Fresh Thinking - Strategic Planning 2008
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DEFINING THE STRATEGIC PLANNING PROCESS: A TOOLKIT FOR EFFECTIVE IMPLEMENTATION
PREPARED BY FRESH THINKING CAPITAL PTY LTD 396 Florida Road Fearie Glen Pretoria East 0043 Tel : 012-991-4490 Fax: 086-610-7174 Email: [email protected] 2008
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DEFINING THE STRATEGIC PLANNING PROCESS Our aim in this Strategic Planning Work Book is to give you the tools to which will assist you in developing your own Organisation's strategic plan.
TABLE OF CONTENT 1
Chapter One - Benefits & Limitations of Strategic Planning............................ 3 1.1 What Is Strategic Planning? ............................................................................ 3 1.2 What Are Its Benefits? ..................................................................................... 4 1.3 What Strategic Planning Is And Is Not .......................................................... 5 2 Chapter Two - Debunking Eight Strategic Planning Myths................................ 6 3 Chapter Three – Overview of the Strategic Planning Model............................. 7 3.1 Meaning of the Strategic Plan........................................................................ 7 3.2 Strategic Planning Team ................................................................................. 7 3.3 Thoughts About the Strategic Planning Process ......................................... 8 3.3.1 Openness.................................................................................................... 8 3.3.2 Iterative ..................................................................................................... 8 3.3.3 Time commitment.................................................................................... 8 3.3.4 Big thoughts .............................................................................................. 8 4 Chapter Four – Strategic Planning Bedrock: Vision............................................ 9 5 Chapter Five – Strategic Planning Bedrock: Values ......................................... 10 6 Chapter Six – Strategic Planning Bedrock: Mission........................................... 11 6.1 What is Strategic Thinking? .......................................................................... 11 6.2 Clarifying Your Organization's Mission........................................................ 11 7 Chapter Seven – Determining Organizational Driving Force........................... 13 8 Chapter Eight – Organizational Strategy ............................................................ 14 9 Chapter Nine - Situational Assessment .............................................................. 15 10 Chapter Ten - Critical Issues Analysis............................................................. 17 11 Chapter Eleven – Defining Strategic Objectives ........................................... 18 11.1 Defining Strategic Objectives ...................................................................... 18 11.2 Developing Your Strategic Objectives ........................................................ 18 12 Chapter Twelve - Strategic Action Milestones.............................................. 20 12.1 There is one SAM summary for each SO..................................................... 20 12.2 Responsible person ........................................................................................ 20 12.3 Schedule .......................................................................................................... 20 12.4 Resources required........................................................................................ 21 13 Chapter Thirteen - What to Do When the Strategic Planning is Done? .... 22 13.1 Implement ....................................................................................................... 22 13.2 Communicate .................................................................................................. 22 13.3 Monitor. ........................................................................................................... 22 13.4 Update. ............................................................................................................ 23
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1 Chapter One - Benefits & Limitations of Strategic Planning Our goal in providing you with the Strategic Planning Tool kit is to allow you sketch a template for your own organization's strategic plan. Strategic planning is a powerful tool for laying out the template or roadmap for future success and should be in every manager's toolkit. In the chapters that follow we shall look at: What strategic planning is and is not Organizing the strategic planning process Who does it and how How long it takes End products Drafting and refining the plan Centrality of values, vision, mission & strategy Doing a SLOT situational analysis (strengths, limitations, opportunities, threats) Setting the strategic objectives (SO) which define the future state of the organization Developing strategic action plans (SAP’s) to lead to the achievement of these SO’s Communicating the completed plan to the organization Implementing and monitoring the plan Reviewing progress and revising the plan
1.1 What Is Strategic Planning? Strategic planning is a disciplined, creative process for determining how to take your organization from where it is today to where you wish it to be in the future. Strategic planning is fundamentally a decision making process, based on asking simple (but deep) questions, analyzing the range of answers, and choosing among them: What do we do? Where are we now?
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Where are we going? How will we get there?
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How did we get here? Why are we in business?
When will we get there? What will it cost?
This process encompasses the entire spectrum of issues an organization faces, ranging from the big ones of who you are, what you do, and what your corporate values are to the smaller but equally important ones that connect the focus on the future with the work that must be performed soon to move the organization forward.
1.2 What Are Its Benefits? The benefits of strategic planning are manifold since it: 1) 2) 3) 4) 5) 6) 7) 8)
Asks and answers questions of key importance to the organization Provides a framework for decision making throughout the organization Reveals and clarifies future opportunities and threats Sets specific objectives for achievement Provides a basis for measuring performance Serves as a channel of communication Develops a team which is focused on the organization's future Provides managerial training
The above benefits can be encapsulated in a single statement: Strategic planning aligns the total organization – people, processes, and resources – with a clear, compelling, and desired future state. What Are Its Limitations? While the benefits are manifold, unfortunately so its limitations: The future is uncertain and might differ substantially from expectations on which parts of the plan may be built. There will be internal resistance to formal planning due to multiple factors: a. Information flows, decision making, and power relationships will be perturbed. b. Conflicts within organization are exposed. c. Current operating problems tend to drive out long-term planning efforts. d. There are risks and fears of failure. e. New demands will be placed on managers and staff. f. Most people wish to avoid uncertainty. Planning is difficult, messy, hard work. Planning is expensive - in time and money. The completed plan limits choices and activities for the organization in the future.
