Given the uncertainty and volatility as organizations reset business strategy, strategic planning can no longer last for months or wait for an annual update. The business context changes too fast and too radically, and scenario plans, enterprise strategy and strategic execution plans need to adapt accordingly.
A waste-free planning approach eliminates all but what is necessary and sufficient to communicate a strategic plan
During the strategic planning process, enterprises, functions and business units identify the choices and actions required to develop the business model. Strategic plans define the roadmap for making these changes. But these processes and plans are often ineffective.
“Strategic plans are often too vague, noncommittal or unwieldy even in ‘normal” times,” says Meaghan Kelly, Senior Principal, Research, Gartner. “A waste-free planning approach eliminates all but what is necessary and sufficient to communicate a strategic plan.”
Waste-free strategic planning works from the beginning to quickly produce a clear, effective, measurable, communicable plan by focusing exclusively on a few key components:
- A limited number of highly relevant metrics that define the organization’s current and target end state
- The most critical assumptions underpinning the strategic plan
- The key functional initiatives required to achieve the end state
- A concise statement that distills and communicates the strategic plan
To ensure effective execution of the strategic plan, make sure to focus on the following four imperatives during the planning process.
No. 1: Identify a shortlist of metrics to describe the target state of the organization
To brainstorm appropriate metrics to gauge your target state, you first need to be clear on that target state — which means understanding business strategy and your role in driving it. Corporate strategists might interview their CEO about desired outcomes; functional leaders might get insight from business leaders and other stakeholders.
Ultimately, the metrics must relate to the stated outcomes — and you’ll need to estimate the metrics’ value on Day 1 to track your progress. The period to achieve those targets may be as short as one quarter or as long as five years. Key considerations are the volatility of the current environment and the need to give the strategy a chance to work. Longer-term strategic goals should still be tracked at least quarterly.
No. 2: Document and monitor key assumptions that underpin the strategy
Assumptions are essential tools for communication, because they reflect why the target end state and required initiatives are better than the alternatives and form the cognitive foundation of the selected strategy. In articulating the central drivers of value for the organization and industry — including the macro economy, customer behavior, competitors or technology — assumptions make cause-and-effect relationships explicit between:
- The business ecosystem (initial and target)
- The key initiatives
- External driving forces
Incorporate assumptions developed during scenario planning to better understand which of these relationships are highly reliable “truths” versus those that represent highly uncertain dynamics that are difficult to control or predict.
Make sure the assumptions are concrete and carry quantifiable thresholds. Frequently monitor those thresholds for advanced warning of an imminent breach. A breach would trigger an urgent course correction.
No. 3: Identify key initiatives and milestones required to move strategic planning from initial to end state
To identify the select key initiatives that drive waste-free strategic planning, include initiatives that:
- Represent the change-the-business agenda
- Seek to create value beyond the inertial trajectory
- Demonstrate actual business action by grouping smaller projects under the initiative as necessary
The strategic plan doesn’t need to include initiatives intended to run the business, such as “keep serving our customers” or “maintain employee engagement.” Such initiatives only seek to perpetuate the current state or trajectory.
After specifying the initiatives, set criteria and dates for key milestones and completion.
No. 4: Craft a concise mission statement that captures the essence of the strategy
In creating a statement to surmise the essence or core elements of a strategy, strive for a single, aspirational sentence — but be willing to sacrifice conciseness for clarity. The focus should be more on getting the essential elements right than on finding the perfect turns of phrase. Teams caught in endless debate over wordsmithing have likely gone too far.
Benefits of a waste-free strategic planning process
By adapting your strategic planning model for only these necessary and sufficient parts, you enable:
- Faster, but more collaborative, strategy formulation
- Quicker and more effective communication to implementers (with less “lost in translation”)
- Earlier course correction
- More objective measurement and allocation of performance gaps between strategy formulation and execution of the strategic plan