Guest Blogger Steve Earley: Strategic Planning - 10 Essential Steps
Once again, we welcome guest blogger, Steve Earley who shares his thoughts on Strategic Planning. Do you have something great to share? Let us know and you could be featured here as well.
Everyone has heard the old axiom that states “failing to plan is planning to fail.” Most business leaders intuitively understand this and have every intention of creating a strategic plan for their company. However, all too often one of the following occurs:
The leader lacks the requisite experience in creating strategic plans and/or believes it too expensive to hire an outside consultant to assist. Therefore it never gets created.
Other issues take priority and the planning process is delayed, or in some cases never happens.
A plan is created but without specific actions items and appropriate accountability. This scenario leads to failed execution and the plan is likely only to be resurfaced when the next plan is to be developed.
If you have ever gone through a planning process and experienced any of the above, you may indeed question whether the work to create a plan it is really worth all the effort.
But all the data show that creating a comprehensive strategic plan that is well communicated and executed will greatly enhance an organization’s success and results.
Cross Company has a long history of creating and executing strategic plans. We have re-engineered our business and, in the process, produced results that have generated increases in our ESOP stock value well above the S&P 500 Index over the last 35 years. Since the 2008-2009 recession, we have seen a robust 57% growth in organic sales, set record profits, record ESOP stock values and built an incredibly strong balance sheet with no debt and significant cash reserves. We firmly believe we would not have achieved these results without solid strategic plans that were executed very well.
The following will provide a well-tested guideline in how to create and execute a comprehensive 3-5 year strategic plan.
Strategic Planning - 10 Essential Steps
#1 - Hire a Facilitator
The first lesson to be learned is that the Owner/CEO/President should never facilitate the strategic plan process. Doing so biases the plan, inhibits open discussion and/or dissenting opinions, limits creativity and innovation and makes the process seem like “work.”
Leading an effective strategic planning process and corresponding discussions requires training and experience. A good facilitator will have proven methodologies to stimulate thinking, discussion and group interaction. They will have systems for capturing the notes, data and relevant information and tools to assist in the creation of the plan and its corresponding actions. They will know how to keep the team engaged and energized throughout the entire process.
Of course, the facilitator will meet with the business leader to get an overview of the company, understand its business challenges and obtain the leader’s views and desired outcomes. But they will also suggest how to get inputs from others in the organization to help gain buy-in.
Finding such a resource is not difficult nor does it have to be expensive. Many speakers at trade association meetings are well schooled in strategic planning processes. You can also do a Google search and find consultants that specialize in strategic planning. And depending on which state your company is based, there may be federal and/or state subsidized agencies that have these resources as well. These agencies often have proven professionals with great skill sets available for a fraction of the price you would normally pay a consulting firm.
At Cross Company, we have utilized two such state resources to assist in developing our strategic plans: the Small Business Technology Development Center (SBTDC) and the NC State Industrial Extension Service (IES). We believe we received the same level of quality that you would expect of an expensive consulting firm for about one quarter of the cost! If your business is in the state of NC, I recommend them highly!
#2 - Get Inputs from All Stakeholders
One mistake that many companies make when developing strategic plans is to involve only the senior leadership of the organization. We have found it extraordinarily valuable to engage associates at all levels of the organization. In fact we crafted surveys that we sent to all associates and also our external Board of Directors to gain their perspectives and feedback on a number of issues such as:
Our current direction and value proposition.
What is working well.
What can be improved.
Future challenges and threats.
Opportunities we should pursue.
Suggestions and ideas to consider.
What we should not change.
The survey was formatted to also allow for freehand comments after each question and/or section. We got 88% participation and received over 25 pages of freehand comments.
This provided the management team and facilitators valuable information in advance of our planning session. We wanted and respected their input, and they appreciated having a part in developing the plan. Including them made it so much easier getting buy-in and engagement in executing it.
#3 - Conduct an Offsite Retreat
Developing a comprehensive strategic plan requires focus and a lot of mental energy. It is work that can be exhausting at times. Therefore, it is best to convene the planning session offsite. It doesn't have to be held at an expensive venue, but the team needs to be away from distractions and the daily business whirlwind.
The planning team should be together for the entire time. They need to be able to focus their energy on addressing the future challenges and opportunities for the business and crafting strategies that will allow them to achieve the goals of the plan. Allowing for some social time and nice dinners in the evening can work wonders to stimulate creative thinking, generate team building and recharge the batteries.
Our offsite retreats are typically 2 ½ - 3 ½ days with the team arriving in time for dinner the night before the planning session begins. When possible, we like to allow a half day for recreation/team building in the middle of the retreat which helps maximize energy levels when it’s needed most - during the last day of the planning session.
#4 - Thoroughly Assess Your Business
If any marketing research is needed to obtain information to be considered, be sure to get that done in advance of the planning retreat so that the team can assess the data beforehand.
At the retreat, the team begins by assessing the current state of the business, its value proposition, its competitive position and factors impacting the business. The facilitator will lead the team through a series of exercises to:
Identify external influences on the business (e.g. government regulations, disruptive technologies, competitive threats, market cycles, economic factors, etc.).