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1.3 What Strategic Planning Is And Is Not "Strategic planning determines where your organization should be going so that all organizational efforts can be pointed in that direction." STRATEGIC PLANNING IS Human-based People's minds Principles Collective vision Commitment to planning Done by executives Risk enhancer Decision oriented Done in open Messy & controversial Proactive Deliberate Focused Way of life Roadmap to the future Creative
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STRATEGIC PLANNING IS NOT Process-based Set of rules Platitudes Personal vision Commitment to plan Done by planners Risk eliminator Task oriented Done behind closed doors Smooth & harmonious Reactive Quick Diffuse Single activity Next year's business plan Mandate
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2 Chapter Two - Debunking Eight Strategic Planning Myths Below are brief summaries of the eight myths. Myth 1. You need a documented plan. The value of planning is not the plan itself, but rather in developing a common language, articulating assumptions, and learning to make decisions together. Myth 2. A plan can describe all the things that must be done to succeed. Strategy sets the direction and context for subsequent actions and decisions by all in order to close the gap between where the organization is now and where it would like to be. Myth 3. Strategic planning is a formal, analytical process. Strategy is inherently a creative process, dealing with complexity and ambiguity. The plan is never finished - it is a living document. Myth 4. Plans are built solely on facts and hard data. A strategy is a set of assumptions about how the world behaves. Facts and hard data are used to test its validity. Myth 5. The planning cycle runs on your financial calendar. While planning may be part of an organization's annual cycle, whenever major events and changes occur, the plan should be immediately reexamined to test for the continued validity of its underlying assumptions. Myth 6. The work is over when the plan is done. Strategy must be communicated, put into action, and integrated with daily decision making. Myth 7. There is one right strategy. Strategy is about identifying and creating choices through conversations between stakeholders. Myth 8. There is one best process for building strategies. The key to successful planning is fitting the tools and techniques of planning with the organization's culture, capabilities, business environment, and desired outcome and then sticking with those tools and techniques for an extended period.
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3 Chapter Three – Overview of the Strategic Planning Model We outline a basic strategic planning model, suggest the composition of the planning team, and comment on the process. The strategic planning model we have found useful for most organizations has three phases: 1. Strategic thinking concentrates on establishing the planning bedrock of values, vision, and mission and on setting the grand strategy. This phase encompasses 40-50% of the planning effort. Resolving these "big" issues at the start gives a solid basis for smooth planning and for dealing with strategic issues as they arise during implementation. 2. Strategic planning assesses the Organization's current ability to reach its desired future in light of its competitive landscape, identifies the critical issues it faces, sets strategic objectives to address these issues, and outlines strategic action plans to realize these objectives. 3. Tactical planning focuses on the specifics of implementation and explicitly connects people and budgets with the strategic action plans. This phase is virtually synonymous with the annual planning and budgeting cycle.
3.1 Meaning of the Strategic Plan The plan focuses on the future. It provides a common direction for everyone, is an effective recruiting tool, can be shared with clients and prospects for marketing and with suppliers for effectiveness, and gives you the ability to track progress. A strategic plan is a living document, not something to be thrown on a shelf.
3.2 Strategic Planning Team The ideal size of a strategic planning team is 6-12 members plus an outside facilitator. Each team member should be chosen to represent different segments of the Organization, not just direct reports to the Director General. All members should have the respect of their peers. Senior, middle, and front line management should be represented. Members do not wear their "departmental hats;" they wear the "Organization hat" during the planning deliberations. One member, probably a younger one on the "fast track," should be charged with handling the internal logistical details for the planning process. © Fresh Thinking Capital Pty Ltd 2008
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An outside facilitator should be used to bring experience in the planning process, to give perspective on the future, and to allow all team members to work as equals. The Chief Director has a prominent role in the planning team, sets the context, endorses the result, but remains enough in the background that the ideas of others may emerge. This is not an easy task for most Chief Director/Head's and is another compelling reason for using a skilled outside facilitator.
3.3 Thoughts About the Strategic Planning Process 3.3.1 Openness The strategic planning process should be an open one within the Department. While it is usually not practical to have everyone who wishes to attend the planning meetings, the ongoing results should be available to all employees, for example, via the Organization's intranet, through broadcast e-mail, or simply a loose-leaf binder at the receptionist's desk. Critiques and suggestions should be welcomed from all.
3.3.2 Iterative While there is an underlying logic and flow to the strategic planning process, the plain fact is that planning is a highly iterative process. Almost at every step, the team must revisit earlier steps to ensure consistency and revise accordingly.
3.3.3 Time commitment For a typical Organization, 3-6 months is required to develop a strategic plan, with 6-10 all-day meetings and a couple two-day retreats. Team members must also work on the plan between meetings, so the Director must ensure they are given the "space" to permit their concentrated efforts and to encourage their personal commitment to both the process and the end
3.3.4 Big thoughts If there is ever a time to decouple everyone from the everyday concerns of running the normal business and to think truly big thoughts, this is the time to do it. The Chief Director and outside facilitator both have an obligation to see this is done by all.
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4 Chapter Four – Strategic Planning Bedrock: Vision Clarifying your Organization's vision creates a lodestar to lock onto, inspire your efforts, and give meaning to your very existence. Strategic thinking - the first of three phases in the strategic planning model provides the basis for subsequent planning and guides you in dealing with strategic issues as they arise later. It embraces the planning bedrock of vision, values, and mission and the grand strategy. Vision is the first element in the planning bedrock. It is the fundamental reason your Organization exists - the why of your being. Vision is crucial in laying a solid foundation to guide the future development of the Organization. Vision is the concrete statement of your ultimate dreams for the Organization or for the world that you can impact through it. Clarifying one's vision is a deceptively difficult task. Ideally, it should be: Future oriented Easy to understand and remember Reflect your Organization's uniqueness Ambitious Creative Inspiring Brief - try for ten words or less.
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5 Chapter Five – Strategic Planning Bedrock: Values Ultimately your Organization rises or falls by the values you live by in all circumstances. Strategic thinking - the first of three phases in the strategic planning model provides the basis for subsequent planning and guides you in dealing with strategic issues as they arise later. It embraces the planning bedrock of vision, values, and mission and the grand strategy. Values are the second element in the planning bedrock. They reflect your character and your corporate culture - the how you do what you do. Values are long-lasting. They affect all that you do. Values are your convictions on how business is to be conducted and people are to be treated, inside and outside the Organization. Organizations are like people. The good ones stand for something positive and know why they stand for it. They live out their values consistently day to day, impacting others by their example. Ideally, values should be: Few in number Shared by all Inspiring Clearly understood It is relatively easy to develop a list of important values. It is hard to home in on the few that make a difference in your Organization. It is harder still to capture the nuances these values evoke in the minds of your employees.
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6 Chapter Six – Strategic Planning Bedrock: Mission Your Organization's mission clarifies what you do and guides your everyday efforts and decision making.
