By Tim Moore, EO Houston member and managing partner, TR Moore & Company, A Doeren Mayhew Firm
With year-end almost upon us, now’s the time to think about your business’ strategic plan: Do you have one in place? Does it need to be revisited in light of changes to the business or the upcoming new year?
As most businesses grow, strategic planning evolves from a few ideas in the mind of the owner to a more formal process. Ideally, a formal strategic planning document is eventually developed that lays out key initiatives for the business over the next three to five years. But unfortunately, what starts out as a well-articulated set of strategic directions often ends up collecting dust — not meeting its potential to help drive the business’ success, perhaps never even being articulated to the management team.
Here are three keys to creating an effective strategic plan that grows with your company:
1. Treat it as process, not a document. The strategic planning process should involve:
• Collecting relevant facts
• Setting priorities
• Weighing competing alternatives
• Making choices about the direction of your business
While outside advisors can facilitate the planning process and provide implementation support, top management must be ready to take the lead. Management should not be just reviewing and approving a nice binder of initiatives prepared by your advisors; they need to be highly engaged in a process of debate followed by decision making.
When the focus is on the process, not just the output, it’s easier to make it an ongoing effort. That’s because managers develop a deeper understanding and buy-in. As active participants in the plan’s development, they also have a greater sense of ownership, and thus much more willingness to keep it up to date. In simple terms, they understand the “why” of the plan and are not just tasked with completing projects.
2. Define and track. Don’t view strategic planning as simply setting long-range goals. A good plan also includes strategies (broad directions to achieve your goals) and specific projects and related tasks (shorter-term actions required to implement the strategies).
For example, to achieve a goal of doubling market share, you may devise a strategy to open or acquire three new locations over the next three years. Projects will consist of the actions to be undertaken each year to build or buy the new stores.
But your strategic plan won’t go anywhere unless it contains a set of metrics, such as “incremental market share improvement,” and milestones, such as “opening the third store on June 1,” to measure the plan’s implementation progress.
Accountability is also key. Assign responsible individuals to oversee each goal, strategy or project. And regularly assess their progress against the metrics and milestones. As the leader of the company, your role is to push this accountability – it doesn’t happen without leadership.
3. Update when needed, not when scheduled. Some businesses make annual updates to their strategic plans, whether they’re needed or not. That’s certainly better than letting the plan sit on the shelf, but it’s not sufficient.
When investigating why so many businesses didn’t use their strategic planning process to drive major business decisions, researchers from Marakon Associates and the
Economist Intelligence Unit found that the need to make these decisions didn’t always coincide with the annual planning calendar. Rather, an opportunity to buy out a competitor, the loss of key employees, a technological breakthrough, or major disruptions to suppliers or customers created a need to update the plan.
Effective strategic planning is difficult. It requires a discipline that many organizations fail to achieve, leaving them directionless and reactive rather than focused and able to create their own opportunities. Businesses that can master the art of strategic planning as an ongoing process are well positioned for meeting — or exceeding — their long-range goals.