Category: Strategic Planning

Have you decided that your organization needs a strategic business plan but don’t know where to start? What preparation is required to build your strategic plan?

In this third of a series of blogs about strategic plans, I attempt to answer these questions.

To access the first blog in the series “Why do you need a Strategic Plan?”, click here. To read the second blog in the series “The 7 Stages of the Strategic Planning Process”, click here.

Getting To Work – The Research Phase

As identified in the first blog of the series, after getting the basics together including the project plan, the team identified, the timeline for completion, the approval process, etc., it is time to start the work. The first major activity is the research phase which starts by analyzing the external environment (market segments, growth rates, competitors, partners and industry trends) and the internal environment (products, team, quality control, etc.).

The three important charts or diagrams that organizations use to summarize all of the information are the following:

1. Market growth chart: This chart shows the market size, sometimes broken down by geography or sector, for the past few years (3 to 5 is sufficient) and projecting forward for the next three or five years. It is best if this information is based on industry analyst reports or other credible sources that can be referenced.
2. Competitive analysis chart: This two-dimensional chart or four quadrant chart is used to compare the organization’s products or services to those of the top three to ten competitors. The two axes of the chart represent the relative performance of the two most important attributes of your product or service, from your customers’ perspective. These attributes might be price, quality, size, features, scale or other attributes important to your customers or clients.
3. SWOT analysis: SWOT stands for strengths, weaknesses, opportunities and threats and is a way of assessing the strength of an organization, both the current situation (strengths and weaknesses) and the future prospects (opportunities and threats).

Creating a SWOT Analysis

The SWOT diagram, sample shown in the chart below, is a very important snapshot of the state of an organization. Let’s dive a bit deeper in each of the four areas:

1. Strengths: List the major strengths of your organization. This should be a honest assessment and include company size, agility, market share, team, expertise, technology, products, services, customer relationships, cost structure, location, geographic reach, partners, etc. Every organization has some considerable strengths or they won’t exist very long.
2. Weaknesses: Identify the key weaknesses of the organization. This could include things like company size, market share, missing expertise, required relationships, competitor strengths, etc. Every organization has some weaknesses and if you can’t list many, then maybe you haven’t looked deep enough.
3. Opportunities: These are those blue-sky ideas that could be captured by the organization but not currently being delivered. This could be new geographic or vertical markets, new products or services, new business models, acquisition of competitors etc.
4. Threats: These are external threats to the ongoing success and survival of the organization and may include competitive, environmental, regulatory, political etc.

The quick formula for the strategic plan is as follows:

• Play to your Strengths
• Improve your Weak areas, where possible and cost effective
• Investigate Opportunities for growth, improved margins etc.
• Understand the Threats looming on the horizon and when possible have an approach or action plan to overcome or mute the threat should it occur.

From this SWOT analysis, a detailed action plan can be initiated to help the organization be more productive in the market and more sustainable for the longer term.

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Does your organization have a clearly articulated strategic business plan that everyone understands and supports? Who should be involved in the preparation, review and approval of your business strategic plan?

In this second part of a series of blogs about strategic plans, I attempt to outline the steps and owners of the strategic planning process.

Read the first part of our strategic planning series, Why Do you Need a Strategic Plan? here. Let’s break down the strategic planning process for your organization into stages. Fundamentally, you want to engage as many stakeholders as possible in one or more stages of the process while at the same time recognizing that “everyone on the ball” for the whole process will not be efficient.

I suggest that you consider the following stages in developing your business plan:

1. Project Plan

Get agreement on the process to be used and define who will be involved in the research, development, authoring, review, approval and communication phases of the plan. What time horizon will be used, how long will the process take and how often should the process be repeated?

• For most organizations, the strategic business plan will look out three to five years, with five being the most common for NFP corporations and other mature businesses and three being more common for fast-moving technology businesses.
• It is recommended that the strategic plan be revisited annually with either a major iteration or minor tweaks depending on the extent of changes in both the external and internal environments.
• The process should be able to be completed within 2 to 3 months from start to finish.
• Many organizations undertake the strategic planning process during their 2^nd fiscal quarter so that the 3^rd quarter can be used to start preparation for the next year with the annual budget being finalized and approved during the 4^th quarter before the next fiscal year starts.

2. Research Phase

During the research phase, most of the time will be spent looking outward at the overall market and the other players (competitors and potential partners) in the market. It is important to cast a wide net but then focus down on the market segments where you will participate over the planning period.

Although private companies are not required to give details about customers, revenue, margins etc., many will do so in press releases and presentations at industry conference. This phase should define the Total Available Market (TAM) for your products and services and identify market share for at least the top three to five players. This is also the time to identify the SWOT (strengths, weaknesses, opportunities and threats) for the corporation, as well as the other major players in the market.

3. Authoring Phase

The authoring phase will generally be led by one person, but the writing can be divided into sections with different people writing each section. The format will depend on your requirements, but I suggest that you consider a Word document with a target to get the core content covered in 15 to 20 pages with more detailed content included in appendices.  In my next blog I will outline what content should be included in the strategic plan.