6.1 What is Strategic Thinking? Strategic thinking - the first of three phases in the strategic planning model provides the basis for subsequent planning and guides you in dealing with strategic issues as they arise later. It embraces the planning bedrock of vision, values, and mission and the grand strategy. Mission is the third element in the planning bedrock. It translates your vision and values into something tangible - the what of your existence. Mission guides your everyday efforts and is the touchstone for decision making. Mission is the products or services you provide, for whom, where, and how. Clarifying your mission is vitally important, precisely because it forces you to state unambiguously what you do. Equally important, it also defines what you do not do! Ideally, your mission should be: Focused Clear Specific Distinctive Short
6.2 Clarifying Your Organization's Mission Perhaps the easiest way to put your arms around what your mission should be is by answering a series of questions. 1. 2. 3. 4. 5. 6. 7. 8.
What business(es) are we in? What business(es) could we be in? What business(es) should we be in? What business(es) should we not be in? What is unique or distinctive about us? Who are and should be our principal customers, clients, or users? What are and should be our principal market segments? What are and should be our principal products and services?
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9. How do we and should we distribute our products and services? 10. How has our business changed in the last three to five years? 11. How has our industry changed in the last three to five years? 12. How is our business likely to change in the next three to five years? 13. How is our industry likely to change in the next three to five years? 14. What are the key measures of our success and how do we use them?
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7 Chapter Seven – Determining Organizational Driving Force Your Organization's driving force is the dominant factor influencing your decision making and central to setting your strategy. A powerful technique for determining your organization’s strategy (the ultimate goal of strategic planning) is to consider its driving force. They define the driving force as “the primary determiner of the scope of future products and markets.” Your driving force is the dominant factor that most influences the making of major decisions. In our own strategic planning engagements, the following 8 driving forces seem to cover most organizations, with examples of organizations allied with each driving force. 1. Products offered – produces specific products (things) for its markets. 2. Services offered – delivers specific services (human efforts) for its market. 3. Market needs – focuses on meeting the needs of specific markets. 4. Customer needs – focuses on meeting the needs of specific set of customers. 5. Technology – applies its technological capabilities in innovative products or services. 6. Human resources – leverages its employees’ specific qualities, skills, or training. 7. Service capability – leverages the depth or uniqueness of its employees. 8. Image – seeks to maintain a specific organizational image within its markets and the products or services it produces. It is a rare Organization that can look at the above list and say, "Of course, it's obvious that our driving force is ___." The discussion might start that way, but you can bet that someone else will jump in to throw cold water on that driving force and suggest another. Indeed, our experience is that some of the richest, most vigorous, and deeply contentious debates in the entire planning process take place when the planning team tries to identify their driving force.
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8 Chapter Eight – Organizational Strategy Your organization’s strategy is the direction you choose to follow to reach your vision and is central to all business decisions. Formulation of your strategy is the last of the four "big" statements that constitute the strategic thinking portion of strategic planning. They set the stage for the more analytical portion of planning and ultimately for the setting of strategic objectives. Let's review the three elements of the planning bedrock first: Vision - the concrete statement of your ultimate dreams for the Organization or for the world that you can impact through it. Values - your convictions on how business is to be conducted and people are to be treated, inside and outside the Organization. Mission - the products or services you provide, for whom, where, and how. It is strategy that connects the present to the future. Strategy is a direction, a pathway, chosen from amongst many possibilities. It is intimately connected to, indeed, it is based on your planning bedrock: Strategy is the particular means by which you seek to fulfill your mission and to move toward your vision, within the context of your values. Your strategy flows from your driving force. Your driving force is the dominant factor in making your major decisions. The secondary or tertiary driving forces can legitimately be considered as decision influencers and can find their way into your strategy statement if they are strong enough. The driving force analysis is not the only way to determine strategy, but it certainly is the most thorough and analytical, even if only to confirm the obvious. Experience, however, suggests that the "obvious" isn't always so. The extra time expended to be more analytical is usually worthwhile. Even with a sure confidence in the validity of your driving force, it is still a matter of great creativity to select a strategy that is consistent with your vision, values, and mission. In future Chapters, we'll take a detailed look at your internal and external influences, so that you can determine which factors are most important in setting your strategic objectives.
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9 Chapter Nine - Situational Assessment Once the big issues of vision, values, mission, and strategy have been determined, it is time to assess the internal and external factors affecting your business. A situational assessment requires a hard-headed look at all the factors affecting the future success of your business, as they relate to your vision, values, mission, and strategy. Once these are identified, you then select those factors which are most critical and develop long-term objectives to address them. There are several approaches we could use for the situational assessment. In this Chapter, however, we will follow the SLOT assessment, the most popular situational assessment method and the most highly structured. It looks at all the positive and negative factors inside and outside your organization that affect your success. By definition, strengths and limitations are considered to be internal factors, over which you have some measure of control. Also by definition, opportunities and threats are considered to be external factors, over which you have essentially no control.. Internal factors: Strengths Limitations/Weaknesses
External factors: Opportunities Threats
Strengths are the qualities that enable you to fulfill your organization’s mission. They can be either tangible or intangible. They are what you do well, the qualities your employees possess (individually and as a team), and the unique characteristics that give your organization its coherence. They fall into four broad categories: Human competencies Products & services Process capabilities Financial resources
Limitations/Weaknesses are the qualities that keep you from fulfilling your mission and reaching your full potential. They are those activities, services, or other factors that do not meet the standards you feel should be met. They are controllable. You want to eliminate or minimize them. They fall into the same four broad categories as above.
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Opportunities are presented by the environment within which your organization operates. Selecting the targets that will best serve your clients while bringing you the results you desire is not an easy task. Developing plans to address opportunities begins with a list of those available to you. They fall into four broad categories: Markets/customers Competition Industry/government Technology Threats are external to your organization. They compound your vulnerability when they relate to your limitations. They are not controllable. When a threat comes, your stability and survival can be at stake! They fall into the same four broad categories as above.
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10 Chapter Ten - Critical Issues Analysis A simple process for selecting your 5-7 critical issues to focus your strategic plan is presented. Last time we used the SWOT (strengths, limitations, opportunities, threats) methodology to conduct a situational assessment. It's common to produce many dozens of issues that need addressing, variations of which may be found on several of the four categories. You must now winnow these many dozens of issues to a half dozen critical issues in order to tighten the focus of your strategic plan. If you select too many, this focus is severely diluted and subsequent actions will bear less fruit. Step 1. Discuss At this stage there are probably 10 or 15 sheets of butcher paper stuck on the walls full of issues for all to see. Discuss the similarities and contrasts of the issues listed to ensure everyone understands what is behind each. This will usually lead to some consolidation or restatement of issues. Step 2. Stabilize the critical issues The facilitator restates the 5-7 critical issues and stresses that all subsequent planning will be done solely around these issues. No other issues will be the subject of the Organization's strategic focus, nor will they be discussed during the remainder of the strategic planning process.
