Strategic planning often includes use of several key terms as well. See Chapter 3 for specific guidelines and checklists to help you with your process. What are the big planning pitfalls? Strategic planning can yield less than desirable results if you end up in one of the possible pitfalls.
Too often, teams rely on untested assumptions or hunches, erecting their plans on an unsteady foundation. Chapters 7, 8, and 9 cover collecting good information for your plan. The planning process includes research and investigation. Your investigation may yield results that tell you not to go in a certain direction.
It takes time and effort to plan well. Be realistic about what you can invest. Find a way to plan that suits your available resources, which include your time, energy, and money. Chapter 3 helps you decide what kind of planning process to embark on.
Well-laid plans take time to implement. And results take time to yield an outcome. Chapter 14 is all about action. When an organization pauses to plan, issues that have been buried or put on the backburner come to the forefront and can easily derail your planning efforts. Make sure that your company is in order and that there are no major conflicts before you embark on strategizing.
Chapter 3 and 7 help you to identify if you have any organizational issues that will derail your planning. Organizations are unique, complex, and diverse. You need to find your own path instead of following a cookie-cutter approach.
What are the components of a strategic plan? Think of the frameworks as different lenses through which to view the strategic planning process. Your strategy is where your organization is headed, what path it takes, and how it gets there.
The strategy is external. You gather information from your customers, competitors, industry, and environment to identify your opportunities and threats. The financial, internal business processes, and people areas are internal.
The customer area is external. Chapter 12 elaborates on this framework and the Balanced Scorecard. Built into your strategic plan is a market-focus framework because of how critical this is to your organizational growth.
Where are we going? How will we get there? This framework is explained in Chapter 3. What are the most frequently asked strategic planning questions? Strategic planning can create a ton of questions. The following sections cover the answers to the most commonly asked questions.
Who uses strategic plans? Everyone — or at least every company and organization that wants to be successful. Companies in every industry, in every part of the country, and in most of the Fortune use strategic plans.
Organizations within the nonprofit, government, and small to big business sectors also have strategic plans. See Chapter 3 for statistics for how widely strategic planning is used as a management tool.
Does every strategic plan include the same elements? Plans may vary in detail and scope depending on how big the organization is , but for the most part, a strategic plan includes the basic elements listed above. Just exactly what is strategic planning? The term strategic planning refers to a coordinated and systematic process for developing a plan for the overall direction of your endeavor for the purpose of optimizing future potential. What could we sell in the future?
The central purpose of this process is to ensure that the course and direction is well thought out, sound, and appropriate. In addition, the process provides reassurance that the limited resources of the enterprise time and capital are sharply focused in support of that course and direction.
The process encompasses both strategy formulation and implementation. What is the difference between strategic planning and long-range planning? The major difference between strategic planning and long-range planning is in emphasis. Long-range planning is generally considered to mean the development of a plan of action to accomplish a goal or set of goals over a period of several years.
The major assumption in long range planning is that current knowledge about future conditions is sufficiently reliable to enable the development of these plans. Because the environment is assumed to be predictable, the emphasis is on the articulation of internally focused plans to accomplish agreed-on goals. The major assumption in strategic planning, however, is that an organization must be responsive to a dynamic, changing environment. Therefore, the emphasis in strategic planning is on understanding how the environment is changing and will change and on developing organizational decisions that are responsive to these changes.
Does every company need a strategic plan? Every endeavor or enterprise already has a strategy. These range from some vague sense of the desires of the owner to massive, overly sophisticated master plans. The answer is yes. We are highly successful already, so why should we plan? Success is strong evidence that a company has had a sound and appropriate strategy. Note the past tense. Can a smaller company afford the time for strategic planning?
Experience shows that the top management team devotes approximately 2 to 4 percent of its time to practical strategic planning. Indeed, in the long run, you save time. But understand, strategic planning can become a time trap. You can become caught in a long slog of planning if you get too mired down in the details.
From the outset, you need to establish that the plan is a living document and that it is not written in stone. By doing that, you can avoid strategic planning becoming a time trap. Your efforts in forward planning can become pointless if you fear that the plan may be overwhelmed by unanticipated events and developments.
