How to Achieve your Strategic Plan: Part 2 of 2

In my last post I summarized the top 4 reasons why Strategic Plans fail. But you don’t get rewarded for predicting rain, you get rewarded for building an ark.  So how do you ensure that you achieve your strategic plans? How do you keep everyone moving in the same direction? How do you get the most out of everyone’s efforts? How do you make sure that every day you take another significant step toward your most important enterprise goals?

Evaluating the winds and currents

When setting direction, you have to examine all of the issues that will have an impact on your journey. You look at the voice of your customers, employees and shareholders to analyze your strengths, weaknesses, opportunities, and threats. This in-depth analysis of information from inside and outside your company is essential for charting the right course in a fast changing world. When conducting this analysis, it is critical to give top priority to customer feedback since every companies future ultimately depends on its ability to serve customers better than the competitors.

As an example, your overarching goals for each of your major constituents could be:

  1. Customer: the “provider of choice” as measured by customer delight
  2. Employee: the “employer of choice” as measured by employee satisfaction levels
  3. Shareholder: #1 in Shareholder return
  4. Community: “highly valued member of community” as measured by philanthropic contributions

Measuring your progress

Once you’ve established your overarching goals, you need to make sure that you develop strategies that really drive the business forward. I like to use the “rule of 3” – no more than 3 major strategies for each identified goal. You will also need to develop concrete metrics with breakthrough objectives for each strategy that can be monitored on an ongoing basis, like a speedometer or mileage gauge.

As an example, one of the strategies that you establish to become the “employer of choice” could be:

  1. Retain the best employees. We will retain outstanding performers at every level of the region by developing a spirited, team oriented culture and work environment that combines exciting professional challenges with opportunities for professional growth.
    • Performance Metric: Employee Retention
    • Current Performance: 82%
    • Benchmark: 95%

Turning long-term strategies into short-term tactics

OK. You’re making progress because you’ve defined clear-cut goals, strategies and metrics for the entire company. Now it’s time to analyze the gaps between current performance and the benchmark by utilizing tried and true quality tools and six sigma to develop improvement initiatives to close the gap.

  1. Retain the best: Using my “rule of 3” again, identify the top 3 tactics to close the gap in the coming 12-18 months. NOTE: Just as with strategies, choosing more than 3 tactics greatly diminishes your chances of making any progress due to resource constraints, lack of focus, etc.
    • Recognize and reward outstanding performance at every opportunity.
    • Create an inspiring and competitive team environment by establishing bold objectives and enabling employees to achieve them.
    • Sharpen focus on results by sharing and publicizing them throughout the region.

Getting everyone on board

Once you have identified the tactical plan for the upcoming year, you need to deploy the objectives throughout the organization using a concept called the “time span of control”. For example:

As the leader, you are focused on delivering the year.

→ Your management team has to deliver 4 good quarters to achieve the annual objectives.

→ Their team has to deliver 3 good months every quarter.

→ The front line leaders have to deliver 4 good weeks every month.

→ And each employee has to deliver 5 good days each week.

Approaching deployment of your objectives in this manner ensures that everyone in the company knows how they connect to the strategic goals. It also identifies the budget required to achieve each tactic and it identifies where your incentives are mis-aligned.

Going back to our “employer of choice” example, one of the tactics to “Retain the best” was to recognize and reward outstanding performance. Formalizing this tactic could be as simple as an agenda item in every front line leader’s weekly meeting or an employee of the month program. Establishing a budget for the reward program is also important.

Developing a simple document to serve as your compass

When you complete this integrated planning process, you publish a simple straightforward, three-page document that lists your vision, goals, strategies, and top priority tactics. It also includes a scorecard for tracking progress to the goals.

This document becomes the official company-wide strategic plan that sets the direction each year. Another thing, everyone gets a copy. It’s short, crisp, and it’s meant to be that way. After all, the goal isn’t to list every activity at your company. The purpose is to help everyone focus on the top priorities for the upcoming year as you journey to your five-year goals.

Results-oriented management process

While winning strategies and tactics are important, you can never forget that the best plan in the world is only ink on a page. The real challenge comes in putting the plan to work – and making it work. You need to implement a disciplined way to convert this good work into breakthrough results. This is where the “time span of control” comes in handy again.

Each management level described above has to develop a management process around their “time span of control” to ensure that you have chosen the right tactics and they are delivering the predicted results.

