Strategic planning is a business activity that has major implications for an organization’s growth, given that it is the bridge between an organization’s high-level business strategy (e.g. vision, mission, over-arching strategy) and its annual financial planning activities. Without it, an organization is at risk of under-delivering on its vision and growth potential, as well as investing in “off-strategy” opportunities. Yet strategic planning is often over-looked and under-appreciated because, in many organizations, it has become a rote “check the box” activity with little or no actual impact on the day-to-day running of the business.
If you’re looking to increase the impact of strategic planning in your organization to ultimately improve performance, we encourage you to consider these four guiding principles:
#1: Ensure there is a clearly articulated over-arching strategy to implement
#2: Obtain visible and meaningful executive engagement
#3: Give strategic planning “teeth” by outlining financial considerations
#4: Collaborate and iterate with line management to ensure better planning and buy-in
Definition of terms
On a scale from conceptual to practical, a statement of an organization’s high-level strategy is largely conceptual, answering the key question, “Why will we win?” This high-level strategy defines the elements of an organization’s “special sauce” that positions it for greater success relative to competitors, but the high-level strategy is not a plan in and of itself.
On the other end of the scale, an organization’s annual financial planning activities are highly practical, producing the organizational budgets that reflect a company’s investment priorities and drive the company’s day-to-day operations.
Strategic planning connects the conceptual and the practical by detailing the specific strategic, often multi-year, initiatives that fulfill the organization’s high-level strategy and help guide financial planning on an annual basis. The main deliverable is usually a multi-year strategic plan with investment and organizational implications.
#1: Ensure there is a clearly articulated over-arching strategy to implement
Far too often, the details of an organization’s over-arching business strategy live in the minds of its executives, and not on paper. However, without that clear articulation as an input, strategic planning is at risk of producing an eclectic array of loosely related initiatives and tactics. Best-in-class companies often demonstrate unrelenting clarity and focus, as well as an articulate over-arching strategy to provide the clarity and focus necessary for impactful strategic planning.
If your organization needs to better articulate its over-arching strategy, consider the following framework for developing the necessary inputs for more effective strategic planning:
Vision: who or where the business aspires to be in 5 years
Mission: what the business seeks to achieve every day
Scope: where the business will and will not compete (e.g. geographies, channels, consumer segments)
Competitive advantages: sources of unique and sustainable advantages relative to competitors
Elevator pitch: 1-2 sentences summarizing in simple and credible terms the logic of “why we will win” (i.e. how you will create unique value for consumers / customers)
#2: Obtain visible and meaningful executive engagement
Effective strategic planning requires executive sponsorship and involvement for two reasons. First, actions will always speak louder than words; therefore, visible executive sponsorship will lead to the organization treating strategic planning as a high-priority instead of a “check-the-box” activity. Second, regular executive involvement and updates will keep the strategic planning outputs aligned to the executive team’s vision for the business in both the short and long term.
#3: Give strategic planning “teeth” by outlining financial considerations
Effective strategic planning should provide specific guidance and inputs for annual financial planning activities. Without that link to financial planning, strategic planning can seem “nice, but not necessary” due to its limited influence on the business.
Consider giving your strategic planning activities some “teeth” by clearly outlining the implications of the company’s strategic initiatives for its financial planning. Here are three questions you might ask of your strategic initiatives to clarify guidelines for annual planning:
What does this strategic initiative mean for the company’s investment priorities and expectations (e.g. geographies, categories, channels, consumer / customer segments)?
What does this strategic initiative require of the organization and its people (e.g. capabilities and capacity, processes and tools to support)?
What are the expected timelines related to this strategic initiative (e.g. development, implementation, program or offering life cycle)?
By providing meaningful and specific inputs to annual financial planning in the areas of investment priorities and expectations, organizational requirements, and timelines, strategic planning should quickly become more valuable. And by detailing the investment, organizational, and timing implications for its initiatives, strategic planning will better bridge the company’s long-term vision and its near-term financial planning.
#4: Collaborate and iterate with line management to ensure better planning and buy-in
Effective strategic planning work must be collaborative and iterative because it relies on collecting input and feedback from numerous stakeholders and subject matter experts. Strategic planning should specifically rely on line managers to balance the executive team’s vision for the business with a realistic view of what is feasible in the near term, given the current company context. This input-gathering from line managers will achieve two benefits. First, it will strengthen the quality and accuracy of the strategic planning outputs; and second, it will engender “buy-in” more quickly from the line managers and teams whose perspectives have been incorporated – and who will ultimately have to execute on the plan.
Conclusion
Strategic planning is a challenging but rewarding set of business activities because it brings an organization’s strategy to life and can have profound effects on performance. By considering our guiding principles, you are more likely to improve the effectiveness of your organization’s strategic planning activities to help fulfill its long-term vision and objectives – more quickly, and with greater impact.