Uncertainty is, indeed, a major problem in forward planning. However, the greater the uncertainty, the greater the need for good strategic planning because you want to try to be ready for the unknown. How can we be confident that our planning will be successful? But this book helps you avoid these many pitfalls.
Strategic planning is worth the effort because it helps you run your organization better. You can be confident that the information and best practices outlined in this book result in a successful strategic planning process. I promise! What is strategic thinking? Most business 17 18 Part I: Laying the Foundation for Your Strategic Plan owners and executives have countless excuses for not having a formal strategic plan. Of those that have a plan, only 10 percent actually implement it. Vision: Bringing things into focus You get what you focus on.
Everyone knows this, but most companies are busy tending to the urgent problems of the day and not focusing on key longterm issues. Unless your staff can focus on a common vision, the company can go nowhere. A strategic plan helps direct energy and guide staff toward a shared goal in an ever-changing world.
Yes, and to help find your true north check out Chapter 6. Mission, goals, and objectives: Empowering employees The mission statement, goals, and objectives are the roadmap in a strategic plan to empower your employees to be more effective and you too, for that matter.
They provide the framework for independent decisions and actions initiated by departments, managers, Chapter 1: What Is Strategic Planning Anyhow? Head to Chapter 6 for more info on developing your mission and Chapter 12 for developing your roadmap.
See Chapter 14 for more info on helping your employees be more efficient. Execution and evaluation: Ensuring success A strategic plan is a living, dynamic document. It drives your business and must be integrated into every fiber of your organization, so every employee is helping to move the company in the same direction. You really should clean more often. Know what your end result looks like and where your milestones should be.
Plan your near term actions and evaluate your progress each quarter. The course correction to put you back on track becomes your next action plan. Check out Chapter 14 for more on this topic. Diversity leads to a better strategy. Bring together a small core team — between six and ten people — of leaders and managers who represent every area of the company.
We tend to try to squeeze strategic planning discussions in between putting out fires and going on a much needed vacation. But to create a strategic plan, your team needs time to think big. Do whatever it takes to allow that time for big-picture thinking including taking your team off-site.
This tip includes you — the CEO. See Chapter 14 for more on this topic. Hire a trained professional who has no emotional investment in the outcome of the plan.
An impartial third party can concentrate on the process instead of the end result and can ask the tough questions that others may fear to ask. To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, accountabilities, and specific deadlines. And everyone must understand the plan and their role in it. Good strategic plans are fluid, not rigid and unbending. They allow you to adapt to changes in the marketplace.
Review the strategic plan for performance achievement no less than quarterly and as often as monthly or weekly. Focus on accountability for results and have clear and compelling consequences for unapproved missed deadlines. You ask your partners or management team the same question, and you hear wildly different answers.
More importantly, neither can anyone else. You find that when you explain your business to a potential client, you tell different stories about how you provide value. In fact, you normally pursue all opportunities for fear you may miss the big one.
You rely solely on word-of-mouth for new customers. And you notice your staff complaining too. Do any of these statements sound familiar? Having a strategic plan and a succinct strategy brings clarity and focus to your organization. Why not get strategic now and make it your most successful year ever? Forget about failure rates and all that garbage. This chapter gives you many reasons why you should care about strategic planning.
If you or your boss need convincing, the statistics as well as the intangibles are covered in the sections that follow. A peek at what high-growth organizations are doing can show you how planning impacts your growth. Reason 1: Strategic Planning Is the Leading Management Tool Over the past dozen years, you may have witnessed an explosion in the use of management tools and techniques — everything from Six Sigma to benchmarking. As new tools appear every year, others seem to drop off the radar screen.
The objective of the study was to provide managers with information to identify and integrate tools that improve bottom-line results as well as understand their strategic challenges and priorities. Bain has assembled a database that now includes 7, businesses from more than 70 countries in North America, Europe, Asia, Africa, the Middle East, and Latin America. To qualify for inclusion in the study, a tool had to be relevant to senior management, topical as evidenced by coverage in the business press, and measurable.
The results? Out of all the tools used, 79 percent of respondents use strategic planning. In fact, strategic planning is a long-time favorite tool, having been used by more than half of companies in every survey since Bain started this project.
