Clearly, a solid strategic plan must be at the heart of any strategy execution or performance excellence effort, but I find that people are often confused or even intimidated by the strategic planning process, so I thought I'd take a step back and go over some fundamentals to help those of you who feel this way.
I'll start by giving you my definition of a strategic plan. To me, it's a set of short- and long-term goals that, if deployed over the next 3 to 5 years (with some possible adjustment along the way) will guide the organization toward its desired future state. The goals should include strategic objectives, outcome measures, short- and long-term targets for the measures, and improvement initiatives (i.e., projects with action plans).
Sounds simple enough, but as mentioned, how to get to this point can be mystifying to many people, so I'll break it down into its most fundamental parts.
The process is comprised of the following components:
- Gather a series of inputs that are both internal and external to the organization
- Hold a forum to discuss and understand those inputs (the planning session)
- Determine a method to choose which are the most important inputs to address in the strategic plan
- Create a few key outputs that will be part of the plan
So what inputs should you consider? They fall into three categories:
- Stakeholder feedback on their requirements and your performance on those requirements
- External input from a variety of sources and
- Internal input from employees by department or business unit
Stakeholder feedback should consider customers, Boards of Directors, employees, regulatory agencies, and other partners and can come in the form of surveys, focus groups, regulations, guidelines, and interviews.
External input should consider macro-environmental factors including Political, Economic, Social, Technological, Environmental, and Legal (PESTEL). The organization should solicit information on only the PESTEL areas that apply to it and the information can come from research, consultants, lobbyists, knowledgeable employees, or experts.
Finally, internal input is usually solicited using a departmental or business unit SWOT Analysis, where the strengths and weaknesses are internal to the organization and the opportunities and threats are external. As you may have surmised, much of the PESTEL analysis also addresses potential opportunities and threats.
Now that we have introduced a great deal of data and information, what do we do with it? How do we use it to prepare for the actual planning session (step 2 in the process above)?
Each member of the strategic planning session should receive all of the information in advance and study it to begin to understand the key themes that it highlights. At the session, the information should be presented by different individuals, both as a whole and, importantly, highlighting the few most important issues from each information source. Then, it should be discussed as a group and the key issues based on the group’s decisions are moved to an organizational SWOT Analysis that is being built as you go (on a white board, projected on a screen, or in another very visible location in the room).
At this point, based on the filtering that has already occurred, there should be somewhat less information than when the strategic planning session began, but it is still far too much to address as an organization. So, it is time to begin focusing and prioritizing the key themes, objectives, breakthrough improvement areas, and initiatives (step 3 in the process above). At this stage, the group is attempting to identify strategic challenges to address and strategic advantages and core competencies to leverage or strengthen. More on how this is done will be discussed in part 2 of this article.
The key outputs from the planning session (step 4 in the process above) should be:
- A confirmed or refined set of Mission, Vision, and Values
- A strategy map
- A preliminary scorecard
- Identified breakthrough improvement areas
- Preliminary initiatives
The strategy map is merely a pictorial view of the 3 – 5 year strategy, containing perspectives or strategic areas to ensure a balanced approach to setting goals, themes, strategic objectives, plus arrows showing the relationships among the various objectives. The scorecard takes the items on the strategy map and "operationalizes" them for deployment by adding measures and targets for tracking progress, along with key initiatives.
If you're new to scorecard development and measure creation, you might find it helpful to view our recorded webinar, "Balanced Scorecard Fundamentals" available through this link.
And stay tuned for part 2 in my series that will get deeper into how you prioritize during planning. In the meantime, I'm happy to answer any questions and would love to hear about strategic planning approaches that have worked for you.