Every successful organization does some form of strategic planning. When the organization is small, it is often conducted informally by the business owners or top management. However, as an organization grows, strategic planning often involves mid-level managers and strategy consultants.
The rationale of involving professional managers in strategic planning includes tapping on their knowledge and expertise and getting buy-in at an early stage. However, as more people are involved in strategic planning, it means the process itself must be more formalized.
A plan is not useful if it is not implemented properly. Hence, implementing strategies becomes crucial. If a strategic plan is the seed then its implementation is the nutrient that enables the organization to grow to its potential.
Successful strategic planning and implementation involves the few steps stated below. It is very much a process that keeps repeating itself.
- Review past results
- Assess strategic position
- Review and set direction, KPIs and objective
- Develop strategic initiatives
- Communicate, cascade and align
- Execute and monitor
1. Review past results
Almost all organizations review past results. However, many of them only review financial results which are often lagging performance indicators, not leading or more insightful indicators such as order book, sales calls, inventory turnover, product margins, product sales trends, sales per sq foot, etc.
It is often pointed out that organizations do not review non-financial performance data because collecting and presenting them is extremely tedious and almost impossible. However, with the advancements of business intelligence and analytics applications, such efforts could be greatly reduced.
2. Assess strategic position
Assessing strategic position involves detailed analysis of internal factors and external environment. It is a critical but often overlooked step. Proper strategic position assessment helps organizations identify opportunities and threats to their business early so that they could act on them.
Tools such as Blue Ocean Strategy’s strategy canvas, SWOT, PESTLE, Porter’s 5 Forces, Growth Matrix and benchmarking are useful in framing the assessment.
These tools may sound confusing initially for some business executives but they need not be. Each of them has their pros and cons and could be applied for each circumstance. They help business executives understand their business’s strategic positioning within the competitive environment that they operate in.
Market research or competitors studies are often an important part of this step as it gives business executives feedback from customers, competitors and other stakeholders. The reality check may bring new opportunities for the organization to offer new or better offerings.
3. Review and set direction, KPIs and objectives
After reviewing an organization’s strategic position, senior executives need to answer whether their organization’s strategic direction needs to be altered.
Reviewing the organization’s mission and vision statements is an important process. Although one should not change its organization’s mission and vision statements regularly because it reflects poor planning, but it would be necessary to change mission and vision statements in order to inspire or motivate employees.
Once the mission and vision of the organization are clear. The senior management should review and set the long term objectives or some called goals of the organization.
Next, they need to set the Key Performance Indicators (KPIs) of the organization. KPIs are different for organizations in different industries. E.g. sales per square feet is a KPI for retailers but it will not be that relevant to a information technology company.
4. Develop strategic initiatives
Strategic initiatives or projects focus organization’s resources and prevent wastage. For example a “Sales productivity improvement initiative” could be started in order to focus an organization’s efforts to improve sales per employee from $80,000 per employee to $120,000 per employee in 1 year’s time.
An initiative can have one or multiple tasks. In the above example, one of the task could be to “Train sales executives in spin selling techniques”.
A champion and leader should be assigned to each initiative. The role of the champion is to oversee, guide and motivate the initiative’s team members so that they could achieve success. While a leader’s key role is to manage and lead the team to ensure successful completion of the initiative’s objectives.
Other than the champion and leader, team members would be assigned to an initiative. If possible each task should be assigned to a team member as task leader so that they could be completed in time.
One can use a specialized strategy implementation software to help you or you can use a spreadsheet to help you keep track of strategic initiatives.
5. Communicate, cascade and align
Communicating strategic plan to employees require one to know who are the influencers or informal leaders in an organization because certain people in an organization have more influence than their designation might suggest. It is crucial to obtain buy-in from your organization’s leaders, formal or informal, before you implement the plan.
In order to get buy-in, business executives need to find out what motivates their teams. Like it or not, money remains one of the key motivation factors. However, the monetary reward must be attainable else it will not be effective. The other ways to motivate your team includes giving good performing team members their deserved recognition and inspiring team members with grand targets.
Cascading KPIs means a top level corporate KPIs should be broken into parts and assigned to team members lower down in the organization. For example, a corporation may have sales objective of $10 million in the upcoming financial year but it should be cascaded down to the business divisions, such as products division (e.g. $7 million) and the services division (e.g. $3 million). The divisional sales target should then be further cascaded to each sales manager and executive.
Alignment means the KPIs should be aligned with the organization’s top level objectives and KPIs. For example, one of the key objectives of an organization could be to reduce inventory levels by 10% but it could conflict with the objective of increasing sales by 20%. One can imagine conflicts between the sales manager and operations manager that may arise if the targets do not make sense.
6. Execute and monitor
Close monitoring of a strategic plan’s progress is often the most mundane but critical part of the entire process. Let’s face it, if the top management of an organization does not monitor or question the progress of various initiative and KPIs, it is unlikely that the desired pace of progress is likely to be achieved.
It is not that the organization’s employees do not know what they need to do but once the leadership does not monitor closely, employees often feel unmotivated because they rather spend their time doing the work that their leaders are following up closely with and these are often operational tasks.
A strategy implementation application could help you in this aspect as it should send out reminders to team members at pre-set times or when deadlines are missed. Next, performance dashboards and alerts enable managers to be alerted when performance levels drop to certain levels.
If you would like to know more about ways to develop and implement strategies effectively, please contact Mr Ong at ong@rocvalue.com or +65 6681-6713. Roc conducts strategy planning clinics, retreats and strategy implementation review meetings for corporations of all sizes.