveness:
Operate with strong results orientation
Seek different perspectives
Solve problems effectively
Motivation and inspiration energize people, not by pushing them in the right direction as control mechanism do, but by satisfying basic human needs for achievement, a sense of belonging, recognition, self-esteem, a feeling of control over one's life, and the ability to live up to one's ideals. Such feelings touch us deeply and elicit a powerful response. (HBRLeadership Insights 2015)
How Do You Stay Aligned?
A Strategic Plan needs to be a living document if it's to succeed.
Markets change, customers change, suppliers change, competitors change, and sometimes uncontrollable outside forces like nature or the government change everything at once.
Leadership means keeping your people engaged through it all. And in our experience, there's only one method that accomplishes that.
We call it Radical Transparency.
Your best people need to understand the whole picture so they can make their best contribution.
If they understand, then when conditions change -- even slightly -- they'll re-align themselves. They'll even try to provide you with the insights you need to respond strategically.
In fact, the more clearly they understand, the more wholeheartedly they will engage your Strategic Plan at the Core Values level.
You hired great people. If you let them, they'll do everything they can to take care of business.
Keep your Strategic Plan alive
Live Radical Transparency
Beat the competition with your employees' buy-in
Successful Strategic Planning Requires The Right Transparency
If you show us a company where the planners are different from the doers, we will show you a company where what gets done is different from what was planned. (HBR)
Misaligned measurements and incentives create confusion and inconsistency for employees -- and that translates into confusion and inconsistent experiences for customers. (Gallup)
How Do You Engage People?
You have top-level Numerical Targets -- customer count, sales goals, etc. -- that the whole company aims to hit.
But since no one person can wholly control either "customer count" or "sales," Numerical Targets won't help an individual know if their day-to-day work furthers the company Strategic Plan.
Thankfully, numbers that track progress create progress. A conscientious individual held accountable for a number will make it move -- if they believe it's a fair measurement, and if they have full control over it.
We call those numbers Key Performance Indicators, and when they're skillfully created (often by relating data from separate business applications), your team will embrace them for two reasons.
First, they give each person a satisfying view of how their daily activities contribute to the Strategic Plan.
Second, when they hit their number, they prove that they're making a meaningful contribution.
Your most valuable and conscientious individuals thrive in an environment like that.
Use Key Performance Indicators to relate day-to-day work to your Strategic Plan
Give each employee complete control over their KPIs
Let them prove that they're making a meaningful contribution
Strategic Plans Only Succeed When Monitored.
Determine who is accountable. This is how you’re going to get to where you want to go. The strategies, action plans, and budgets are all steps in the process that effectively communicates how you will allocate time, human capital, and money to address the priority issues and achieve the defined objectives. (Forbes)
If you are trying to achieve a goal, the more often that you monitor your progress, the greater the likelihood that you will succeed... Your chances of success are even more likely if you report your progress publicly or physically record it. (American Psychological Association [APA])