Not surprisingly, the most popular tools are the ones that create the highest satisfaction ratings. Respondents were most satisfied with strategic planning out of all 25 tools. See Figure for details. That year after year, strategic planning is used by companies worldwide with very high satisfaction rates.
For more information on this study, check out the following Web site: www. Reason 2: Failing to Plan Is Planning to Fail If organizations fail to anticipate or prepare for fundamental changes, they may lose valuable lead time and momentum to combat them. Many times businesses achieve a level of success and then stall. Strategic planning helps you to avoid the stall and get off the plateau you find yourself on. Accidental success is dangerous. Succeeding without a plan is possible, and plenty of examples exist of businesses that have achieved financial success without a plan.
Employees who see aimlessness within an organization have no sense of a greater purpose. People need a reason to come to work everyday besides the paycheck.
Lack of direction results in morale problems because, as far as your employees are concerned, the future is uncertain, unpredictable, and out of control. These depressing conclusions can only be seen as a threat to employment, which negatively impact productivity. To avoid these dangers, you need to get rid of the naysayers including possibly yourself. Reason 3: The Best of the Best Do It High-performance organizations have fundamental differences that set them apart from other organizations.
Anecdotally, these companies are better than their competitors at everything they do. They work more diligently and incessantly to improve faster than their competitors. There are tons of studies out there that dig into the hows and whys of companies that are ahead of the pack.
But instead of getting lost in the details and differences of these studies, take a look at the basics. At the end of the day, high-performance organizations accomplish extraordinary results, and they do it with ordinary people.
Instead, your goal should be to transform your organization in such a way that your people are capable of delivering high performance every minute and every hour of every day. What makes great companies great Becoming the best at something is often achieved by modeling the behaviors of winners and putting those behaviors into practice. An example of a high-performance company is a mid-sized graphics and print shop in Georgia.
Its mission includes total focus on customer solutions. According to the owner, the employees practice the mission, not just preach it.
To support that action, the company enables all employees to be responsible and accountable for serving its customers. Not to mention that the employees are proud of their work and take rightful ownership of their accomplishments. To that point, they perform extraordinary work. What are successful CEOs spending their time on? Have you ever wondered what the guy next door is doing all day?
If you could just be a fly on the wall in the offices of some of the Inc. The Inc. To be eligible for Inc. The majority of the Inc. Most importantly, they take the time to reward themselves and others based on the achievement of the goals and action. Granted, 50 to 90 percent is quite a large margin, but it gives you an idea of how these CEOs spend their time.
And strategic planning helps. The benefits to strategic planning are both intangible and show hard bottomline ROI. The day-to-day impact Every day your work impacts aspects of your business. In the next sections, you discover the true day-to-day impact of having a strategic plan in place.
Spend more time on high impact, high-growth activities High impact, high growth activities are where you want to spend as much time as possible. With these maneuvers, you spend less time spinning your wheels. Think back on the past month. I bet there were. Get rid of this dead weight as fast as possible! You want to pursue true opportunities and quickly throw out false starts. Strategic planning helps you to put the boundaries on your business. When you ignore extraneous distractions, you use your resources more effectively and more quickly to grow your organization.
When everyone on your team is on the same page and is pulling in the same direction, you can easily absorb shifts, make changes, and innovate on the fly. Be proactive instead of reactive Being in a reactionary mode all of the time puts you one or more steps behind your competition. Make sure that your strategic plan maps out proactive choices to propel your company forward.
Achieve your vision for success You started your organization for a reason. You likely have a vision for your business. You want to achieve your vision for success. Having a strategic plan makes success intentional.
Increase employee commitment Strategic planning increases employee commitment — especially in this tight labor market, helping your employees see the vision that you have for success and growth helps you work toward that goal.
The bottom line impact As business owners, you care about what falls to the bottom line. I do too. A major reason my company focuses on strategic planning is because it does make a financial difference. To verify this, in , we conducted a research study of strategic planning and strategy execution of firms in the United States.
The bulleted list below provides the results of that study and explains what you can expect to achieve as well. Note: To the reader who needs talking points to convince his or her management that strategic planning is profitable, this section is for you. If you compare these stats to the Inc. Many of the Inc. Your new bottom line To get you excited about strategic planning before you start, why not calculate your new bottom line?
