Six Things to Include in a Strategic Plan

Six Things to Include in a Strategic Plan

By Mark Robert Richards

Mission and Vision

The mission and vision create a sense of urgency for the organization. Therefore, they should be motivational and aspirational to the employees. The mission statement should answer the following types of questions:

  • Why does the company exist?
  • Why was the company formed?
  • What is the purpose of the company?
  • What does the company want to accomplish?
  • How does the company intend to fulfill its mission?

The vision paints a picture of what the company will look like in the future. Typical timelines are five to ten years out. A good vision statement should get you thinking outside the box. The vision statement is where you define the B.H.A.G.’s, or the Big, Hairy Audacious Goals made famous by Jim Collins in his book Built to Last.

When setting B.H.A.G.s, make sure they are written as S.M.A.R.T. goals to make them measurable and relevant. Remember, S.M.A.R.T. is a mnemonic acronym, giving criteria to guide in the setting of objectives. S=specific; M=measureable; A=attainable, meaning accomplish the goal in time; R=relevant, meaning goals that align with company values and the long-range plan and; T=time-based.

Core Values

Core values set employee boundaries. They are the guideposts that direct employees in their day-to-day decision-making. First, write down the core values. Then, repeatedly talk about them and what they mean to you as the owner/leader. Then, use many examples to create visual imagery people can connect to their personal life. Core values are the “must-have” and “can’t have” in the culture. If employees violate them, they must leave the company with no exceptions. Core values define the company culture, so be thoughtful when determining them. Setting core values in a company is a great team-building exercise. It brings people together and gets them to open up about what’s important and why it is essential. It allows employees to express themselves and build mutual trust and respect with each other. These are two foundational attributes when building high-functioning teams.

SWOT

Albert Humphrey at the Stanford Research Institute (now known as S.R.I. International) was a management and business consultant that developed the SWOT analysis technique. SWOT is a strategic planning tool to evaluate a project or business venture’s strengths, weaknesses, opportunities, and threats. This technique is an excellent framework to assist employees in developing a strategic business plan. The tool will identify internal and external factors that are both favorable and unfavorable toward achieving the business objectives. However, there are limitations to SWOT, given that it is primarily a qualitative assessment tool. Several other strategic planning techniques exist, including the use of Monte Carlo simulation modeling. The Monte Carlo method is a mathematical technique used to estimate the possible outcomes of an uncertain event.

Key Objectives, Strategies, and Tactics

The strategic plan should lay out the key objectives you want the business to focus on and achieve over the next three to five years. Limit your goals to ideally three to five initiatives unless sufficient resources exist to take on more. However, the upper limit is seven initiatives, as any more will overwhelm the organization. The leaders will not provide a line of sight deep enough to resource and deliver results properly. Think of too many objectives as diminishing returns. The strategies focus on overall actions employed to achieve the goals. There can and often are more than one strategy supporting an objective. Tactics are more granular and focus on the who, what, where, when, and how questions. They address the resources needed to fund and execute the strategies to deliver on the critical objectives.

Measurements

Strategic plans aren’t helpful business tools unless they include SMART goals and measure progress accordingly. Recall, SMART goals are for setting the visionary B.H.A.G.’s, and they are used to evaluate the advancement of the key objectives. First, identify appropriate key performance indicators (KPIs) for the objectives, strategies, and tactics. Then put them into the annual operating plan, which is the first year of the strategic plan. Any management compensation plans include the same KPIs to drive alignment. Next, establish a regular cadence of KPI reviews. The timing will vary by such factors as objective complexity, resources required, and importance. Finally, consider setting both reasonable and stretch goals. Stretch goals are aspirational and go beyond what is needed to deliver on the operating and strategic plans. It takes courage and confidence for employees to put up meaningful stretch goals. You build trust with employees by never penalizing the team for missing a stretch goal. Instead, you find ways to celebrate milestones and progress. A good tool for running efficient KPI review sessions is the Quad Chart.

The Quad Chart is a single sheet of 8 ½” x 11″ paper divided into a 2×2 matrix and shown in the landscape format. The upper left Quad has bullet points addressing “what you said you’d do.” The upper right Quad has bullet points addressing “what did you do.” The lower left Quad has bullet points addressing “what you will do,” and; the lower right Quad addresses “open issues.” Only a single sheet of paper is needed to assess team progress against the key objective KPIs quickly. The Quad Chart expedites the review process and keeps employees focused on the critical issues driving the project.

Contingency Plan

Let’s face it; the strategic plan is outdated the day it is published. Assumptions are inaccurate, external and internal conditions change, and the competition is always on the move requiring strategic plan modifications. Uncertainty is another reason using quantitative tools like Monte Carlo method simulations to evaluate alternative scenarios and assign probability-adjusted outcomes, and value ranges (i.e., standard deviations) is essential. Augmenting the strategic plan with such analysis helps to box the risk and anticipate possible alternative results. Contingency planning improves management plan execution. The best management teams always have multiple defined contingency plans for each key objective, with corresponding strategies and tactics. They employ early warning KPIs as guideposts to trigger the alternative strategies and tactics and abandon the original.

Mark Richards is the retired Chairman and C.E.O. of Appvion, Inc., headquartered in Appleton, WI.

Mark is now President of Meade Street Advisors, L.L.C., board governance, executive coaching, and strategic planning consulting business in Fort Lauderdale, FL. Mark can be reached at

mark@meadestreetadvisors.com

www.meadestreetadvisors.com

www.linkedin.com/in/markrrichards