This is an original article from ArchPoint.
What is strategic planning?
Some call it “goal setting.” Others call it “business planning.” Labels for strategic planning are as varied as there are types of organizations. Regardless of what it’s called, we find most companies undertake some form of strategy work. Leaders assemble annually to discuss the good and the bad and decide organizationally what needs to be changed, stopped or started. They set goals and create a vision for the future. But the work shouldn’t stop here.
Good planning requires going a step further by actually putting a plan in place to deliver the future. Your vision may be crystal clear in your mind but for your people, that vision must be translated into an actionable, executable plan so they know how they contribute to making that vision a reality.
Growth and progress do not come to those who do not create plans to achieve growth and progress.
What is a strategic plan?
Most companies have a strategy, even if it is short term. But most companies do not have an executable strategic plan. If there’s one thing ArchPoint believes with passion, it’s that organizations must have a clear vision of their desired future and the steps to achieve that future. Otherwise, they risk churning at the same performance level or worse, declining.
A strategic plan includes five main elements:
- A well-thought-out statement of what the company wants to be in the next 3 – 5 years.
- A set of financial goals that keep the organization grounded in reality.
- Prioritized strategic choices to achieve the future vision of the organization.
- Applicable measures for each of the strategic choices to be able to gauge success.
- Detailed action plans for the next 6 – 12 months that define owners, activities and deadlines.
If strategy is the destination, a strategic plan is the map.
Why strategic planning is important
Given that a strategic plan is the map by which an organization achieves its goals, planning is crucial. Daily priorities often overtake long-term initiatives – and these longer-term, important items can get lost.
Planning is also important to prevent an organization from meandering aimlessly toward the future. You may reach your desired destination, but how long will it take? And how much time and energy will have been wasted trying to manage and work through the ambiguity? Strategic planning is important because it harmonizes roles, functions and activities so companies can efficiently move in the same direction to reach their desired destination.
Your employees need strategic planning. People are required to bring strategy to life daily. Your people must know the strategy, understand the plan to reach it and know how their work contributes. Leaders can take for granted that because they know the strategy, the organization will inherently know how to deliver the strategy.
Even if leaders do share and discuss the strategy, it doesn’t mean that people are aligned.
The benefits of strategic planning
Strategic planning brings focus among competing priorities and aligns organizations. It brings people together to discuss and wrestle with what and how to prioritize, allows for the opportunity to consider solutions to business issues and creates a unified vision for the company to communicate and share.
“You can survive without strategic planning, but you miss cohesion and discretionary effort. You don’t win the hearts of your employees when you expect them to do their job without knowing the bigger picture. Without being fully engaged, they will treat work as a job and not a career – a means to earn money versus a means to build something collectively,” says Amy Lazarus, ArchPoint Managing Director, USA.
If you asked your employees right now what your top 5 priorities are, could they tell you?
Below are just some of the benefits of strategic planning:
- Maintain focus on priorities. By integrating the strategic work into the daily activities, the strategic priorities won’t feel like an additional burden to the organization. The goal is to weave the two together.
- Enhance accountability. Creating ownership of the strategic plan throughout the organization is a win-win for the company’s leadership and its employees.
- Provide a means to track and measure performance. A strategic plan should connect measures of the organization to the teams responsible for carrying out the initiatives.
- Drive collaboration and discussion. The strategic plan is not set in stone but should be the foundation for strategic dialogue to stay competitive with changing external and internal conditions.
- Set direction and align your team. Good strategic plans bring the organization together and drive every level toward a common objective.
- Increase execution of long-term strategic growth. The first step is creating the plan but ultimately a well laid plan with detailed workplans leads to future growth and competitiveness of the organization.
Creating a strategic management routine
For a strategic plan to remain fresh and the organization agile, leaders must make strategy a key part of how they manage. By doing this, you maintain a balance between executing the plan and the inevitable changes that will need to be made. A strategic plan is not static, but something an organization can and should adjust based on changes in the marketplace and within the company. It is a benchmark that allows the company to self-assess and then adjust the plan to ensure its success.
Course corrections will be necessary, and so will a regular review of the strategic plan and progress. Companies that are truly successful in strategy implement a consistent management routine and review plans on at least a quarterly basis. Having a plan doesn’t remove your ability to adjust, instead it grounds the organization, and helps you pivot in the right direction.
How successful companies do strategy
Think of the company who is the most successful when it comes to strategy. What makes them the best? “Employee buy-in and involvement,” says Lazarus. “One client in particular is a great example – they started our method of strategic planning, OGSM, with the leadership team. Once they gained buy-in at that level, they rolled out the planning process to other levels and divisions. They also created a multi-year plan ensuring the strategic priorities and choices were understood at the executive level before sharing it further. It wasn’t forced, it evolved year over year as the organization acclimated to the structure.”
For Stephen Peele, ArchPoint Senior Partner for Strategy, what successful companies do differently is focus. “Companies that are successful concentrate on the key priorities – what’s really going to move the needle. They also have the ability to reconcile priorities across the business and utilize a dashboard to keep people focused.” Successful companies also walk the talk and execute their strategy in alignment with their commitments. Through process discipline and a sound management routine, what is agreed upon in a planning session is followed through to execution. Nothing motivates excellence more than delivering on commitments.
Strategic planning is only the beginning. The real work comes in bringing the strategy to life through the organization.
How to write a strategic plan
The strategic framework that we have found to work best in developing, aligning and deploying strategy is OGSM (Objectives, Goals, Strategy & Metrics). OGSM provides a direct line of sight to the overarching business goals and strategies of the enterprise. It turns something incredibly complex into simple words, numbers and actions that can easily be communicated throughout the organization. There are four main steps to writing an OGSM.
- Assess the current state of the business. An objective, honest assessment of where the organization is today is crucial to the success of strategic planning efforts.
- Define the future state of the business. Once a clear picture of where the business is today is established, the organization’s definition of future success should be agreed upon by the leadership team.
- Develop and prioritize the work. Once current state and desired future state are defined, leadership directs its efforts to the critical choices needed to deliver the future state through a strategic plan.
- Align, execute and manage the strategic plan. The plan must be indoctrinated into the daily activities of an organization for it to be successful. Strategic activity management is also necessary to ensure alignment endures.
Regardless of the framework you choose, every strategic plan should answer these questions.
How to test your strategic plan
For a quick strategy self-check, answer the questions below to see if your organization is on track for strategic success.
- Is your strategy in line with how your organization plans to grow? These two elements must not compete – work done in support of strategic execution must also support the means in which the company experiences growth.
- Are your financial goals connected to your strategy? If one of your financial goals is to increase market share, there should be strategic work devoted toward this goal.
- Are your priorities reasonable? Often resources committed to one priority are the same that are needed for another, so if your organization cannot logistically achieve the priorities currently set, you may need to scale back and reconsider your choices.
- Do you currently have or plan to build the capabilities needed to achieve your strategy? You cannot become the innovation leader in your market if you do not have the skill sets and resources required. Acquiring and/or building capabilities must be considered if the strategy requires it – or the strategy may need to be altered.
- Do you have a mechanism for maintaining focus and tracking strategy execution? Your people need a way to keep tasks on track – and they need one person assigned to oversight. Both a means to track strategic activity and a leader who manages it is fundamental to success.
View the original article.
Join IMEC and ArchPoint on March 13 to learn the next steps in developing and deploying your company's strategy using OGSM.
Developing Your Company's Business Strategy
March 13 | 8:00am - 12:00pm