Managing Your Business through Your Strategic Plan
Dec 7, 2018 | Thought Leadership
Developing and implementing a strategic plan are the backbone of a business operation. It separates organizations who are “hoping” for a great outcome from the organizations that have a specific direction and a focused plan to achieve a future course. The strategic plan is essential in defining the strategic direction the organization is going to be taking over the next three to five years.
The strategic plan should assess the external and internal environment of the organization, define the value proposition offered to customers, and establish the high-level goals, objectives, and key performance results the organization is hoping to achieve. Unfortunately, many organization leaders are focused on the whirlwind of daily activity, and they do not take the time to clearly define a vision for the future and how they are going to get there. A strategic plan is vital to the organization because it stimulates forward thinking and enables the organization to determine and influence its direction and success.
A strategic plan is vital to the organization because it stimulates forward thinking and enables the organization to determine and influence its direction and success.
Once developed, the multi-year strategic plan will provide a course for the organization to follow. The long-term plan should not need to be changed over the life of the plan unless significant changes occur within the environmental landscape (new competition, disruptive technology advancements, or changes in regulations) or the organization becomes involved in a merger or acquisition. However, the strategic plan should be reviewed at least annually to make sure the organization stays on course with the vision created and to assess progress.
For those organizations that do develop a strategic plan, 80 percent will fail to execute the plan on their own. Hiring consultants with experience in executing strategic plans ensures that you have a non-partial watchdog to monitor and drive project results. Independent consultants are particularly helpful in challenging the status quo, asking probing questions, and providing reports that link progress to goals, while coaching any gaps that become apparent during execution. Execution is the act of converting the high-level strategic plan into an annual operating plan, with measurable activities, and evaluating performance.
While the strategic plan is a high-level thinking and exploring activity, the operating plan is a focused and disciplined process. A strategic plan that sits on the shelf serves no purpose for the organization. The annual operating plan essentially turns the goals of the strategic plan into measurable actions. Effectively developing and implementing a strategic plan has two distinct parts: the longer-term, high-level strategic plan and a shorter-term annual operating plan. The process for creating and executing the strategic and operating plans follows these steps:
1. Assess Your Current Situation
Questions you can use to self-assess include:
- What are our current situation and strategies?
- What is our current portfolio of products and services and what is the performance of each?
- What is our longer-term vision for the organization?
- Is the top leadership committed to developing and implementing the plan?
2. Complete an Environmental Assessment
The environmental assessment examines the external and internal environments. The external analysis examines the competitive environment and, most importantly, explores the needs, wants and expectations of the organization’s customers and stakeholders. The internal analysis examines the core competencies and operations of the organization, including your internal processes and an organizational capacity to move forward.
3. Create a Shared Direction
Creating a shared direction is important to clarifying the direction the organization will be taking. Components of a shared direction include:
- A vision for the future – How are the world, your community, or individuals going to be better?
- A clear mission statement – The mission statement defines the organization’s primary reason for existing.
- Core values – Values define the beliefs and behaviors that will guide the organizational decision making.
- High-level, longer-term goals – Longer-term goals energize, direct, and inspire the organization and define the big picture direction the organization is taking
4. Develop a Comprehensive Strategic Plan
Once the vision, mission, values, and high-level goals have been defined, the organization leadership can begin to develop the actionable strategies to be followed to achieve the vision. The multi-year strategic plan will identify the longer-term goals, specific objectives to achieve the goals, key result areas for measuring progress, and a timeline for implementation.
5. Develop and Implement the Annual Strategic Operating Plans
Developing and implementing an annual operations plan aligns organization initiatives and activities with the strategic plan vision and goals. The keys to a successful operational plan include:
- Defined initiatives and projects to be completed during the year that will support the strategic plan objectives
- Key performance lead and lag indicators and performance targets that will measure progress
- An individual plan for each organization team so that all members know how they are contributing to organization success
6. Measure Success of the Implementation Initiatives and Adjust the Plan
Premier business leader Peter Drucker eloquently defined the importance of organization measurement as: “What gets measured, gets improved.” Implementation of the operating plan will fail if the organization does not take time to measure progress and evaluate what is working and what is not working. Execution is the primary responsibility of the business leader, and execution of the plan can only be achieved if the organization is consistently measuring progress and evaluating the success of initiatives. Execution is achieved through:
- Determining the key results to be measured
- Regularly monitoring performance of the key results
- Determining what each member of the team is going to do to contribute to the achievement of the initiatives or projects
- Providing a visible scoreboard that tracks progress
- Regular evaluation if the plan is working and adjusting as necessary
Managing the Change Process
Successfully developing and implementing a strategic plan is an exercise in change management. The strategic plan is designed to move the organization from the current state to a more desirable future state. This new future will probably require a change in organizational processes and behaviors.
Change is difficult for most of us. Moving the organization successfully through this transition will require clear and transparent communications on the vision, removing obstacles to change, creating short-term wins, and anchoring the change to the organization culture. The leader must remain actively engaged and supportive through the entire process.
Reprinted with permission of BusinessWoman, a monthly publication focused on the interests of business women in South Central PA. BusinessWoman is published by On-Line Publishers, Inc., 3912 Abel Drive, Columbia, PA 17512, 717.285.1350, [email protected], www.BusinessWomanPA.com The original article can be viewed on page 9 and 10 in the December 2018 issue.