Several large-scale studies have shown that most organizations in the U.S. haven’t embraced strategic planning as a regular, ongoing, essential business process. Strategic planning is usually attempted with a half-hearted approach. Not surprisingly, these attempts produce limited results. Additionally, because many strategic planning processes are overly complicated, it’s common for leaders to be frustrated by the time and effort expended.
The good news is not all strategic planning processes are complicated, nor do they demand enormous effort. There are simplified models more appropriate for small and medium-size organizations. Unless you have a full-time strategic planning department, a simplified approach is probably better than a model developed for a Fortune 500 company.
The main reason to create a strategic plan is to have an agreed-on plan for the upcoming year. Beyond that is strategic in nature, which means the plan is aligned with the company’s stated direction. Plans that don’t take into account the strategic direction of the organization aren’t strategic plans; they’re just plans. The danger of not having a strategic direction is the likelihood that you’ll change course every year without getting anywhere. Plus, organizations without a clear direction will always struggle to find and retain good people because there’s a sense of frustration and anxiety associated with not knowing the plan. If for no other reason, employee retention is a great reason to commit to serious, ongoing strategic planning.
Imagine your company as a large cruise ship. Without a plan, the ship will just remain docked. The ship is still an amazing sight to see, and people may even pay to board the ship and enjoy its comforts, but it’s not going anywhere. With a short-term plan, the ship will embark on a journey. The excursion may be exciting and satisfy your desire for entertainment, but it won’t capture anyone’s attention for the long haul or tap into the deeper needs for fulfillment and satisfaction. But with a strategic plan, the ship, crew and passengers recognize they’re on a purposeful journey with a long-term destination in mind. Short- and medium-term plans exist, too, but they’re part of a more significant mission. Short- and long-term direction is clear, and all the benefits of being docked remain. The thrill of a short-term excursion is still intact. However, on top of everything else, a greater, more meaningful and longer-term plan exists. This is the value of strategic planning.
Working backward
Strategic planning works most effectively by beginning with the end in mind and working backward. One component of the strategic plan is the long-term direction of the organization, referred to as vision or strategic vision. It’s the imagined future of your organization at some point down the road, typically 10 to 20 years from today. When creating a vision, it’s often helpful to identify a specific goal. In the book “Good to Great” by business consultant Jim Collins, he uses the term BHAG to refer to the “big, hairy, audacious goal” associated with creating a vision. I encourage you to learn more about BHAGs and vision casting because it’s a critical component of leadership.
Once the long-term direction is set, mid- and short-term benchmarks are often easy to identify. For example, if your 20-year vision is to be one of the top three franchise operators in your industry, a 10-year benchmark could be to implement a successful franchise model with a growing group of franchisees. A five-year benchmark could be to launch the initial franchise model. A one-year benchmark might be to finalize your research and have a preliminary model ready for beta testing. The plans all begin with the end game in mind—the long-term direction.
Of course, vision is largely determined by an overarching organizational purpose, which is referred to as mission—the reason your organization exists. Often, the mission is unclear and, as a result, the vision is difficult to ascertain. Until the mission is clearly understood, vision is seen as random and devoid of meaning. In other words, mission is the starting point of the strategic planning process.
To support the strategic plan, I recommend a five-year rolling plan. This plan outlines all significant aspects of the strategic plan throughout the upcoming year, along with the four years following. Each plan is unique, so these plans shouldn’t follow defined criteria; however, common elements include projections for revenue, profit, people, facilities, major purchases, marketing, etc. This five-year rolling plan is updated annually as part of the annual strategic planning process.
The one-year plan is where the rubber meets the road. It’s an expansion of the current year of the five-year rolling plan but in a much more detailed format. The one-year plan is several plans combined into the plan for the upcoming year. Again, plans are unique in nature, but a typical one-year plan includes financial, operational, marketing, staffing and equipment plans.
The final piece to the strategic planning puzzle is accountability. Too often, plans are created but not implemented or implemented initially but abandoned or forgotten. Create accountability by committing to review and assess progress regularly.
There are two parts to this element. The first is a quarterly strategy review session to review the plan so concerns can be identified and actions taken. This meeting is usually a four-to-six hour review session. The second part is a weekly meeting to review information related to the plan. This meeting isn’t a full review of every aspect like the quarterly review session. It’s a quick scan to look for problems that could be addressed immediately.
Now go forth.
Featured Photo Illustration: ©iStock.com/Alex Belomlinsky
Harwood is the founder, president and CEO of Pro-Motion Consulting, a management consulting firm based in Farmington Hills, Mich. Reach him at phil@mypmcteam.com.
