Functional leaders are heading into strategic planning season. Take these steps to ensure the process is productive and tied to strategic business goals.
“We burn a huge amount of hours and our strategic plan hasn’t helped advance strategic initiatives. It hasn’t protected against disruption. It hasn’t really done anything.” Those are the words of one corporate strategist — but they probably sound familiar.
Business executives say 56% of the time spent on strategic planning is wasted
In fact, strategic planning often turns out to be a disappointment to all involved — especially once functional teams have to translate the lofty mission, vision and objectives of the enterprise into day-to-day priorities.
- Among corporate strategists, only 31% say their strategic plans prepare their organization to hit five-year revenue growth targets.
- Just 13% say the plans position the organization to hit 10-year growth goals.
- Business executives say 56% of the time spent on strategic planning is wasted.
- Only 23% of business partners view IT strategic planning as effective.
- Just 13% of marketing leaders have seen results from their strategic plans.
So what goes wrong? The objective sounds simple enough: Define the organization’s strategy and make resource-allocation decisions to pursue it. The problem — paradoxically — is that many organizations lack a coherent plan for their strategic planning.
A methodical step-by-step approach for functional leaders
Strategic planning involves a periodic resetting of mid- to long-term strategic direction and priorities. It focuses on key issues and the specific initiatives needed to attain long-term strategic goals. An effective playbook takes functional leaders through these eight steps:
- Outline expectations. At the outset, clearly define the enterprise and business context for all stakeholders to prevent managers and executives from misunderstanding each other and derailing the process. Outline the responsibilities, process timelines and expected outcomes for each participant.
- Verify the business context. Interview business leaders and have them describe the current and desired future state of the business, lay out the goals and capabilities required to support and enable those business aspirations, and specify suitable metrics to gauge progress against those goals. “We could not have created [a relevant strategic plan] in isolation,” says the head of internal audit at one multinational company. It’s also important to identify what to stop doing.
- Assess capabilities. Evaluate the maturity and importance of key functional capabilities required to support the overall business goals. There shouldn’t be a big difference between the function’s self-assessment and business partners’ perceptions of its strengths and weaknesses. “We want to be able to consistently point to our impact on business performance, and to do that, we have to be aware of our own strengths and development opportunities,” says one functional leader.
- Set objectives. Develop a prioritized list of objectives with discrete and measurable steps that describe how a specific goal will be accomplished. Each strategic business goal can be supported by four to five objectives with a time horizon of one to two years. Objectives should be specific, measurable, actionable, results-oriented and tied to a near-term deadline to ensure timely completion. “Having alignment on paper is meaningless unless you’ve defined your objectives in a specific, measurable and actionable way,” says one CFO. Also outline to the finance organization what resources will be required. Ask managers and staff members to identify opportunities to eliminate or modify activities to free up resources for new priorities.
- Establish an action plan with measures and metrics. Formalize a document that outlines the sequence of action steps or initiatives required to attain an objective. It is the primary source of information for how the function’s objectives will be executed, monitored, controlled and closed. It provides specifics, including responsibilities, resources, risks and mitigation plans. Select a handful of strategic, financial and outcome-oriented measures to track progress toward a strategy. Select well-defined and verifiable metrics to determine progress. “We frequently screen all the metrics on our performance dashboard for relevance,” says one functional executive.
- Put strategy on a page. Capture the elements of your strategic plan on a single page. Gartner suggests creating a one-page Strategy on a Page template outlining where the functional organization is, where it is going and how it will get there. Communicate how you are adding value today and demonstrate how you plan to impact future business across the coming year. Include a statement of strategy, a before-and-after description of the state of the function, five to seven critical assumptions underpinning the strategy, and five to seven initiatives required to meet the functional objectives established to support business goals.
- Communicate the plan, articulating the objectives and strategy across the function and company. The one-page strategy template is a helpful tool, as it makes the plan easy for employees to consume. Communicate the plan first to functional leadership, then to business leaders, and finally to finance and business staff. Make sure employees are receiving consistent messages from their managers and functional leaders. Keep the message simple and tailor communications to encourage buy-in. “It is important to find the few employees who will contribute most to strategy implementation and target them with a very personalized message,” says one senior executive.
- Keep the plan alive. Once the strategic plan is adopted and shared, it’s critical to measure progress against the objectives, revisit and monitor the plan to ensure it remains valid, and adapt the strategy as business conditions change. Document lessons learned and make adjustments for subsequent planning cycles. Monitor triggers to track the effectiveness of the strategic plan. Kill underperforming projects quickly. Track and validate assumptions periodically.
Functional leaders can’t plan properly if they aren’t clear on the enterprise and business mission, vision and objectives. They can’t execute their own strategies without appropriate, executable, measurable goals. Following these eight steps will increase the chances of success.