The Strategic Planning Process Explained
Almost every organization has some form of a strategic plan, even if it is thoughts inside the founder's head. When we put those thoughts onto paper, we can start refining your plan.
But once we start adding other people and stakeholders into the organization, getting those thoughts onto paper becomes essential. The team can contribute and help find opportunities and overcome roadblocks for the business.
That is when strategic thinking becomes a competitive advantage and your secret weapon to scale.
CEOs often cite these reasons for why they don't have a current strategic planning process in place:
Perceived lack of time.
Feels intimidating.
Lack of knowledge of a proven process
Wanting to focus on doing vs. planning
All these are compounded when you feel that time is your biggest commodity.
Sometimes, you must slow down to speed up. Many executives at companies run so fast that their legs get out from underneath them, and they can't keep up. That keeps them from being able to scale.
We recently discussed how you form your strategic plan and the process you can implement to create an action plan to keep it alive in your organization throughout the year.
You can also listen to “Perfect Your Strategy - Effective Strategic Planning Process” a conversation we hosted recently in The Scaling Up Coaches Club on Clubhouse
Listen to Scaling Up Coaches Chris Young and Steve Ferman answer questions on the Strategic Planning Process and share how they work with clients.Why should you take the time to implement a strategic planning process?
Those who run businesses find themselves in a game of whack-a-mole with problem-solving. While you are solving one problem, another problem pops up.
While strategic planning sounds like it takes time away from those activities, it gives you the framework to use strategic management to solve your future problems and find external opportunities. Having a strategic plan active in your organization helps you get things done in your business more efficiently.
Building out your strategic plan and connecting it to your management process and day-to-day business is not a one-and-done activity and doesn't happen overnight.
Instead, a good strategic planning process helps you refine your plan over time. As you get more data and metrics in your business, you can use those along with your strategic plan to speed up your future decisions. A good process helps you repeat that exercise more efficiently.
Scaling Up Coach Steve Ferman often compares the strategic planning process to Sudoku, the game of numbers strategy.
When you know the frameworks or roadmap to solve the puzzle, you use the pieces you already have to solve for the blank spaces.
The fastest way to complete the puzzle is to solve for the easiest spots across the board to fill in, not to follow a prescribed method of starting on the top left and filling in the rows left to right and top to bottom. With each square you complete, the next set of problems gets easier to figure out. You can spot some gaps easily because you have more answers in the row, column, or square. That leaves fewer empty spaces where you have to make calculated guesses that are hard to roll back.
Your strategic plan gives you the framework for making decisions, just like those first number clues on the sudoku puzzle.
Steve says, "When you use a good process, your strategic plan always evolves. As long as you have a plan and you're executing the plan to reach those strategic goals, then as you re-evaluate using new data, you can set new initiatives and behaviors and work your way through the puzzle."
What is a Strategic Plan & Process?
If you fail to plan, you plan to fail. A strategic plan is never completely done, but if you don't have one right now that is clearly articulated, then you're not going to get where you want to go.
Moving the building blocks of a strategy from a founder's head to a plan gets everyone aligned to a shared vision, mission, values, and purpose.
A strategic plan helps us set long-term thinking about the company. Thinking about where you want to go long-term helps you make short-term decisions more efficiently. Some of the first things you will use to start to form a strategic plan are:
What is the problem you solve?
What is your purpose (or mission statement)?
What is your strategic objective or BHAG or Big Hairy Audacious Goal?
Who is your core customer?
What are the core values of your company?
How are you different from your competitors?
Your strategic plan sets up strategy execution or what people should do to ensure the plan works. Scaling Up Coach Chris Young says, "From there, it is really about aligning resources and processes, getting into a communication cadence, setting up KPIs (Key Performance Indicators), and ensuring everyone's on the same page." I
Your strategic plan helps you set organizational goals or priorities for every contributor. Hence, they know what they should be going towards the same goals and the same end result or future state.
What are the most common mistakes made in developing a strategic planning process?
Timing - Waiting for the best time to start.
The best time was yesterday if you do not have a formalized strategic plan and process. The second best time to start is today.
Your plan and process are evergreen because you regularly review and update the plan. You don't need to wait until the start of a new year or the end of a cycle. The longer you wait to develop a business strategy, the more likely it is that changes in business environments and other external factors will cause cascades of problems.
