At the beginning of the day it's all about possibilities. At the end of the day, it's all about performance. Most companies consider the possibilities, but only winners turn possibilities into performance. Cut through the clutter using this simple framework for strategic planning.
I have found that rather than debating definitions, it's simpler and faster to answer important questions about your business. So, you will see these questions noted to the right of each planning component.
Using this framework, here are three simple steps to turn a strategic plan into results:
Prepare
Your strategic plan is a primary vehicle for achieving your goals. Therefore, a useful strategic plan requires significant preparation to help ensure your return on investment. First, identify lessons learned from past strategic planning sessions. Ask yourself: "What should we stop, start and keep for our upcoming planning?" Next, define what you want to achieve with your strategic plan. Do you want to:
- Fine-tune your business
- Maximise untapped opportunities
- Transform your business due to rapid changes
Finally, collect data on the market, customers, and organisation so your team can spend their strategic planning time interpreting data, rather than debating perceptions.
Design a process
Many leaders view strategic planning as an event versus a process. Here are three practical ways to design a strategic planning process that focuses on execution:
- Hold quarterly strategic reviews
Use them to take a look back at how you performed against your strategic plan and to take a look forward to what you need to get / stay on track.
- Create a rolling plan
At each quarterly business review, add a new quarter to your plan. Rolling plans are more commonly used in budget planning, but they can be equally useful for creating a strategic planning process.
- Clearly define and manage your performance indicators
Every organisation has a variety of performance indicators. Consider a measurement continuum (see below). The two ends of the continuum represent the two types of performance indicators.
Lagging indicators are the results of your organisation's past performance - they enable you to see if your plans worked as well as expected
Leading indicators are the drivers of your organisation's future performance - they give you early warning signs of problems
Lagging indicators are important to help you understand how you have performed in the past. However, they must be balanced with leading indicators that tell you how your organisation will perform six, nine or twelve months from now. A singular focus on lagging indicators gives you little opportunity for corrective action if your team drifts off-course. Effective leaders look at both lagging and leading indicators of performance. This balanced view enables them to know what did happen and also anticipate what will happen.
Execute!
This step never ends. Your organisation's ability to execute your strategic plan, will determine your competitive advantage. Research from Fortune's Most Admired companies reveals that top companies set themselves apart because strategy is not an exercise; it is the focus of everything they do. Execution is easy to talk about, but difficult to do.
A clear leadership focus (and the resulting organisational focus) is a common theme for the most successful companies. Therefore, define one thing you will focus on to drive your strategic plan - keep it simple. Communicate your strategy tirelessly and shamelessly. Also, ensure that each initiative has a single point of accountability.
Remember, company performance is just a concept that is brought to reality by individual performance. The strategic rubber meets the road of execution at the individual level.