Creating an Effective Strategic Plan: Know Where You’re Going
“If you don’t know where you’re going, how will you know when you get there?”
The purpose of strategic planning is to ensure that your company DOES know where it’s going.
Start with the End in Mind
The Business Dictionary defines strategic planning as “a systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them.” Strategic planning starts with a clear vision of the desired end and then works backward. (As opposed to long-term planning, which begins with the current organizational status and maps out a path to meet estimated future needs.)
So with strategic planning, one must start with the end in mind: What do you want your company to look like in five years? Most businesses don’t have a clue. They’re managed on an ad hoc or reactive basis. The companies that thrive are the ones with a strategic plan.
Strategic planning looks at all the things your company could do and hones in on the things it is actually good at doing.
It helps company executives to prioritize and allocate resources. They know where to spend time, human capital, and money.
Three Basic Elements
An effective strategic plan is basically comprised of three elements:
- Assessment – This involves an examination of recent company history to address two questions: “Where are we?” and “What do we have to work with?” The second question is important in order to determine the company’s strengths and weaknesses, and then to capitalize on the strengths.
- Objective/Vision – This is where the organization’s stakeholders determine the direction they want the company to go and articulate that vision in their desired goals. This step involves asking the question, “Where do we want to be?”
- Tactics – The tactics are the means of achieving the desired goals. This step answers the question, “How do we get there?” For example, in order to achieve revenue goals, your company may choose to identify one new market, or your sales team could decide to make 50 sales calls a day.
Where Are We?
Do you know?
Assessing where you are as a business is harder than it seems. Some companies get caught in a trap of seeing themselves as they WANT to see themselves, instead of how they actually are. For this reason, you may wish to conduct internal and external audits to get a clear understanding of the marketplace, the competition, and your organization’s actual strengths. (“What do we have to work with?”)
In this step, many organizations choose to utilize a SWOT analysis, or some other strategic planning tool for identifying strengths and weaknesses.
Where Do We Want to Be?
This step involves creating a clear vision of where you want the company to go and your objectives. The vision must be clear to everyone in the organization; otherwise, you’ll never creative an effective plan to take you from where you are today to where you want to be in the future.
Alignment is Critical
Alignment is often misunderstood in a business context and is the single largest failure when executing a strategic plan. It is extremely difficult for most employees to understand how their job impacts the long-term strategy of a company. It is not enough to have a plan. The plan must be developed and communicated throughout an organization. Each employee not only needs to understand the plan, they need to understand their role. Too often executives and business owners lament that they want their employees to think like the owner when in reality, it is the business owners and executives that have to think like an employee in order to develop a truly engaged workforce.
(Source: "Strategy 101: It's All About Alignment", by Larry Myler, Forbes, October 2012.)
You may have multiple objectives (for instance, financial objectives, customer objectives, operational objectives, and so on). Once you’ve identified your long-term objectives, you can break them down into short-term goals. Then build those strategies that build into the short-term goals.
Many of our businesses use the SMART system to define their goals: Specific, measurable, actionable, realistic and timely. These can then be broken down even further into functional or departmental goals, and even individual goals. For example, you may have a long-term financial goal of doubling revenue by the end of the current fiscal year. In that case, your supporting short-term goal could be to contract an advertising consultant for one month to help you analyze your customer's buying trends.
How Do We Get There?
Execution, Execution, Execution
Next, comes the tactics or execution phase, where the high-level plan is translated into more operational planning and action items. These actions comprise what is to be done, in what order, using which tools and personnel, and finally when will it get done. Everyone in your organization must have a clear action plan. They need to know their piece of the overall plan and what they’re responsible for.
This is the nuts-and-bolts phase, where you decide how to put your new ideas into operation. These are highly practical things you will implement every day. They may include writing blog posts, offering promotions (such as coupons or loyalty programs), adding or improving job training programs, and rewarding employees who improve quality standards or reduce waste.
The tactics are developed by those who deal with getting the work done, day by day. Tactics include specific activities that are arranged on specified time frames and have specific outcomes that will move the company forward to achieve the objectives outlined in the strategic plan.