One and Done - Not making your plan a living document in your organization.
You need to add a process to your strategic plan that ties it to strategy execution so that you can be adaptive and have regular reviews to update it. Setting smaller goals over time will help you achieve the big goals in your plan.
Overplanning - Stuck in an endless cycle of thinking, not doing.
Your strategic planning process should connect your plan to your organization's daily, weekly and monthly activities. By breaking those big long-term goals into pieces you can tackle in the short-term, your team is always working toward the goals you lay out and seeing successes emerge from your plan.
What to Expect.
Scaling Up Coach Steve Ferman points out, "It's not a sprint. It's a marathon. It takes 24 to 36-month time frame to take a big market size company, at least to turn them around and get them on the right path to being 100% a cohesive unit."
But all of that time is not spent on planning. Steve explains that during this process, you also start figuring out your strategy implementation to fold your plan into operational planning, "You got to have a giant scoreboard somewhere. I like to call a war board, that everybody knows what's going on in the organization so they can all march to the same drum to the same beat and all head towards the same end goal."
Start with a diagnosis of the current issues.
Where do you start? Steve and Chris believe step one to strategy formulation is to start with diagnostics and figure out the organization's mission and the organization's goals.
Chris says, "To me, that's the first step in starting the strategic plan. How solid is the team? How cohesive is the team? It's the first place that I start when working with a new company. I think getting the people right is very important. Because if you don't surround yourself with the right people to support you as a CEO and entrepreneur, I think you're setting yourself up for failure."
When you start with diagnostics on the team, you find potential growth opportunities and blind spots, and other strategic issues. Some examples you might encounter include communication gaps and vulnerability-based trust.
Chris says this is one of those examples of where slowing down to speed up pays off. "Sometimes I get the glazed look on people's faces because they realize these planning activities are a lot of work. All they wanted was a strategic plan we could reference once in a while and put on a shelf. But I like to come at it from a holistic perspective. Where is this organization headed, and where do the founder and leadership want to take it? What's the capacity of the people to believe in the mission vision values? What's the capacity of the contributors to do their work?"
Steve adds that the diagnostics and strategic planning process tools help to take some of the emotion out of the decision-making. "We try to break it down into simple terms by using tools with Scaling Up that allows you to take the emotion out of it. We use the Functional Accountability Chart and Process Accountability Chart to help everyone understand who is responsible for what and how you account for them to the balance sheet's bottom line.
Align the Top Team.
The word bottleneck illustrates that problems often come from the top. If your top team is not aligned, they can't help you disseminate that to the rest of the company.
Our coaches agree that this step is critical before starting a strategy map and your planning documents or One-Page Strategic Plan template.
Steve explained, "Strategy is, I think, the hardest of the four pillars to Scaling Up because there are many variables and people you have to rely on."
Steve shared an example from a company he coaches. The company is well established, has been in business for 25 years, and grosses about $6 million in revenue. They came to him initially because their sales had slumped. He started with internal diagnostics and assessments before moving to tools that measured the external environment, like swot analysis. He realized their problem was not a sales problem but a communication problem amongst the top team. They weren't working together toward the same goal.
"There are only five executives in this firm, but they all have to start communicating better. I had them all take this quiz. I took all of the answers." Steve said, "I put them in a spreadsheet next to each other. I looked at who scored what. It turned out that the director of operations and the head of technology were nowhere near alignment with the rest of the team. I don't know if sales or market share are unequivocally the issue. But I do know that we are not on the same page."
The outcome is that they are working on sales in the short term but also working on the executive team's core values and alignment. Steve explains, "If we are going to get anything rolling, we all need to start documenting things with action items and smart goals that everyone can follow and be transparent."
To understand more about how important aligning your executive team is, Chris suggests the book The Five Dysfunctions of a Team.
Chris shared, "I'm a tremendous fan of implementing and cascading throughout the organization, particularly in the C-suite. Whatever's happening there, whatever dysfunction is happening there - and I guarantee you there's dysfunction - has to be solved first. We get them to sit down and have honest conversations. That's the secret to scaling a company. It's amazing how people, especially at large organizations, don't have any clue what the other person's doing, are supposed to be doing, or if it was doing that position at all."