Just as before, the objective is to deliver the annual objectives as part of the 5 year plan.

→ Every Quarter the Board and the investment community requires the leader to provide a status to ensure progress to the annual objectives.

→ To ensure those quarterly calls go well, you need to conduct Monthly Operational Reviews with your Management team to make sure they deliver 3 good months.

→ Your Management team establishes, for example, weekly Sales meetings to ensure that they deliver 4 good weeks.

→ And each employee knows what they have to do each day to ensure they deliver 5 good days.

Summary

The reason this approach works so well is that it addresses the four reasons why strategic plans typically fail as I outlined in the first post. The simple communication document ensures every employee knows the plan. The results oriented management process keeps the management team focused on performance against the goals. And lastly, the “time span of control” formally deploys the goals, identifies budget needs, and establishes the right employee incentives.

Following the “rule of 3” keeps the plans focused, short, and crisp. This limit on strategies and tactics will also force your organization to focus on the few things that will move the needle the most.

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How to Achieve your Strategic Plan: Part 1 of 2

Strategic Plans are everywhere. The development of a Strategic Plan is even considered an annual ritual in some companies. So with all of this effort and practice, why do 9 out of every 10 strategic plans fail? In the first entry of a two-part post, I’ll address the four most common reasons why Strategic Plans fail. In the second part I’ll discuss some practical methods to help companies achieve their Strategic Plans.

Why 9 of 10 Strategic Plans Fail

We have all seen the output of Corporate Strategic Planning sessions: 3 ring binders, charts, actions, metrics, etc. One company actually delivered it in a hard bound, book format. Unfortunately, the output of these sessions actually contribute to the high failure rate. In summary, Strategic Plans typically fail because:

  1. Employees don’t understand the strategy
  2. The Executive team spends less than an hour a month discussing the strategy
  3. The budget is not aligned to the Strategic Plan
  4. Employee Incentives are not aligned to the Strategic plan

Employees don’t understand the strategy

Here is a test – go ask a random group of employees what the strategic direction is of your company and see how consistent the answers are. The sheer size of many Strategic Plans is intimidating to most employees resulting in a lack of understanding.  Most plans are not communicated well and I have even worked for some companies that refused to tell employees what was in the plan because it was confidential! The result is employees not knowing how they contribute on a daily basis to the plans achievement. Even when plans are communicated, it is usually in the form of some type of kick-off meeting. Worst of all, after the kick-off it’s never discussed again.

The Executive team spends less than an hour a month discussing the strategic plan

The plan is completed, 200+ tactics have been identified, it is delivered in 3 ring binders, and it’s placed in the bookshelf. There the binders sit,  collecting dust until next year’s plan displaces them. Every executive team tracks financial results on an ongoing basis and they may even chart overall progress against their 5 year strategic plan. Unfortunately, the 200+ tactics (which, by the way, are excessive) identified as enablers to achieving the strategic plan are rarely discussed. Without ongoing discussions, the company has no idea if the tactics selected were the right ones, if they are delivering the intended results, and if executed flawlessly result in achievement of the plan.

The budget is not aligned to the Strategic Plan

The annual budget process is rarely aligned with the 5 year strategic plan. The reason is fundamental – the budget and the strategy are typically developed by different departments, have different timelines, and are rarely integrated. In addition, the annual budget is geared up to feed the existing machine and are based on prior year run rates. We have all seen how this turns out – departments take on a “use or lose it” spending attitude at the end of the year and their new budget looks a lot like the old budget. Hardly leading to breakthrough results.

Employee Incentives are not aligned to the Strategic plan

As I just mentioned, Strategic Plans are put in place to dramatically improve performance. Once the plan is issued, employees go back to work and are incented to do the work that they have always done. I once worked at a company that put delighting the customer at the core of the strategic plan. Unfortunately, the retail network incentives never changed. The field was still rewarded almost exclusively for current year P&L performance. Even worse – the old customer satisfaction measure was still in place and only weighted at a 20% contribution.

How do you achieve your Strategic Plan?

When you look at these four reasons, it is no surprise that only 10% of companies come close to hitting their strategic goals. In my next post, I’ll share an approach to achieving a strategic plan that I have personally used in many industries. It works so well that the process was even awarded a Global Benchmarking Award.

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