Whether you’re new to strategic planning or have some experience, Pinnacle Solutions’ strategic planning overview provides leadership, experience, wisdom, and guidance in the processes supporting the development and execution of a business strategic plan. Pinnacle Solutions offers this guidance gratis in exchange for your input to us after you have read or used the material.
Business strategic planning can range from simple to complex and is compelled by a number of business drivers and influencers. The key drivers and influencers are as follows:
Marketplace Drivers – Marketplace Drivers represent those activities, trends, and influencers affecting your business, your suppliers, the economy, your customers, and your overall business performance. Marketplace drivers include for example raw materials availability and price, interest rates, supply and demand, mature or emerging markets, and innovation. For a classic example, simply consider the impact of emerging technological innovations on the business marketplace in the last ten years. Awareness of marketplace drivers and dynamics will be valuable to the first step in the strategic planning process detailed below. Marketplace drivers tend to affect modern global markets and may not always directly affect your industry or business.
Industry Drivers – Industry Drivers represent those activities, trends, and influencers affecting your industry. Industry drivers typically impact your business to a greater or lesser degree whereas marketplace drivers may not impact your business at all. Classic examples of industry drivers include regulation, deregulation, innovation, demand, and competition. The reintroduction of convertible automobiles in the 1970’s, Southwest Airlines’ innovative business model, and
Regulatory Drivers – Regulatory Drivers represent those legislative and regulatory agency requirements for doing business. These requirements affect business operations and related costs. Examples abound and include well known legislation such as the Sarbanes/Oxley Act and mandates from the Federal Trade Commission (FTC) and Securities and Exchange Commission (SEC). Strategic planning processes require an updated knowledge of these mandates and the preparation to execute strategies and tactics to remain compliant.
Shareholder Interests – Shareholder Interests represent the expectations of shareholders in either publicly or privately held business organizations. Shareholder Interests typically involve the expectation of a return on investment and a going concern (in the accounting sense). For business organizations with Shareholder interests, strategic planning and execution must account for activities that will further the business in such a way as to maintain or enhance shareholder return on investment and perpetuity.
Product Positioning – Product Positioning refers to the strategic efforts to create, modify, develop, and deliver products or services in response to demand. Strategic planning requires these efforts are carefully contrived, targeted, and measured to assure products and services yield the greatest return on investment. Marketing, Sales, Production, and Service groups within a business organization all have a stake in the strategic planning efforts for Product Positioning.
Financial Drivers – Financial Drivers refers to those financial performance objectives and measurements which strategic initiatives are designed to achieve. Financial strategies and budgets are an iterative component within the larger iterative structure of strategic planning. For example, a retail business organization with many retail outlets may use a 15 percent hurdle rate to determine whether stores are viable or not. Certain financial institutions are required to maintain liquidity levels, and most businesses have industry standard ratios which define a business organization’s success within the industry.
Internal Initiatives – Internal Initiatives include efforts such as R&D, Mergers and Acquisitions, plant and equipment modifications or divestitures to mention just a few. Internal initiatives affect the strategic planning process through funding and support of each initiative with dedicated company resources. Initiatives that are not mandatory in nature typically have expected rates of return or at least contribute to strategic positioning and are carefully weighed against opportunity costs before being adopted as a part of the strategic plan.
Customer Drivers – Customer Drivers represent the interests or demands of customers as discovered through customer contact, marketing surveys, complaints, complements, repeat business, or any other channel of customer input. Demand or the lack thereof, affects strategic plans and initiatives in sales, marketing, product management, and eventually, operations, finance, and can even affect HR. Forecasting and measuring customer demand fits into the strategic planning process as a central component and influencer of strategic planning and strategic initiatives.
Geopolitical Drivers – Geopolitical Drivers refers to those influencers that impact the business organization and are likely beyond the direct control of the business organization. Laws, customs, economics, and culture in foreign regions and countries hosting domestically based business organizations can impact strategies, strategic planning, and strategic initiatives. Unstable political situations abroad can sponsor a strategic review of a business organization’s position in the region and lead to abandoning a foreign operation. Recently, the abuse of workers engaged in the manufacture of products sold in America has compelled corporations to modify their strategies for outsourcing work abroad.
Each of these drivers and influencers is independently complex. Trying to deal with them collectively places the complexity at an exponential level and requires a more structured and methodical approach to build an iterative plan contributing to confidence and success.
There is no single best strategic planning ritual or approach, so just get started with something. Because strategic planning is inherently iterative, modify your approach as you go along with iteration after iteration until you have the single best approach for your organization. Pinnacle Solutions will offer two options for your review and consideration to get you started. One option will be a more informal approach and would be suited for small to medium sized business situations. The other option is a more formalized and contemporary approach used by larger organizations. Whether your business organization requires a more or less formalized approach, the basic steps described below are common and essential to the success of both approaches.
The steps to a structured approach include three iterative steps. The first step is a Strengths, Weaknesses, Opportunities, and Threats (SWOT) assessment. The second step involves the development of the strategic plan itself which includes:
·A set of realistic strategic initiatives,
·Measurements and Controls
The third step in the process involves the development of cascaded goals and measurements to create alignment and conscription to the strategic plan. Let’s consider the importance of each of these independently to get a better understanding of their role in developing a sound strategic plan.
Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis – The classic and simpler approach to a SWOT analysis holds an organizational view characteristically noted and broken into a four quadrant diagram. Each quadrant represents each feature (upper left quadrant for organizational strength characteristics, upper right for organizational weakness characteristics, lower left for organizational opportunity characteristics, and lower right for organizational threats characteristics). Strengths and Weaknesses are considered “internal” factors whereas Opportunities and Threats are considered “External Factors. The distinction is necessary for use later in the strategic planning process. The final SWOT analysis should represent a good reflection of your business organization’s current reality. Use the hyperlink to locate an example of a SWOT diagram and analysis reflecting product positioning for the Subway® corporation. Although this SWOT diagram is used for the narrower needs of product positioning, the same approach is taken to develop a strategic plan for the entire business organization. For consultative advice and guidance on the use of SWOT or advanced SWOT analysis in strategic planning please contact Leadership Pinnacle.
