What Every Business Executive Should Know About Creating a Comprehensive and Executable Strategic Plan – Part 1
Business executives are always wanting to improve their company’s performance by laying out a better business plan and strategy. Many ask the question “where can I find a decent business plan template for the new year?”
- Have you given much consideration to the possibility that your strategic and operational plans may be far less effective than they could be?
- Do you know what your strategic plan should accomplish?
- How would you begin to measure the effectiveness of your current strategic planning process?
- Does your own planning process consistently define meaningful goals that get achieved as expected when the plan is followed?
This article is part one of a series that describes the components of a comprehensive business strategic plan and provides a checklist for evaluating strategic planning process effectiveness.
Strategic Planning is a misunderstood and often misused term, lacking a well-defined and widely agreed upon definition. Strategy, and the planning associated with it, has origins dating back to its military usage as early as the 6th century. In the corporate world, strategic planning generally refers to the defining of the organization’s go-forward plan for the future and accompanying desired outcomes. The spectrum of corporate strategic planning models and processes is broad, and the term has taken on many different connotations over recent decades.
The Opportunity Afforded By Strategic Planning
When strategic planning is done well, with a mature and robust process that guides the effort to ensure completeness – the outcomes can be powerful and position the organization to dominate the competition. Yet only a small percentage of organizations operate with mature planning models that yield complete and comprehensive strategic plans. The majority do not fully operationalize their strategy to get maximum benefit. Fully operationalized strategic plans are more comprehensive – going further than just defining business strategy by addressing all of the actions and resources required to implement the strategy, including:
- Timelines for the actions
- Required resources
- Metrics tied to goal accomplishment
- Accountability in goal-related initiatives
- Plan governance structures
- Scenario planning
- Risk mitigation
- Industry trend analysis
- Core competencies analysis
- Core values analysis
All of this provides the holistic picture of the existing landscape and the organization’s proficiencies within it. Such plans allow managers to monitor progress and remove impediments to goal accomplishment.
Data suggests that most organizations would certainly benefit from adopting a more formalized approach to strategic planning and that many companies have routinely failed to successfully and fully implement their strategic goals.
- The Harvard Business Review estimates the ROI from traditional planning approaches to be 34% or less.
- The Economist Intelligence Unit estimates that organizations realize just 60% of the potential value of their strategies.
- Kaplan and Norton research suggest that 90% of organizations fail to successfully implement their strategies.
While the statistics related to the effectiveness of strategic planning appear somewhat grim, they can be vastly improved by understanding the discipline of planning and setting on a coarse to improve planning methods by stretching the process further into the operations layer where execution takes place. Failure to execute on strategy has several root causes, which include:
- Poor prioritization
- Lack of detail planning to support strategic goal achievement
- Poor communication and coordination
- Poor change / transformation planning
- Strategy and culture misalignment
- Strategy and operations misaligned
- Plan goals lacking accountability
- Poor planning governance
- Ill-defined strategic goals
- Lack of risk identification & mitigation strategies
In the articles over the coming weeks, we will walk through various aspects of the strategic planning process and what a strategic plan should include.
(Saturday, Feb. 5 the next part in the series will be posted. One article will be posted every week on Saturday after Feb. 5 as part of “Strategic Planning Saturdays”)