With the quick formula taken from the results of the research above, you can see the potential impact you can expect. Chapter 2: Why Strategic Planning Impacts Your Growth Figure and Figure provide you with a worksheet to calculate how profitable strategic planning can be to your business. Figure looks at sales volume or revenue, and Figure deals with net income. Adding them together is like double counting.
Figure Calculating the impact of strategic planning on your sales volume or revenue. Your Company a. Use your own sales volume, anticipated growth rate, and net income to determine the impact of strategic planning on your organization. Your Company Figure Calculating the impact of strategic planning on your net income.
Not ready to embark on a strategic plan quite yet? I understand. How about sticking your toe in the waters of strategic planning instead of diving in head first? Pick one and implement it. Drive the organization with big vision Growth requires thinking big and then executing like crazy. Success is ten percent inspiration and 90 percent persistence. But that ten percent is critical, otherwise the 90 percent is lost, aimless, and unproductive.
That way, you head in the right direction to meet your goals. Chapter 6 provides tons of examples of big visions and helps you to develop yours. A big vision is achieved through accomplishing big objectives and goals.
An example of a big goal is to be the best, number one, or leader in your industry. A small goal is to sell a set dollar volume in goods and services. Here a few best practices to help you establish big goals that get results: 1.
Objectives and goals must be understood. Everyone needs to understand how the people contribute to and impact the goals. The goals must be measurable and actionable by appointing someone responsible and having a due date.
Review regularly and hold people accountable. Create a culture that makes people feel responsible for not missing a deadline. Chapter 2: Why Strategic Planning Impacts Your Growth Celebrate wins Publicly share big accomplishments, milestones, project completions, and revenue goals.
Seek out new ideas Invite left and right-brained people into your organization to create a complete brain trust of skills and competencies.
Your left-brained folks bring the analytical perspective to the table. They think of things like analyzing data for discoveries and exploring parallel industries for new methods. The rightbrained people focus a bit more on creativity and can invent creative solutions, challenge the status quo, find hidden connections, and see new models. The sharing of ideas can have a huge impact on your business. Focusing is a never-ending struggle for entrepreneurs — too many ideas, too few resources.
In an increasingly competitive environment, growth comes from being great at one thing at a time. Succeed at one thing that you know customers need. That takes focus on the customer and focus on what you choose to do better than anybody.
Use your vision as a filter to keep out distractions. Empower through ownership Taking ownership is similar to accountability. Entrepreneurs like to build and own their work. They are achievement-oriented and take pride in results. Empower your people by assigning ownership. Recognition is the number one motivator.
You can unleash powerful output by clearly defining roles and responsibilities. Give ownership of key business metrics. Then give that individual or team the autonomy and authority to drive that revenue past the forecast! Neutralize negativity If you want your company to be successful, you have to squash the negative attitudes throughout the entire employee network. That attitude can bring sustainable growth to your company.
Consider how to avoid road blocks and road bumps along the way. What makes it less confusing is understanding how all the parts of a plan work together.
People refer to objectives as goals and to goals as objectives. Mission gets confused with vision and no one seems to know where strategies actually fit in. Then you have indicators, measures, metrics, targets. Each part has certain elements to show you how and where things fit it. For a visual on this discussion, see Figure How are we going to get there?
Figure The elements of a strategic plan. Why do we exist? What will our organization look like in 5 to 10 years from now? You may or may not choose to include your SWOT in your strategic plan but as supporting documentation.
What can your organization potentially do better than any other organization? Strategic objectives are long-term, continuous strategic areas that get you moving from your mission to achieving your vision.
What are the key activities that you need to perform in order to achieve your vision? Does your strategy match your strengths with how you will provide value and be perceived by your customers? Effective goals clearly state what, when, how, who and are specifically measurable.
What are the 1- to 3-year goals you are trying to achieve to get to your strategic objectives? Are your action items comprehensive enough to achieve your goals?
What are the key performance measures you can track in order to monitor if you are achieving your goals? Do the estimated revenue projections exceed your estimated expenses? But what matters most is having a strategy and therefore a strategic plan that is effective. Without it, what is the point of the plan or the organization? No objectives that are disconnected from goals and no strategies that sit all alone. Instead, give it life by breaking into executable parts. Plan by thinking about the organization as a whole entity and then implement on a department by department basis.