Gap Analysis – An optional opportunity to add value to the strategic planning and SWOT processes is to do a gap analysis. In a gap analysis, a comparison between the current state and desired state is charted to facilitate itemizing gaps between both states. The SWOT effort created the current state or current reality. By comparing the features in the SWOT analysis to a common perception of a future state reality for each of the same features your business organization will uncover the gaps between where you are now, and where you would like to be in the future. Now, using the gap analysis and the SWOT analysis, your business organization is ready to build a strategic plan.
As mentioned before, building the strategic plan is the second step in creating the overall strategic plan for your business organization. From your efforts in the SWOT and Gap analysis processes, your business organization should have a robust list of objectives and opportunities from which to generate a strategic plan. Remember that your final plan will have the best chance for success by assuring at least the following components are present in your organization’s strategic plan:
·A logically organized set of realistic strategic initiatives. Consider an organizational approach that works best for your business organization. A traditional organization of strategic initiatives would be portrayed hierarchically as follows:
oOverarching Strategy (Increase market share by 15%- VP Sales/Marketing)
§Supporting strategic initiative (Evaluate distribution channels for opportunities – Marketing Mgr)
·Action items (Evaluate the feasibility of resellers – VP Sales/Marketing )
·Action items (Evaluate new markets for opportunities – Contract Mktg Firm)
·Action items (Gain ideas and support from Sales staff – Sales Mgr)
·Action items (Review trade show kiosk for improvements – Sales Mgr)
·Action items (Test direct mail catalog – Contract Catalog Firm)
§Supporting strategic initiative (Conduct focus groups – Contract Survey Firm)
·Action items (Conduct three focus groups in market A – Market A sales Mgr liaison)
·Action items (Conduct three focus groups in market B – Market B Sales Mgr liaison)
·Action items (Conduct three focus groups in market C – Market C Sales Mgr liaison)
Other organizational opportunities include organizing chronologically, organizing based upon dependencies, or based upon the key drivers, and influencers mentioned above. Using a variety of views for the same data can also provide a different perspective on the entire plan. For example, a plan organized by key drivers and influencers may look completely unrealistic when viewed from a chronological perspective. Another approach to organizing your strategic plan is based upon urgency. For example mark strategic initiatives as (H) High Priority, (M) Medium Priority, (L) Low Priority, (U) Uncontrollable, or (M) Mandated. This approach will also provide a unique perspective on what is really important, where your organization will likely spend most of its time, and what can be deferred if necessary. Remember, even the uncontrollable items will have an impact on your organization so include them in your strategic plan to provide balance and reality.
·Initiatives owners. – Every initiative and supporting action item must have an owner(s). Two-deep ownership will provide continuity of purpose and performance should one of the principle owners be unable to fulfill his/her responsibility to the item.
·Timing commitments. Each initiative and supporting action item must have some type of time commitment. The type of time commitment can vary as follows:
oSpecific date (Completed by MM/DD/YY)
oDate range (Completed between MM/DD/YY and MM/DD/YY)
oDependency (Completed within 30 day of the last focus group)
oQuarter (Completed in the 4th quarter)
·Communication. Communication of the final strategic plan to all of those with a stake in the strategic plan’s success facilitates alignment to the ideals and direction behind the strategic plan. Periodic updates keep the strategic plan and the plan’s progress fresh in the minds of stakeholders. Periodic updates also facilitate review of the strategic plan’s progress and provide an opportunity for correction or modification. Carefully consider the culture of your business organization and the communication approach that would work best for your organization.
·Measurements and Controls. Measurements and controls work together to provide a basis for evaluating the progress of a strategic plan, strategic initiatives, and action items. Set appropriate measures and controls for initiatives and action items to assure their results have the intended impact.
·Follow up. Follow up on the progress of your strategic plan once your business organization’s strategic plan is complete; commit to periodic review points in the future. Your strategic plan needs and initiatives will likely provide a logical set of review points. If not, consider a quarterly or semiannual review.
Cascaded goals and measures represent the third and final stage in the development of the strategic planning process. As mentioned earlier, alignment and commitment to the ideals, initiatives, and action plans comprising the strategic plan is essential to the success of the strategic plan. On behalf of Leadership Pinnacle, Pinnacle Solutions provides support and guidance on creating an aligned organization through following link to Alignment Solutions. There your business organization will find the tools and leadership wisdom to value and confirm alignment within your business organization. Everyone in your business organization should have reflected in their personal goals some activity(s) that support and provide for the progression of each strategic initiative in the strategic plan. It takes hard work and communication to consistently provide the bottom-up connection between individual contributions and the accomplishment of an entire strategic initiative. There is a payoff for this effort in the form of alignment, commitment, mutual satisfaction, gain sharing, customer retention, and employee retention.
Now you have the basic idea and framework from which to start the iterative process of business strategic planning at a very basic level. There are more complex approaches and alternatives to developing a strategic plan that include a Blended SWOT, Budget Integration, and Critical Success Factor Analysis. Additionally, the “art” of building a strategic plan requires a sophisticated approach including building or synchronizing to Mission, Vision, Value, Organizational Culture, and Community to energetically and enthusiastically create a strategic plan that motivates and aligns the organization to turn vision into reality. For more information and support on creating your business organization’s strategic plan, or the use of more sophisticated approaches to strategic planning, please contact Leadership Pinnacle.
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