Here's the final installment in this series. As a recap, Part 1 described the overall process of preparing for a strategic plan and introduced the key outputs of a strategic planning session. Part 2 covered the tools and techniques commonly utilized in the process. Part 3 described why you might want to consider using an outside facilitator for your next planning session. This time I'll dive a little deeper into the planning outputs and how to derive them.
As you're working through your strategic planning sessions, you should aim to complete these items:
1. Confirmed or refined Mission, Vision, and Values statements
If these three documents already exist, they can simply be shown on a flip chart or a Word document and updated or refined, as needed, by the group.
If they don't already exist, a small group should draft something ahead of the session to provide a constructive starting point. As a recap, the Mission spells out why you are in business. Vision clarifies where you'd like to be (in a measurable fashion) at some defined point in the future. Values should describe the attributes of your desired organizational cultureand daily behaviors.
The task of carefully finalizing all of the wording and punctuation should become a follow up action item that is assigned to a few people to complete after the session. Group "word-smithing" is neither fun nor productive.
2. A Strategy Map
A strategy map is merely a pictorial view of your 3–5 year strategy. It contains perspectives, or strategic areas, that help ensure a balanced approach to setting goals. It will contain your top strategic objectives (the same ones that will live on your top-level scorecard), as well as arrows showing the causal relationships among the objectives. It may also include strategic themes, which are groupings of strategic objectives that may live in different perspectives and that add clarity to the picture. Here's a bit more information on each part:
- The perspectives look like "horizontal swim lanes" on the strategy map and will either come from a previous year’s scorecard or, if you're building your first strategy map, you might try to find examples from another organization within your industry (or in a similar industry) to use as a starting point. This is an area where an outside facilitator could help provide ideas on appropriate perspectives, as well as the cause-and-effect sequencing.
- The objectives should come directly from an organizational SWOT analysis (as mentioned earlier in this series), and are built into the perspective areas on a flip chart or white board (as a draft). As you go, the facilitator can start to add arrows between objectives to indicate cause-and-effect relationships.
- A good way to "test" the strategy map is for the facilitator to talk through the strategy map from bottom to top, reading out the objectives and calling out the causal relationships depicted by the arrows. If it sounds like it encapsulates the strategic plan and also fits the organization's mission and vision, it's a good strategy map. Otherwise, you may have missed a key objective or two.
3. A preliminary Balanced Scorecard
A Balanced Scorecard takes the items on the strategy map and "operationalizes" them for deployment by adding measures with 1- and 3-year targets for tracking progress, along with key improvement initiatives.
It is difficult to finalize a top-level organizational scorecard in a strategy session since the attendees are often senior managers who are not always the best people to determine the best measures. It’s not that they don’t understand measures, but they may not know which measures are currently tracked or how difficult it might be to collect data on proposed new measures. It’s better to engage subject matter or process experts to develop the measures and have the senior managers review and approve them at a later time.
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. Or, again, this is an area where an experienced facilitator can make the process run smoothly and quickly.
4. Identified breakthrough improvement areas
It’s important to identify a few issues, objectives, or preferably measures that are severely underperforming. For these areas that need to be improved dramatically, you should identify multiple initiatives that address the drivers of the problem(s). These can be issues like Revenues, Operating Income, Margin, Organizational Readiness, Customer Satisfaction, Employee Satisfaction, etc.
5. Preliminary prioritized initiatives
Every single organization I have worked with has historically tried to work on too many initiatives. The result is that the most important projects or programs do not get successfully completed. Prioritization of initiatives is absolutely critical because organizational performance will never change without an initiative that changes a process or adds a new program.
The prioritization process begins at the strategic planning session, though it is never completed there.
There are several types of initiatives that can emanate from an organizational SWOT analysis. Those initiative types are capital expenditures (like brick and mortar, technology, etc.), the development of new programs (like services offered, a diversity program, a knowledge management system, etc.), or initiatives to address breakthrough improvement targets.
There are two keys to prioritization. First, choose quantitative prioritization criteria such as the priority of the objective addressed by the initiative, the magnitude of the underperformance being addressed, return on investment, ease of execution, etc. This focuses the discussion on data rather than opinions. Second, always “leave room” to put a full-court press (multiple initiatives addressing multiple drivers) on the breakthrough improvement targets.
I hope you've found this series helpful. I welcome your questions, suggestions, and comments below. If you'd like to chat with me about your own planning process and unique challenges, I'm happy to hear from you! Send me a note through our contact form anytime.