4. Presentation & Review Phase

Once the plan is fully outlined and agreed by the CEO and senior team, it is a good time to put the highlights of the plan into presentation format. This facilitates a broader review of the plan by the board and key stakeholders and can be used to gain further feedback on the key components of the plan. It also starts the preparation for the broader communication of the plan.

5. Approval Phase

During the approval phase, it is common for the CEO to present the strategic plan to the board, often with the senior management team present. Some CEOs prefer that components of the plan be presented to the board by the senior team. Either at the end of the presentation, or at a subsequent meeting, the board should approve the plan, either as presented or with certain changes agreed. If the board has suggested substantial changes, then it is prudent to bring the revised strategic plan back to the board for final approval.

6. Communication Phase

Once the board has approved the plan, it is important for the CEO to present and solicit feedback from all key stakeholders, senior team, employees, funders, partners etc. The depth of the presentation may vary by stakeholder but the essence should be the same for all.

7. Implementation Phase

The CEO and senior team are now responsible for the implementation of the plan. Major changes in direction should be mapped out into smaller stages with clearly agreed timeline and milestones. It is the board’s responsibility to check periodically to ensure that the organization is staying true to the course set during the strategic planning exercise. If there is too much drift then it is likely that the whole strategic planning process needs to be undertaken again. Of course, major outside forces may require that the plan be re-visited earlier than anticipated.

The strategic planning process can seem a daunting undertaking at the beginning, especially if the organization has not really had a strategic plan in the past. However, the process is critical to harnessing all of the energy of the organization into a single direction with an agreed goal or objective. Without a common plan in place, everyone lacks direction and sense of purpose.

Outsiders question the organization and are less likely to help the team achieve their ultimate objectives. In addition, board members can become difficult to deal with and may start questioning every proposed action, no matter how significant it is. Align your team and stakeholders to achieve the best outcomes for the organization – articulate a clear strategic plan.

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Does your organization have a clearly articulated strategic business plan that everyone understands and supports? Why do you need one and what is the impact of not having a written strategic plan?

Who should be involved in the preparation, review and approval of your business strategic plan? In this first of a series of blogs about strategic plans, I attempt to answer the first question: WHY?

When asked, most CEOs will say that they have a business strategy, but the true test is to ask three people (senior managers and board members) and see if they can all articulate roughly the same strategy for the corporation.

In fact, many organizations do not have a clearly written strategic plan that has been approved by the board and communicated to all staff and key stakeholders. Without a clearly articulated strategy in place, everyone on the team is pulling in a different direction trying to achieve what they believe to be in the best interests of the corporation.

As Porter outlined in his famous HBR article, strategy is the creation of a unique and valuable position for an organization, requires that you make trade-offs and involves creating “fit” among the corporation’s activities. When faced with the day-to-day challenges of the organization, a CEO often finds it difficult to focus sufficient energy on creation of a strategic plan.

Why do you need a written and approved strategic plan for your corporation?

The main reasons are as follows:

1. Creation of a medium to long-term roadmap for the corporation so that everyone understands the end target and direction. The plan should consider the 3 to 5 year objectives in light of the current situation and the expected changes in the business environment over that period of time. A common road map means that all (or at least most) of the corporate energy is being expended to reach the same common objectives.
   
2. Engagement of the senior team and other key stakeholders to define and refine the vision, mission and approach for the target period. Two heads are better than one and several are better than two to get to a quality output. Engagement also means that people take ownership in the plan and will channel their efforts and energy into reaching the common goal.
   
3. Engagement of the board of directors, advisors, funders and other external stakeholders to review, suggest changes and approve (board) the strategic plan. This brings, not only a superior plan, but also brings the energy and support of a broader team of people to help achieve your objectives.
   
4. A strategic business plan may be required by funders for NFP corporations and generally will be required by financing groups (banks, venture capital firms, etc.) for private and public corporations. Without a clear plan for achieving corporate growth, funders, lenders and investors are unlikely to believe that your corporation is worth the risk.
   
5. Finally, having a clearly articulated strategic plan will support the view that the CEO is a strong and thoughtful leader who can leverage the full resources of the corporation to achieve success over the longer term.

How should you start the strategic planning process?

Many CEOs believe that they need to isolate themselves from the day-to-day activities of the organization and the rest of the team for a couple of days and write a strategic plan or build a slide deck. Others never manage to take the time to put their thoughts down on paper. Both approaches are problematic and generally will hold the organization back from achieving true success.

Development of the strategic plan should be a process that starts with engagement of all key stakeholders to get their views, inputs and ideas. A detailed review of the current situation can be captured in a SWOT (strengths, weaknesses, opportunities and threats) analysis, a tool to shine a light on the state-of-play for the organization. Once there is a degree of alignment then the strategic plan can be detailed, reviewed, approved by the board and communicated to all of the stakeholders.

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