Planning The Plan.
After diagnostics and aligning the executive team, it's time to work on the strategic plan. Two main pillars of your strategy are to figure out your BHAG and your Core Values.
Your BHAG gives you the end goal of what it is essential to achieve over the next 10-15 years. With that in place, you can start working backward to break that down into shorter horizons of 5 years, one year, and the next 90 days.
And the core values give you the frameworks for making all your decisions and the culture you will build in your team.
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One-Page Strategic Plan.
What Comes Next?
How do you eat an elephant? One bite at a time.
That's how you break down your strategic plan as well. You keep it alive in the company by continually identifying the short-term action items and smart goals that help you get closer and closer to your big goals.
You set priorities and KPIs and cascade those down to the whole team, so everyone understands the goals they are working toward and how they contribute to the organization's goals and the company's success.
As you go along, you find some wins that are quick and easy simply by implementing this focus and good communication rhythms and feedback loops.
Chris points to meeting rhythms and communication rhythms. "Is everyone clear on the mission, vision, and values? How often are we talking about what's important? How often are we talking about key performance indicators attached to each person? The drumbeat is to keep everybody on task. It's not an overnight process, but if you start getting people into communication rhythm, get them tied into a process, you will start to see results."
It's not just hard work. Make it fun to get buy-in from your team.
Strategic planning and execution are not all just sitting in planning meetings or retreats working on planning documents. Both Scaling Up and The Five Dysfunctions of a Team call for creating initiatives with a thematic goal or the jumping point into the strategic plan.
Rarely do you get everyone on board with a lot of talk about doing hard work. Now more than ever, people need to enjoy their work. Team spirit and camaraderie can go a long way toward energizing your employees to help achieve the big goals.
Chris shared, "If you want people to join in, make it fun. Make a contest or a prize. Find ways to create excitement and recognition. It creates a flywheel for getting people engaged in your plan. People are often cynical about strategic planning. That cynicism comes from a long history of managers not following up and not executing well. Without the feedback loop tied to fun and celebration, the energy fades, and the flywheel stops." He says, "Executing these quarterly themes helps you metaphorically or mentally get on the same side of the table in partnership."
Steve shared, "Implementing a strategic plan, ensuring you have the right people in the right seats on the bus, and adding fun energy with themes is like magic. You are helping people find what engages them. What gets them happy and their juices flowing so they can do what they're good at, what they love, and are never tired of doing? It's like magic when that happens when a company.”
Once you create fun and excitement with games, contests, or team themes, get into a rhythm, and celebrate successes, people realize that this is real and is not going away. They recognize how they can play a role in a company's success and feel valued for doing their part.
How using a coach through this process helps.
Steve shared that his journey as a business coach started with hiring a coach when he was a CEO. "I think it was a revelation for me - I didn't know what I didn't know."
When you bring in a coach, you get someone who's going to push you, someone who has been there and done that as an entrepreneur or CEO. They have the experience of building a successful business with a proven strategic plan and process.
Another great benefit is that they have less emotion about your business than those who work daily. A coach brings a more unbiased and open-minded view. You want a coach with a similar mindset to you and who is willing to push you.
While Scaling Up Coaches use a custom approach for every client, many of our coaches have a preferred method based on past success.
Chris shared that the format he sees the most success with is to start with an initial two-day retreat with the executive team. At that retreat, he works with the team to get them to work better together. Then consecutive quarterly retreats where he splits the time between how the team works together and reviewing the business strategy and execution to see what works well and needs improvements.
Steve shared that his approach is similar. He starts with a two-day kickoff by reviewing diagnostics, working through strategic tools that help form KPIs, planning the BHAG, and beginning the one-page strategic plan. But he says, "There is often a curveball a client wants to address first, but he guides them back to this important foundational work to help with those acute problems.
Steve says, "As a coach, you need to build trust within the organization if you can help them achieve success in certain areas. It just goes towards allowing you the path or them giving you the path to do the rest of the stuff that needs to happen, the dirty work, the hard work, the things that really will help them to scale, allow them to grow.
Chris added, "It's not necessarily about being linear. It's about identifying what's creating the greatest drag or the greatest friction on performance."
