Simplified Strategic Planning

By Steve Czerniak, Subject Matter Expert
SCORE of Southeast Michigan

Read that again! I said that I’d make it simpler, not simple. Running a business is a complicated thing. Being a leader is a complicated thing. Thinking ahead is difficult for most of us. Planning takes commitment. Unfortunately, plans are only valid and useful for a small period of time. They need to be reviewed and updated on a regular schedule.

No plan survives first contact with the enemy. (Rephrased) - Prussian military commander Helmuth van Moltke (1880)

I. PREPARE THE ORGANIZATION

The first thing to do is to get everybody ready to do the planning.

1. ORGANIZATION READINESS

Are the leaders ready? Everybody knows that if the leaders don’t believe in something, nobody else will either. My colleague, Jim Yeats, said it best. “I can tell wants important. Where are the leaders spending their time?”

Are the employees ready? Are the willing to get behind the plan and do whatever is required?

Does everybody have the skills they need? Should training be conducted to get them what they need?

Has a team charter been written for the planning team?

2. MISSION, VISION AND VALUES

When is the future? For most companies, it’s three to five years from now.

Mission - The Present - Image of the Firm; Product or Service; Market; Primary Customer Needs; Technological Areas of Emphasis; Values and Priorities

Vision - The Future - Strategic Intent

Values - Cultural Norms - Practical Habits; Acceptable Behavior; Filters

3. THE HEALTH OF THE COMPANY

Resources - Does the company have sufficient resources committed to the planning work and the work that will result.

Core Competencies - Does the company know themselves? Have they thought through what it is that separates them from their competition?

“1. Must Provide Superior Value/Benefit to the Consumer; 2. Should Not be Easily Replicated or Imitated by Competitors; 3. Rare; Something Not Found in a Competitor” - Harvard Business Review

II. ANALYZE THE ENVIRONMENT

Next we need to look at the environment and see what forces manifest themselves as challenges to the organization?

1. SWOT

Conduct a SWOT analysis including Strengths, Weaknesses, Opportunities and Threats. Look for events and trends.

Opportunities and Threats come from outside the organization (external). External Forces come from the Remote, Industry and Operating Environments. Opportunities are elements that the business could exploit to its advantage. Threats are elements in the environment that could cause trouble for the business.

Remote Environment - includes Social, Technological, Economic, Political, Legal and Ecological.

Industry Environment - Entry, Supplier Power, Buyer Power, Substitute Availability and Competitive Rivalry

Operating Environment - Competitors, Creditors, Customer, Labor and Suppliers

Strengths and Weaknesses are from inside the organization. Internal Forces come from People, Resources, Ideas, Marketing, Operations or Finance. Strengths are characteristics of the business that give it an advantage over others. Weaknesses are characteristics that place the business at a disadvantage relative to others.

People - Structure, Systems, Skills, Style and Symbols

Resources - Core Competencies; IT Systems; HR Systems; Suppliers/Subcontractor/Teammates; Intellectual Property; Credentials

Ideas - Information; Innovation; Intellectual Property; Employee Improvement Suggestions

Marketing - Internal Communications; External Communications; Product Catalog; Customer Relations

Operations - Value-Adding Processes, Methods, Materials, Measurement, Tools and Product

Finance - Health of the Business; Investment; ROI; Cost; Expenses; Cash Flow

2. PRIORITIZE CHALLENGES

In the course of doing the SWOT analysis, you’ll come up with many forces and their corresponding challenges. Unfortunately, the organization can only handle a few points to focus on at a time. A good target is ten.

Live or Die - RED (Respond or Shut Down  the Business); 

Extreme Impact - ORANGE (Critical to Meeting Strategic Objectives); 

Significant Impact - YELLOW (Important to Meeting Strategic Objectives); 

Some Impact - GREEN (May Cause Issues in Meeting Strategic Objectives)

Challenges can result in a need for action inside the company (business health, investment, culture) or outside the company (affect the environment, business direction, she the future).

III. THINK THROUGH EXPECTED SCENARIOS

Take the time to think through what could happen and what probably will.

1. BEST, WORST AND MOST LIKELY

What are the best, worst, and mostly likely scenarios that we envision?  Tell stories and illustrate what the future could look like. How will it look, feel, smell, taste and sound. How good could it be? How bad could it be? No kidding? What’s most likely? If it’s truly “most likely” then why think about anything else?

2. ACKNOWLEDGE RISK

Think about what could go wrong and how to address it. How likely is it to happen? What could happen if you take action? What could happen if you don’t take action? What are the Probability of Occurrence and the Severity of Consequences of the risks.

IV. IMPERATIVE ACTION PLANS

There’s not much worse than a strategic plan that doesn’t result in a plan of action. What’s it going to take to make the needed things happen?

1. GOALS

Goals should be written to be Specific, Measurable, Achievable, Relevant and Time Based (SMART).

Goals and objectives mean the same thing. If you look up the definitions and synonyms of each, you’ll find that one is used to define the other.

2. PROJECT PLANS

Define the Scope, Schedule, Cost, Risk (Action and Inaction). Also, look at dependencies between them. Think through the who, what, where, when, why, how and how much.

3. CHANGE STRATEGIES

Different approaches can be used to get people to accept change. Some examples include  removing the old thing to force them to use the new thing, operating both the new and old things to reduce risk, etc.

V. MEASURE OUTCOMES DESIRED

Think about what needs to be measured to ensure that the desired results are being achieved. If it’s important to your success then you need to keep an eye on the status and achievements.

You measure what you treasure. You get what you measure.

In their book, The Balanced Scorecard, Kaplan and Norton introduce the four quadrants of Financial, Quality & Customer Satisfaction, Internal Business Practices and Learning & Growth. In Strategy Map, they show how to think strategically about operational and tactical actions.

Some organizations use dashboards. This automobile metaphor tends toward the idea that gauges and other graphic representations work well to give people memorable perspective.

Be careful to ensure that you focus your energy on business Outcomes, not Activities or Outputs.

REFERENCE: McShane, S.L., Von Glinow, M.A., (2005). Organizational behavior: emerging realities for the workplace revolution (3rd ed.). New York: McGraw-Hill.About the Author

About the Author

 Steve Czerniak retired after a successful 37-year career as a leader and innovator. The last fifteen years were a series of opportunities that honed his skills as an internal consultant and “change agent.”  In retirement, he is a volunteer consultant and a SCORE Subject Matter Expert for the Southeast Michigan chapter.  His personal volunteer objective is to “derive personal satisfaction from helping others, and the organizations they operate, to develop and prosper.”