Complete a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
Complete a competitive analysis.
Document assumptions being made as part of the plan.
Agree on, and prioritize issues to address in the plan.
These exercises force the team to wade through a lot of information and at times can feel like no progress is being made. Don’t worry! This work is invaluable and will later make sense to everyone.
#5 - Establish Major Goals, Objectives and Key Performance Metrics, a Long Term Vision and a Mission Statement
After the business assessment exercises have been completed, the next step is to identify the major goals that your strategic plan will address. These major goals are the high level, overriding and critical initiatives that must be addressed in the plan. It can be one goal, but certainly no more than three or four. Any more than that will be nearly impossible to attain in a 3-5 year period. Examples of these kinds of goals might be:
“Deploying the most effective business model.”
“Attracting and retaining talent, and developing organizational leadership capacity.”
“Assessing our business technology platforms and implementing the systems to achieve our strategic goals.”
Next, the team must establish specific objectives/key performance metrics with completion dates. Typically there are 4-5 and usually include some financial targets. Some examples might include: sales/revenue targets, profit targets, stock value performance, market penetration objectives, acquisition targets, customer satisfaction metrics, eCommerce initiatives, etc.
After the major goals and objectives have been agreed upon, then the team should develop a mission statement (or agree/modify the current one). This is harder than it sounds because the mission needs to be a succinct statement of the company’s value proposition and differentiates you from your competitors. It should also be easy for everyone in the organization to remember!
Finally, the team or the CEO should develop a long term vision for the company. This should be what is commonly referred to as a BHAG (Big, Hairy, Audacious, Goal) and have a 10 year horizon. This is more important than most leaders think. The BHAG helps sell the plan to the organization and creates energy around it. It is especially effective when associates see that progress is being made and that the organization is getting closer to achieving the vision. That in itself creates more energy to make it happen.
#6 - Develop Strategies and Action Plans
Now we finally get to the meat of the planning retreat. Having reviewed all of the information and agreeing on vision, mission, goals and objectives, it is now time to determine how to accomplish all of this.
Depending on how many people are on the planning team and how many goals have been established, it may be best to break the group into smaller teams to develop specific strategies to accomplish specifically assigned goals, and to expedite the process.
Then once the strategies have been outlined the teams should develop specific actions to implement the strategies. These actions/tactics should be very specific, have a date for completion set, and have a team member assigned responsibility for getting each action completed.
These action plans are the desired outcome of the planning retreat. It is rewarding to see the satisfaction and pride the team members exhibit after this action plan process has been finalized.
#7 - Draft a Plan Summary
It is likely that during the planning retreat the planning team will have assigned more work than can be accomplished in the specified time frame, or that they front-loaded the plan with too much to be done in year one. Therefore it is necessary for the CEO or the team to review the plan a few weeks after the retreat to determine what might have been missed, and more importantly what should be eliminated. Once this has been done, it is time to draft a plan summary that can be presented to all stakeholders. This is another important step for several reasons:
It lets the entire organization see the outcome of the planning process.
It lets them see how they individually and collectively influenced the plan.
It creates buy-in and excitement.
It energizes the planning team members and reinforces the importance of their hard work. They become even more committed to executing it!
It provides the opportunity for feedback to ensure all the key issues are addressed in the plan.
It allows the plan to be tweaked and finalized.
#8 - Create a Plan Summary Capsule
Not many companies do this but we have found this to be an extremely valuable way to gain further buy-in from the entire organization and also provide a mechanism for on-going progress updates.
At Cross Company we put the key elements of our strategic plan on a 8 ½ x 11 sheet of paper, have it laminated and then give every associate a copy. We then let them know we will provide them regular updates and ask them to hold us/management accountable for executing it to the best of our ability.
#9 - Review Action Plans Regularly
So we have crafted a plan, communicated it throughout the organization and have gained buy-in. Now is when the wheel meets the road - it’s execution time!
We have developed a discipline to review our progress on all action items of our strategic plan at every management meeting. This forces team members to focus on getting assigned actions completed when due, and/or allowing us to further tweak the plan based on new developments or information. What we have found is this rigor ensures execution of the plan.
#10 - Provide Ongoing Updates to All Stakeholders
Be sure to let everyone in the organization knows how you are progressing with the plan on a regular basis. Doing so creates enhanced management team focus on executing the plan, and also creates trust from the rank and file. Even if the plan is flawed or things are not going as planned, letting everyone know the facts builds confidence that management is on top of things.
Obviously if things are progressing nicely, the updates create confidence, energy and pride throughout the organization. Why wouldn't you take advantage of the opportunity to do this?
Summary
I cannot imagine trying to lead a business that does not have a strategic plan. Yes, it is hard work, takes time and isn't easy. But if a company does not have an idea of what it wants to achieve and a corresponding plan for doing so, what are the odds that it will succeed?
Steve Earley is the CEO for Cross Company - a company comprised of 4 technology groups ranging from Hydraulics, Instrumentation and Automation to Integrated Solutions. Cross Company applies technologies to improve machine and manufacturing process performance. Cross Company is 100% Employee-Owned.
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