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11 Chapter Eleven – Defining Strategic Objectives The strategic planning tire meets the road when you develop 6-8 strategic objectives to pursue in the coming years.
11.1 Defining Strategic Objectives You have come a long way in your planning process and are nearing the finish line. In the last Chapter you identified 5-7 critical issues facing your Organization. In this Chapter you will develop specific, measurable strategic objectives to pursue in the coming years which address these critical issues. Most authors refer to these as "long-term objectives,". Strategic objectives typically, though not always, have multi-year timeframes for their achievement and are multi-functional, i.e. they require concerted efforts by people from many different parts of your Organization. Strategic objectives (SO's) begin with such words as "to have," "to be," "to become," or "to achieve" and end with a specific year by which the SO will be met.
11.2 Developing Your Strategic Objectives You develop your strategic with reference solely to the critical issues you identified in the last Chapter. Begin with the highest priority critical issue and discuss ways to address it. When your ideas begin to gel, write an SO in the above format. Make them positive in concept and wording. Focus on the achievement to come, not on the shortcoming or problem in the present. Since you might draft two or three SO's for each critical issue, you can easily end up with 15-25 potential SO's. Once again, you must prioritize them and choose 6-8 SO's to drive the future development of your Organization. This discussion and prioritization process is markedly similar to the one you used in settling on your critical issues, so we advise following that technique. When you have completed this prioritization, you may well find that one or more of the critical issues has no associated strategic objective. Don't worry! If you have followed the process well, then the 6-8 SO's you chose are the best ones. Resist with a passion the temptation to add more SO's so that all critical issues are addressed, which can easily balloon the SO's to a dozen or more. There is no quicker way to kill the vitality of a strategic plan than this! The only way for SO's to be special and to serve as focal points for your
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Organization's development is to have few of them. Otherwise, efforts are diluted, and achievements are diminished. We suggest validating your SO's against six criteria: 1. 2. 3. 4. 5. 6.
Is it measurable or verifiable? Is it achievable or feasible? Is it flexible or adaptable? Is it consistent with the rest of your strategic plan. Does it stretch your people without breaking them? Is it clear, easy to understand, and inviting to achieve?
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12 Chapter Twelve - Strategic Action Milestones The strategic action milestones link your objectives to your people and your resources. Strategic planning sets the context for the organization to do certain things. These are ultimately encapsulated in strategic action milestone summaries (SAM’s) which identify the 4-8 milestones – major events, phases, or accomplishments – that must take place in an orderly fashion for the SO’s to be met, who will be responsible for each, when they are to be accomplished, and what they will cost in both time and money. SAM’s provide the final link from mission, strategy, and objectives to two vitally important factors: Development and deployment of your people Expenditure of financial resources
12.1 There is one SAM summary for each SO With most of our clients, a “Strategic Action Milestone Summary” template based on a simple spreadsheet format helps to visualize and organize the flow of effort and resources to achieve each strategic objective. Some organizations who routinely use project management software find a project management template better meets their needs. (We would be happy to provide these templates to anyone interested.)
12.2 Responsible person While each milestone (by definition) represents a significant accomplishment and will in all likelihood involve many people, one person is to be charged with orchestrating its achievement.
12.3 Schedule Each milestone’s achievement needs to be scheduled. In early drafts, one normally targets quarters for starting and completing one. When all SAM’s have been drafted, then the personnel and financial resource loading can be determined and adjusted accordingly.
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12.4 Resources required. Capital resources are equipment, facilities, acquisitions, or other major investments not covered in the normal budget. Operating resources are other needed monies not covered in the normal budget. Consultants and other outside service providers would fall under operating resources. Human resources refer to the internal hours to complete the milestone. If staff must be added to the organization, their costs must be included in the operating column. Report progress to the person or, in some cases, the board or other policy group that the responsible person will periodically report progress to and receive support and resources from.
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13 Chapter Thirteen - What to Do When the Strategic Planning is Done? The objective of strategic planning is ultimately to act. Here's what to consider as you roll out your plan for implementation.
13.1 Implement This point seems to be obvious, but is terribly important. The hardest part of strategic planning is to do what you planned and to be alert to the inevitable opportunities for action that are clearly better than your plan (and to adjust your plan accordingly). Implementation takes a certain amount of discipline, will, and change from your usual business practices. The aim is to have your strategy deeply and seamlessly embedded in your daily, weekly, and monthly routine. The plan should guide your activities, underlying all you do.
13.2 Communicate The strategic plan should be shared with everyone in your Organization, as well as with other stakeholders – suppliers and subcontractors, customers and clients, alliance partners, community and government Organizations. The more people who know what you are trying to achieve, the more ideas will bubble up, sometimes from unexpected places. Appendices which might include your strategic action milestones or budgetary information are not part of the public document.
13.3 Monitor. The monitoring process needs to be institutionalized as much as possible. Specific tasks should be part of the agenda of relevant management meetings. At the least, it should be part of a monthly agenda. A formal progress review should be held quarterly. This should include not only the obvious checking of progress against the plan, but also testing of the underlying assumptions of the plan, the continued validity of the objectives, and unanticipated events which might need to be reflected in the plan.
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13.4 Update. A more thorough review and update should take place annually, preferably in a retreat setting, so that it can provide the backdrop to the annual budget process most organizations engage in. In effect, the strategic plan becomes a “rolling three to five year plan.” In practice, however, most organizations do not need to do a thorough update and republish the strategic plan annually. If well executed, a strategic plan starts becoming “stale” about the third year and should be redone entirely from scratch. If this is not done, a planning mindset – one of the most important products of the whole exercise – will be lost for a decade. When you redo your strategic plan, you will generally find little change in the big issues – your values, vision, mission, and grand strategy – and even then, changes will tend to be in clarifying wording, rather than wholesale changing of concepts. Most changes will be in the critical issues and objectives, for, after all, both the external world marches on and you have achieved many of the objectives laid out in the plan.
