Your strategic plan should look as far into the future as you’re comfortable looking. But keep in mind, you need to be confident that your company’s environment will be stable during the period of time you choose. In the 1980s, Japanese automotive companies were looking out 40 years into the future—but this probably isn’t realistic for your organization. Most companies feel comfortable with a three- to five-year strategic planning horizon so long as they review their plan on a regular basis.
The strategic planner is typically the leader of this process. They will also need the help of a cross-functional team that includes members of the board or leadership, along with representatives from finance, human resources, operations, sales, and any other critical functions.
That said, we recommend not limiting the planning process to just senior management. If you want the plan to work, it must engage everyone to some degree. So while the leadership team may be more involved in final decisions, those decisions should be based on input gathered from managers and their teams. What are their thoughts on the future of the business? What do they think your company is doing well, and where does it need improvement? What projects are people working on and how are those contributing to the big picture? Including this type of feedback in your deliberations is the best way to gain buy-in around the strategic plan.
The frequency of plan review varies depending on the goal of the review:
We recommend setting up these meetings at the beginning of the year to ensure you hit these cadences. At the same time, determine the appropriate participants for each and send out invites. Monthly meetings might include a director from each department; quarterly meetings require a smaller set of leaders; and annual strategic retreats are usually reserved for the highest levels of leadership. Getting these meetings on the calendar early not only reserves the times, but also sets an expectation for preparedness.
As mentioned in #2, an annual review of your strategic plan helps ensure the key elements in your plan are still valid. If there’s been a significant shift in the marketplace, for example, you may need to reevaluate your high-level goals and objectives. Or, you may need to add new projects, change or update how you’re tracking KPIs, or change your KPI targets. Periodic strategy refreshes allow you to keep the elements of your plan that are valid and adjust the parts that are not.
Not necessarily. All organizations—even those with only two employees—need to spend time on strategy. If your company fails to prioritize strategic planning, it could get left behind during times of environmental uncertainty or in a tumultuous business market. So while your organization may not be large enough to have an entire strategic planning office or department, you do need to ensure that at least one person in your company has time on their calendar dedicated to your strategic plan.
No. That said, the Balanced Scorecard has proven to be a powerful and time-honored way to plan and execute strategy. Regardless of whether you stick to the Norton-Kaplan methodology or use a variation, understanding the basic principles of a BSC—having clear goals, linking your projects to those goals, and setting up leading and lagging indicators—could help your strategy immensely. And for any strategic planning model to work, you need to have the right goals and the right way to measure and achieve them.
Many companies aren’t sure how to begin developing a strategy—how do you see the best way forward? Here are two important questions to ask during strategic planning, both of which will yield important information that can help you chart a path:
Where are we now and where do we want to be?
As you get started with strategic planning, take the time to understand where you are now—your current business. Know the sales trends in every product/service area, the relative profitability of each of your products and services, the amount of money you have and will have/need in the foreseeable future, and your position relative to your competition, among other things. And because strategic planning is essentially a roadmap for the future, you also need to clearly describe the ideal desired outcome for your business.
Project forward five years—what do you want your business to look like? The greater clarity you have about where you want to be at a specific time in the future, the easier it will be for you to create a great business plan, or blueprint, that enables you to get from where you are today to where you want to go.
What obstacles lie in our path, and how do we go about removing them?
Every strategic plan will face risks and potential derailments. Some of these risks can be foreseen (for example, the internal weaknesses you discover as part of a SWOT analysis), while others cannot. This is one of the most difficult steps in developing a strategic plan, but the long-term success of the company is worth the temporary discomfort of having candid conversations. Management teams should outline the known risks along with financial impacts, and articulate the mitigation plans to prevent or curtail them. Sometimes, just identifying and removing one critical obstacle can turn your company into a more profitable enterprise.
Linking your operational work plan to your strategic plan is the ideal scenario. That way, the issues your department or division is focused on for the year are in line with your strategic plan.
This approach also allows for each department to see how their efforts directly impact your strategic goals, which adds an invaluable motivational element.
At each level in your organization—the enterprise level, division level, and department level—we recommend having 20-30 measures. We’ve found that a number in this range helps each level stay focused on what’s important, and review key data in meetings without distraction or fatigue.
Of course, 20-30 measures in every division described above could leave your company with hundreds of measures, but don’t worry—the goal is never to review every single measure in the organization at the same time. You should plan on reviewing only the information critical to your strategy in your department or division every quarter. That said, use common sense. If one of the measures at the division level above you or the team level below you is red, you might want to look at it before your review to make sure that it doesn’t impact your team.
The best way to make your strategic plan flexible is to have a clear distinction between your goals, measures, and projects, as this enables you to make changes, additions, or deletions more easily. Goals should be updated every one to five years, and measures should be updated every six to 24 months. Projects can be adjusted on a quarterly basis, with completed projects being rolled off and new ones added. At this time, you may also need to make changes to some aspect of a project, for example changing the end date or adjusting the budget.
Your strategic plan should touch a variety of departments and divisions. Even if you’re extremely well-organized, keeping track of all the data coming from different individuals and in different formats is very difficult. Some organizations attempt to use Excel or PowerPoint, but both of these tools fall short when it comes to strategy management. Excel was designed to track data, make tables, and run calculations, but it wasn’t designed to track progress over time, show qualitative analysis (comments), or link strategy elements together. PowerPoint is great for creating presentations, but you have to build a new deck for every monthly meeting. If you plan to use either of these tools, you can count on putting in hundreds of hours per meeting doing manual calculations, formatting graphs, updating versions, etc.
Automating the process with software like ClearPoint helps tremendously and will, in the long run, save your company a great deal of time and energy. Tracking and reporting tasks that would otherwise take days, takes only minutes with ClearPoint. Many of our clients have also found that managers are more inclined to stay on top of their metrics simply because the software is so easy to use. When you can produce more informative strategy reports in less time—and get people excited about metrics to boot—it’s a win all around.
What other key questions do you have about strategic planning? Shoot us a quick email or tweet us @clearpointstrat—we’d love to add your question to our FAQ list!