Only 11% of executives strongly believe that strategic planning is worth the effort (Mankins & Steele in Harvard Business Review, 1/06). Yet, companies continue to plan year after year. Surely there must be a way to reduce the pain and increase the return on investment. This article outlines tips and techniques for improving the strategic planning process.
Tip #1: Don’t Wait
Often, leaders return from summer vacation and realize that it’s time for strategic planning. To complete the process from conception through budgeting before the next fiscal year begins, organizations rush critical strategic conversations.
Instead, insert strategic conversations throughout the course of the year. Bring leaders offsite for 1 – 2 day meetings that focus on one or two specific strategic issues. Prepare rigorously for the meetings by assigning research and pre-reading. In the meetings, dive deep: explore at implications, trends, competitor movements, market shifts, and potential impacts on the business.
If leaders engage in four strategic conversations a year, much of the ground work will be done by the time Q4 rolls around. Leaders won’t be forced to shortchange critical conversations. Instead, they can focus on transforming learning from those critical conversations to sound strategies.
Tip #2: Focus on Results, Not Activities
Often companies mistake busyness for effectiveness. They create a long list of activities. Then they congratulate themselves on how much they get done. The catch, of course, is that not all the activities on the list are needed to achieve results. They’re simply keeping staff busy.
The better way is to focus on results. For example, perhaps the company needs to know what features customers value and what they’re willing to pay for those features. That desired result—increased knowledge of the customer’s preferences—suggests an entirely different approach to goal setting. Instead of listing activities, the conversation turns to “what’s needed in order to achieve results?” Leaders may be surprised to discover that the “to do” list shrinks as they realize that they can skip steps previously assumed to be necessary.
Tip #3: Resist the “More is Merrier” Trap
For some reason, leaders seem to love long lists of strategies and objectives. Perhaps it’s the overachieving impulse that exists in many Type A leaders that tells them that more is better. Whatever the reason, it’s a mistake.
The ideal is 3 – 5 major strategies that every employee knows by heart. These 3 – 5 strategies serve as a beacon for leaders and staff during a year which, inevitably, will throw unexpected challenges at the organization. These unanticipated events could send the strategic plan into disarray. However, if the 3 – 5 strategies are carefully chosen and truly represent the direction for the organization, staff can shift supporting goals while still working towards the big picture.
Tip #4: Connect the Dots
According to a McKinsey Quarterly survey, the first change that people would make to strategy development is to “improve company alignment with the strategic plan.” Of course! Too often, planning happens in a bubble: executives retreat for a series of meetings, develop a beautiful plan, and then forget to let people know how they fit into the plan. This leads to confusion and frustration.
The way around this dilemma is to connect the dots through a cascading goals format. In this format, each of the company’s highest-level strategies links to specific corporate goals. Then, the cascade continues: corporate goals link to business unit goals, which feed department goals, which generate team and individual goals. The result: An organization that is 100% clear on how every individual contributes to the big picture.
This method is tremendously beneficial for employees. They can see the sightline from their daily work to the major objectives of the organization. They also have the grounds to question activities that fall outside the cascading goals structure. It’s a great way to make sure that the company is aligned, focused, and productive.
Tip #5: Don’t Forget the Plan
Let’s say the organization did a stellar job with its strategic planning process. It sponsored strategic conversations throughout the year, focused on results, created a short list of big picture objectives, and connected the dots. The company can undermine all of that good work if people don’t remember to track progress against the plan.
The value of strategic planning is to generate a clear, shared vision for the direction, strategies, and activities of the organization. Without regular communication, organizations run the risk of forgetting their strategic agreements and responsibilities. Instead, build regular updates into the yearly calendar. Those updates remind employees of the organizational goals, show progress made towards completion, and provide an opportunity to celebrate accomplishments.