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PREPARED BY FRESH THINKING CAPITAL PTY LTD 396 Florida Road Fearie Glen Pretoria East 0043 Tel : 012-991-4490 Fax: 086-610-7174 Email: [email protected] 2008
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DEFINING THE STRATEGIC PLANNING PROCESS Our aim in this Strategic Planning Work Book is to give you the tools to which will assist you in developing your own Organisation's strategic plan.
TABLE OF CONTENT 1
Chapter One - Benefits & Limitations of Strategic Planning............................ 3 1.1 What Is Strategic Planning? ............................................................................ 3 1.2 What Are Its Benefits? ..................................................................................... 4 1.3 What Strategic Planning Is And Is Not .......................................................... 5 2 Chapter Two - Debunking Eight Strategic Planning Myths................................ 6 3 Chapter Three – Overview of the Strategic Planning Model............................. 7 3.1 Meaning of the Strategic Plan........................................................................ 7 3.2 Strategic Planning Team ................................................................................. 7 3.3 Thoughts About the Strategic Planning Process ......................................... 8 3.3.1 Openness.................................................................................................... 8 3.3.2 Iterative ..................................................................................................... 8 3.3.3 Time commitment.................................................................................... 8 3.3.4 Big thoughts .............................................................................................. 8 4 Chapter Four – Strategic Planning Bedrock: Vision............................................ 9 5 Chapter Five – Strategic Planning Bedrock: Values ......................................... 10 6 Chapter Six – Strategic Planning Bedrock: Mission........................................... 11 6.1 What is Strategic Thinking? .......................................................................... 11 6.2 Clarifying Your Organization's Mission........................................................ 11 7 Chapter Seven – Determining Organizational Driving Force........................... 13 8 Chapter Eight – Organizational Strategy ............................................................ 14 9 Chapter Nine - Situational Assessment .............................................................. 15 10 Chapter Ten - Critical Issues Analysis............................................................. 17 11 Chapter Eleven – Defining Strategic Objectives ........................................... 18 11.1 Defining Strategic Objectives ...................................................................... 18 11.2 Developing Your Strategic Objectives ........................................................ 18 12 Chapter Twelve - Strategic Action Milestones.............................................. 20 12.1 There is one SAM summary for each SO..................................................... 20 12.2 Responsible person ........................................................................................ 20 12.3 Schedule .......................................................................................................... 20 12.4 Resources required........................................................................................ 21 13 Chapter Thirteen - What to Do When the Strategic Planning is Done? .... 22 13.1 Implement ....................................................................................................... 22 13.2 Communicate .................................................................................................. 22 13.3 Monitor. ........................................................................................................... 22 13.4 Update. ............................................................................................................ 23
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1 Chapter One - Benefits & Limitations of Strategic Planning Our goal in providing you with the Strategic Planning Tool kit is to allow you sketch a template for your own organization's strategic plan. Strategic planning is a powerful tool for laying out the template or roadmap for future success and should be in every manager's toolkit. In the chapters that follow we shall look at: What strategic planning is and is not Organizing the strategic planning process Who does it and how How long it takes End products Drafting and refining the plan Centrality of values, vision, mission & strategy Doing a SLOT situational analysis (strengths, limitations, opportunities, threats) Setting the strategic objectives (SO) which define the future state of the organization Developing strategic action plans (SAP’s) to lead to the achievement of these SO’s Communicating the completed plan to the organization Implementing and monitoring the plan Reviewing progress and revising the plan
1.1 What Is Strategic Planning? Strategic planning is a disciplined, creative process for determining how to take your organization from where it is today to where you wish it to be in the future. Strategic planning is fundamentally a decision making process, based on asking simple (but deep) questions, analyzing the range of answers, and choosing among them: What do we do? Where are we now?
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Where are we going? How will we get there?
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How did we get here? Why are we in business?
When will we get there? What will it cost?
This process encompasses the entire spectrum of issues an organization faces, ranging from the big ones of who you are, what you do, and what your corporate values are to the smaller but equally important ones that connect the focus on the future with the work that must be performed soon to move the organization forward.
1.2 What Are Its Benefits? The benefits of strategic planning are manifold since it: 1) 2) 3) 4) 5) 6) 7) 8)
Asks and answers questions of key importance to the organization Provides a framework for decision making throughout the organization Reveals and clarifies future opportunities and threats Sets specific objectives for achievement Provides a basis for measuring performance Serves as a channel of communication Develops a team which is focused on the organization's future Provides managerial training
The above benefits can be encapsulated in a single statement: Strategic planning aligns the total organization – people, processes, and resources – with a clear, compelling, and desired future state. What Are Its Limitations? While the benefits are manifold, unfortunately so its limitations: The future is uncertain and might differ substantially from expectations on which parts of the plan may be built. There will be internal resistance to formal planning due to multiple factors: a. Information flows, decision making, and power relationships will be perturbed. b. Conflicts within organization are exposed. c. Current operating problems tend to drive out long-term planning efforts. d. There are risks and fears of failure. e. New demands will be placed on managers and staff. f. Most people wish to avoid uncertainty. Planning is difficult, messy, hard work. Planning is expensive - in time and money. The completed plan limits choices and activities for the organization in the future.
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1.3 What Strategic Planning Is And Is Not "Strategic planning determines where your organization should be going so that all organizational efforts can be pointed in that direction." STRATEGIC PLANNING IS Human-based People's minds Principles Collective vision Commitment to planning Done by executives Risk enhancer Decision oriented Done in open Messy & controversial Proactive Deliberate Focused Way of life Roadmap to the future Creative
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STRATEGIC PLANNING IS NOT Process-based Set of rules Platitudes Personal vision Commitment to plan Done by planners Risk eliminator Task oriented Done behind closed doors Smooth & harmonious Reactive Quick Diffuse Single activity Next year's business plan Mandate
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2 Chapter Two - Debunking Eight Strategic Planning Myths Below are brief summaries of the eight myths. Myth 1. You need a documented plan. The value of planning is not the plan itself, but rather in developing a common language, articulating assumptions, and learning to make decisions together. Myth 2. A plan can describe all the things that must be done to succeed. Strategy sets the direction and context for subsequent actions and decisions by all in order to close the gap between where the organization is now and where it would like to be. Myth 3. Strategic planning is a formal, analytical process. Strategy is inherently a creative process, dealing with complexity and ambiguity. The plan is never finished - it is a living document. Myth 4. Plans are built solely on facts and hard data. A strategy is a set of assumptions about how the world behaves. Facts and hard data are used to test its validity. Myth 5. The planning cycle runs on your financial calendar. While planning may be part of an organization's annual cycle, whenever major events and changes occur, the plan should be immediately reexamined to test for the continued validity of its underlying assumptions. Myth 6. The work is over when the plan is done. Strategy must be communicated, put into action, and integrated with daily decision making. Myth 7. There is one right strategy. Strategy is about identifying and creating choices through conversations between stakeholders. Myth 8. There is one best process for building strategies. The key to successful planning is fitting the tools and techniques of planning with the organization's culture, capabilities, business environment, and desired outcome and then sticking with those tools and techniques for an extended period.