Make sure you have the resources to support the goals you decide to focus on. Where are we now? As you think about where your organization is now, you want to look at your foundational elements mission and value to make sure there has not been a change. More than likely, you will not revise these two areas very often. Some mission statements include the business of the organization. Others explain what products or services they produce or customers they serve.
Does your mission statement say what you do? Why does your organization exist? See Chapter 6 for more information about creating your mission. Values guide the organization in its daily business. What are the core values and beliefs of your company? What values and beliefs guide your daily interactions? What are you and your people really committed to? See Chapter 6 for a detailed discussion of values and principles.
These elements are crucial in assessing your strategic position with your organization. The elements of the question Where are we going?
Where are we headed? What is the future I want to create for my company? Because the future is hard to predict, you can have fun imagining what it may look like. Each company strives to create an advantage that continues to be competitive over the time.
What can you be best at? What is your uniqueness? See Chapter 5 for more on advantages. What will your organization look like 5 to 10 years from now? See Chapter 6 for info on refining your vision. The reason it takes so much time to develop is because there are a number of routes from your current position to your vision.
Picking the right one determines how quickly or slowly you get to your final destination. Holistic objectives encompass four areas: financial, customer, operational, and people. See Chapter 12 for more info.
This section explains how you travel to your final destination. Does your strategy match your strengths in a way that provides value to your customers? Does it build an organizational reputation and recognizable industry position? See Chapter 10 for info on different strategies. You can use goals, priorities, or initiatives interchangeably.
In this book, I use goals to define short-term action. Each goal should be specific and measurable. What are your specific, measurable, and realistic targets of accomplishment? See Chapter 12 for info on goal setting. They include start and end dates and appointing a person responsible. Head to Chapter 13 for a discussion on action items. Pick five to ten goal related measures you can use to track the progress of your plan and plug them into your scorecard.
For help with scorecards, head to Chapter How committed are you to implementing the plan to move your organization forward? Will you commit money, resources, and time to support the plan? See Chapter 14 to put your plan to work. Successful strategic planning and implementation require a keen understanding of how well your organization can adapt to this new process.
Introducing it at the right time is key to successful adoption. Assessing your readiness This is the point in your planning where it is critical to be brutally honest with yourself. Companies that jump into planning because they assume they are ready will likely fail somewhere mid-plan and derail the whole process. You can avoid this completely by honestly answering the questions in Figure These are the key areas for you to assess your readiness.
We have a commitment to clarify roles and expectations for all participants in the planning process, including who will contribute to the plan and who will be the decision maker. We have a team comprised of big picture thinkers, subject matter experts, and a strategic plan manager. Top-level manager is willing to be inclusive and encourage broad participation so that everyone feels ownership of the plan and energized by the process. We believe we have committed adequate organizational resources to complete the planning process as designed, for example, staff time, board time, dollars spent on the process and implementation.
Everyone understands the purpose of planning because we realize what it is and is not. We have consensus about the desired outcomes of the planning process. Figure Assessing your readiness. We have a culture that is open to looking beyond the status quo to find new ways of doing things; a willingness to ask the hard questions, face difficult choices, and make decisions that are best for our clients. We want to grow our organization. In my opinion, one of the most important questions is, do you want to grow?
At the end of the assessment, decide whether strategic planning is a go or no go. Refreshed examples and data sources for planning Updated "ten top plans" section CD includes new forms, worksheets, and resources If you're a small business owner, investor, or entrepreneur looking for expert guidance and friendly tips on developing and implementing a strategic plan to help your business succeed in any economy, Business Plans Kit For Dummies has you covered!
Keep ASP team members up to speed with this "quick study" Put all of your ASP Planning team members "in the know" with the Introduction Keep all of your team members on track with this visual reminder of the process This comprehensive OD resource is a powerful aid to consultants engaged in implementing strategic planning with organizational-planning teams. Rodriguez, deputy executive director, New York State Division of Equalization and Assessment Components of The ASP Kit: Applied Strategic Planning: The Consultant's Kit: Includes a page looseleaf binder containing 79 up-to-date strategic-planning activities to guide the planning team through each step of the strategic-planning process.
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