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3 Chapter Three – Overview of the Strategic Planning Model We outline a basic strategic planning model, suggest the composition of the planning team, and comment on the process. The strategic planning model we have found useful for most organizations has three phases: 1. Strategic thinking concentrates on establishing the planning bedrock of values, vision, and mission and on setting the grand strategy. This phase encompasses 40-50% of the planning effort. Resolving these "big" issues at the start gives a solid basis for smooth planning and for dealing with strategic issues as they arise during implementation. 2. Strategic planning assesses the Organization's current ability to reach its desired future in light of its competitive landscape, identifies the critical issues it faces, sets strategic objectives to address these issues, and outlines strategic action plans to realize these objectives. 3. Tactical planning focuses on the specifics of implementation and explicitly connects people and budgets with the strategic action plans. This phase is virtually synonymous with the annual planning and budgeting cycle.
3.1 Meaning of the Strategic Plan The plan focuses on the future. It provides a common direction for everyone, is an effective recruiting tool, can be shared with clients and prospects for marketing and with suppliers for effectiveness, and gives you the ability to track progress. A strategic plan is a living document, not something to be thrown on a shelf.
3.2 Strategic Planning Team The ideal size of a strategic planning team is 6-12 members plus an outside facilitator. Each team member should be chosen to represent different segments of the Organization, not just direct reports to the Director General. All members should have the respect of their peers. Senior, middle, and front line management should be represented. Members do not wear their "departmental hats;" they wear the "Organization hat" during the planning deliberations. One member, probably a younger one on the "fast track," should be charged with handling the internal logistical details for the planning process. © Fresh Thinking Capital Pty Ltd 2008
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An outside facilitator should be used to bring experience in the planning process, to give perspective on the future, and to allow all team members to work as equals. The Chief Director has a prominent role in the planning team, sets the context, endorses the result, but remains enough in the background that the ideas of others may emerge. This is not an easy task for most Chief Director/Head's and is another compelling reason for using a skilled outside facilitator.
3.3 Thoughts About the Strategic Planning Process 3.3.1 Openness The strategic planning process should be an open one within the Department. While it is usually not practical to have everyone who wishes to attend the planning meetings, the ongoing results should be available to all employees, for example, via the Organization's intranet, through broadcast e-mail, or simply a loose-leaf binder at the receptionist's desk. Critiques and suggestions should be welcomed from all.
3.3.2 Iterative While there is an underlying logic and flow to the strategic planning process, the plain fact is that planning is a highly iterative process. Almost at every step, the team must revisit earlier steps to ensure consistency and revise accordingly.
3.3.3 Time commitment For a typical Organization, 3-6 months is required to develop a strategic plan, with 6-10 all-day meetings and a couple two-day retreats. Team members must also work on the plan between meetings, so the Director must ensure they are given the "space" to permit their concentrated efforts and to encourage their personal commitment to both the process and the end
3.3.4 Big thoughts If there is ever a time to decouple everyone from the everyday concerns of running the normal business and to think truly big thoughts, this is the time to do it. The Chief Director and outside facilitator both have an obligation to see this is done by all.
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4 Chapter Four – Strategic Planning Bedrock: Vision Clarifying your Organization's vision creates a lodestar to lock onto, inspire your efforts, and give meaning to your very existence. Strategic thinking - the first of three phases in the strategic planning model provides the basis for subsequent planning and guides you in dealing with strategic issues as they arise later. It embraces the planning bedrock of vision, values, and mission and the grand strategy. Vision is the first element in the planning bedrock. It is the fundamental reason your Organization exists - the why of your being. Vision is crucial in laying a solid foundation to guide the future development of the Organization. Vision is the concrete statement of your ultimate dreams for the Organization or for the world that you can impact through it. Clarifying one's vision is a deceptively difficult task. Ideally, it should be: Future oriented Easy to understand and remember Reflect your Organization's uniqueness Ambitious Creative Inspiring Brief - try for ten words or less.
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5 Chapter Five – Strategic Planning Bedrock: Values Ultimately your Organization rises or falls by the values you live by in all circumstances. Strategic thinking - the first of three phases in the strategic planning model provides the basis for subsequent planning and guides you in dealing with strategic issues as they arise later. It embraces the planning bedrock of vision, values, and mission and the grand strategy. Values are the second element in the planning bedrock. They reflect your character and your corporate culture - the how you do what you do. Values are long-lasting. They affect all that you do. Values are your convictions on how business is to be conducted and people are to be treated, inside and outside the Organization. Organizations are like people. The good ones stand for something positive and know why they stand for it. They live out their values consistently day to day, impacting others by their example. Ideally, values should be: Few in number Shared by all Inspiring Clearly understood It is relatively easy to develop a list of important values. It is hard to home in on the few that make a difference in your Organization. It is harder still to capture the nuances these values evoke in the minds of your employees.
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6 Chapter Six – Strategic Planning Bedrock: Mission Your Organization's mission clarifies what you do and guides your everyday efforts and decision making.
6.1 What is Strategic Thinking? Strategic thinking - the first of three phases in the strategic planning model provides the basis for subsequent planning and guides you in dealing with strategic issues as they arise later. It embraces the planning bedrock of vision, values, and mission and the grand strategy. Mission is the third element in the planning bedrock. It translates your vision and values into something tangible - the what of your existence. Mission guides your everyday efforts and is the touchstone for decision making. Mission is the products or services you provide, for whom, where, and how. Clarifying your mission is vitally important, precisely because it forces you to state unambiguously what you do. Equally important, it also defines what you do not do! Ideally, your mission should be: Focused Clear Specific Distinctive Short
6.2 Clarifying Your Organization's Mission Perhaps the easiest way to put your arms around what your mission should be is by answering a series of questions. 1. 2. 3. 4. 5. 6. 7. 8.
What business(es) are we in? What business(es) could we be in? What business(es) should we be in? What business(es) should we not be in? What is unique or distinctive about us? Who are and should be our principal customers, clients, or users? What are and should be our principal market segments? What are and should be our principal products and services?
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9. How do we and should we distribute our products and services? 10. How has our business changed in the last three to five years? 11. How has our industry changed in the last three to five years? 12. How is our business likely to change in the next three to five years? 13. How is our industry likely to change in the next three to five years? 14. What are the key measures of our success and how do we use them?
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7 Chapter Seven – Determining Organizational Driving Force Your Organization's driving force is the dominant factor influencing your decision making and central to setting your strategy. A powerful technique for determining your organization’s strategy (the ultimate goal of strategic planning) is to consider its driving force. They define the driving force as “the primary determiner of the scope of future products and markets.” Your driving force is the dominant factor that most influences the making of major decisions. In our own strategic planning engagements, the following 8 driving forces seem to cover most organizations, with examples of organizations allied with each driving force. 1. Products offered – produces specific products (things) for its markets. 2. Services offered – delivers specific services (human efforts) for its market. 3. Market needs – focuses on meeting the needs of specific markets. 4. Customer needs – focuses on meeting the needs of specific set of customers. 5. Technology – applies its technological capabilities in innovative products or services. 6. Human resources – leverages its employees’ specific qualities, skills, or training. 7. Service capability – leverages the depth or uniqueness of its employees. 8. Image – seeks to maintain a specific organizational image within its markets and the products or services it produces. It is a rare Organization that can look at the above list and say, "Of course, it's obvious that our driving force is ___." The discussion might start that way, but you can bet that someone else will jump in to throw cold water on that driving force and suggest another. Indeed, our experience is that some of the richest, most vigorous, and deeply contentious debates in the entire planning process take place when the planning team tries to identify their driving force.
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8 Chapter Eight – Organizational Strategy Your organization’s strategy is the direction you choose to follow to reach your vision and is central to all business decisions. Formulation of your strategy is the last of the four "big" statements that constitute the strategic thinking portion of strategic planning. They set the stage for the more analytical portion of planning and ultimately for the setting of strategic objectives. Let's review the three elements of the planning bedrock first: Vision - the concrete statement of your ultimate dreams for the Organization or for the world that you can impact through it. Values - your convictions on how business is to be conducted and people are to be treated, inside and outside the Organization. Mission - the products or services you provide, for whom, where, and how. It is strategy that connects the present to the future. Strategy is a direction, a pathway, chosen from amongst many possibilities. It is intimately connected to, indeed, it is based on your planning bedrock: Strategy is the particular means by which you seek to fulfill your mission and to move toward your vision, within the context of your values. Your strategy flows from your driving force. Your driving force is the dominant factor in making your major decisions. The secondary or tertiary driving forces can legitimately be considered as decision influencers and can find their way into your strategy statement if they are strong enough. The driving force analysis is not the only way to determine strategy, but it certainly is the most thorough and analytical, even if only to confirm the obvious. Experience, however, suggests that the "obvious" isn't always so. The extra time expended to be more analytical is usually worthwhile. Even with a sure confidence in the validity of your driving force, it is still a matter of great creativity to select a strategy that is consistent with your vision, values, and mission. In future Chapters, we'll take a detailed look at your internal and external influences, so that you can determine which factors are most important in setting your strategic objectives.
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9 Chapter Nine - Situational Assessment Once the big issues of vision, values, mission, and strategy have been determined, it is time to assess the internal and external factors affecting your business. A situational assessment requires a hard-headed look at all the factors affecting the future success of your business, as they relate to your vision, values, mission, and strategy. Once these are identified, you then select those factors which are most critical and develop long-term objectives to address them. There are several approaches we could use for the situational assessment. In this Chapter, however, we will follow the SLOT assessment, the most popular situational assessment method and the most highly structured. It looks at all the positive and negative factors inside and outside your organization that affect your success. By definition, strengths and limitations are considered to be internal factors, over which you have some measure of control. Also by definition, opportunities and threats are considered to be external factors, over which you have essentially no control.. Internal factors: Strengths Limitations/Weaknesses
External factors: Opportunities Threats
Strengths are the qualities that enable you to fulfill your organization’s mission. They can be either tangible or intangible. They are what you do well, the qualities your employees possess (individually and as a team), and the unique characteristics that give your organization its coherence. They fall into four broad categories: Human competencies Products & services Process capabilities Financial resources
Limitations/Weaknesses are the qualities that keep you from fulfilling your mission and reaching your full potential. They are those activities, services, or other factors that do not meet the standards you feel should be met. They are controllable. You want to eliminate or minimize them. They fall into the same four broad categories as above.
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Opportunities are presented by the environment within which your organization operates. Selecting the targets that will best serve your clients while bringing you the results you desire is not an easy task. Developing plans to address opportunities begins with a list of those available to you. They fall into four broad categories: Markets/customers Competition Industry/government Technology Threats are external to your organization. They compound your vulnerability when they relate to your limitations. They are not controllable. When a threat comes, your stability and survival can be at stake! They fall into the same four broad categories as above.
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10 Chapter Ten - Critical Issues Analysis A simple process for selecting your 5-7 critical issues to focus your strategic plan is presented. Last time we used the SWOT (strengths, limitations, opportunities, threats) methodology to conduct a situational assessment. It's common to produce many dozens of issues that need addressing, variations of which may be found on several of the four categories. You must now winnow these many dozens of issues to a half dozen critical issues in order to tighten the focus of your strategic plan. If you select too many, this focus is severely diluted and subsequent actions will bear less fruit. Step 1. Discuss At this stage there are probably 10 or 15 sheets of butcher paper stuck on the walls full of issues for all to see. Discuss the similarities and contrasts of the issues listed to ensure everyone understands what is behind each. This will usually lead to some consolidation or restatement of issues. Step 2. Stabilize the critical issues The facilitator restates the 5-7 critical issues and stresses that all subsequent planning will be done solely around these issues. No other issues will be the subject of the Organization's strategic focus, nor will they be discussed during the remainder of the strategic planning process.
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11 Chapter Eleven – Defining Strategic Objectives The strategic planning tire meets the road when you develop 6-8 strategic objectives to pursue in the coming years.
11.1 Defining Strategic Objectives You have come a long way in your planning process and are nearing the finish line. In the last Chapter you identified 5-7 critical issues facing your Organization. In this Chapter you will develop specific, measurable strategic objectives to pursue in the coming years which address these critical issues. Most authors refer to these as "long-term objectives,". Strategic objectives typically, though not always, have multi-year timeframes for their achievement and are multi-functional, i.e. they require concerted efforts by people from many different parts of your Organization. Strategic objectives (SO's) begin with such words as "to have," "to be," "to become," or "to achieve" and end with a specific year by which the SO will be met.
11.2 Developing Your Strategic Objectives You develop your strategic with reference solely to the critical issues you identified in the last Chapter. Begin with the highest priority critical issue and discuss ways to address it. When your ideas begin to gel, write an SO in the above format. Make them positive in concept and wording. Focus on the achievement to come, not on the shortcoming or problem in the present. Since you might draft two or three SO's for each critical issue, you can easily end up with 15-25 potential SO's. Once again, you must prioritize them and choose 6-8 SO's to drive the future development of your Organization. This discussion and prioritization process is markedly similar to the one you used in settling on your critical issues, so we advise following that technique. When you have completed this prioritization, you may well find that one or more of the critical issues has no associated strategic objective. Don't worry! If you have followed the process well, then the 6-8 SO's you chose are the best ones. Resist with a passion the temptation to add more SO's so that all critical issues are addressed, which can easily balloon the SO's to a dozen or more. There is no quicker way to kill the vitality of a strategic plan than this! The only way for SO's to be special and to serve as focal points for your
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Organization's development is to have few of them. Otherwise, efforts are diluted, and achievements are diminished. We suggest validating your SO's against six criteria: 1. 2. 3. 4. 5. 6.
Is it measurable or verifiable? Is it achievable or feasible? Is it flexible or adaptable? Is it consistent with the rest of your strategic plan. Does it stretch your people without breaking them? Is it clear, easy to understand, and inviting to achieve?
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12 Chapter Twelve - Strategic Action Milestones The strategic action milestones link your objectives to your people and your resources. Strategic planning sets the context for the organization to do certain things. These are ultimately encapsulated in strategic action milestone summaries (SAM’s) which identify the 4-8 milestones – major events, phases, or accomplishments – that must take place in an orderly fashion for the SO’s to be met, who will be responsible for each, when they are to be accomplished, and what they will cost in both time and money. SAM’s provide the final link from mission, strategy, and objectives to two vitally important factors: Development and deployment of your people Expenditure of financial resources
12.1 There is one SAM summary for each SO With most of our clients, a “Strategic Action Milestone Summary” template based on a simple spreadsheet format helps to visualize and organize the flow of effort and resources to achieve each strategic objective. Some organizations who routinely use project management software find a project management template better meets their needs. (We would be happy to provide these templates to anyone interested.)
12.2 Responsible person While each milestone (by definition) represents a significant accomplishment and will in all likelihood involve many people, one person is to be charged with orchestrating its achievement.
12.3 Schedule Each milestone’s achievement needs to be scheduled. In early drafts, one normally targets quarters for starting and completing one. When all SAM’s have been drafted, then the personnel and financial resource loading can be determined and adjusted accordingly.
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12.4 Resources required. Capital resources are equipment, facilities, acquisitions, or other major investments not covered in the normal budget. Operating resources are other needed monies not covered in the normal budget. Consultants and other outside service providers would fall under operating resources. Human resources refer to the internal hours to complete the milestone. If staff must be added to the organization, their costs must be included in the operating column. Report progress to the person or, in some cases, the board or other policy group that the responsible person will periodically report progress to and receive support and resources from.
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13 Chapter Thirteen - What to Do When the Strategic Planning is Done? The objective of strategic planning is ultimately to act. Here's what to consider as you roll out your plan for implementation.
13.1 Implement This point seems to be obvious, but is terribly important. The hardest part of strategic planning is to do what you planned and to be alert to the inevitable opportunities for action that are clearly better than your plan (and to adjust your plan accordingly). Implementation takes a certain amount of discipline, will, and change from your usual business practices. The aim is to have your strategy deeply and seamlessly embedded in your daily, weekly, and monthly routine. The plan should guide your activities, underlying all you do.
13.2 Communicate The strategic plan should be shared with everyone in your Organization, as well as with other stakeholders – suppliers and subcontractors, customers and clients, alliance partners, community and government Organizations. The more people who know what you are trying to achieve, the more ideas will bubble up, sometimes from unexpected places. Appendices which might include your strategic action milestones or budgetary information are not part of the public document.
13.3 Monitor. The monitoring process needs to be institutionalized as much as possible. Specific tasks should be part of the agenda of relevant management meetings. At the least, it should be part of a monthly agenda. A formal progress review should be held quarterly. This should include not only the obvious checking of progress against the plan, but also testing of the underlying assumptions of the plan, the continued validity of the objectives, and unanticipated events which might need to be reflected in the plan.
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13.4 Update. A more thorough review and update should take place annually, preferably in a retreat setting, so that it can provide the backdrop to the annual budget process most organizations engage in. In effect, the strategic plan becomes a “rolling three to five year plan.” In practice, however, most organizations do not need to do a thorough update and republish the strategic plan annually. If well executed, a strategic plan starts becoming “stale” about the third year and should be redone entirely from scratch. If this is not done, a planning mindset – one of the most important products of the whole exercise – will be lost for a decade. When you redo your strategic plan, you will generally find little change in the big issues – your values, vision, mission, and grand strategy – and even then, changes will tend to be in clarifying wording, rather than wholesale changing of concepts. Most changes will be in the critical issues and objectives, for, after all, both the external world marches on and you have achieved many of the objectives laid out in the plan.
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