Strategic issues are critical unknowns driving you to embark on a robust strategic planning process. These issues can be problems, opportunities, market shifts, or anything else that keeps you awake at night and begging for a solution or decision. The best strategic plans address your strategic issues head-on.
Conducting an environmental scan will help you understand your operating environment. An environmental scan is called a PEST analysis, an acronym for Political, Economic, Social, and Technological trends. Sometimes, it is helpful to include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to understand what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:
Learn more on how to conduct a competitive analysis here .
Opportunities are situations that exist but must be acted on if the business is to benefit from them.
What do you want to capitalize on?
Threats refer to external conditions or barriers preventing a company from reaching its objectives.
What do you need to mitigate? What external driving force do you need to anticipate?
Strengths refer to what your company does well.
What do you want to build on?
Weaknesses refer to any limitations a company faces in developing or implementing a strategy.
What do you need to shore up?
Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.
A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. Creating a SWOT analysis lets you see all the important factors affecting your organization together in one place.
It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities, and Threats you developed earlier, review, prioritize, and combine like terms. The SWOT analysis helps you ask and answer the following questions: “How do you….”
Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.
Determine your primary business, business model and organizational purpose (mission) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Identify your corporate values (values) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Create an image of what success would look like in 3-5 years (vision) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Solidify your competitive advantages based on your key strengths | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Formulate organization-wide strategies that explain your base for competing | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Agree on the strategic issues you need to address in the planning process | Planning Team | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) |
The mission statement describes an organization’s purpose or reason for existing.
What is our purpose? Why do we exist? What do we do?
Step 2: discover your values.
Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result. Check our the post on great what are core values and examples of core values .
How will we behave?
Step 3: casting your vision statement.
A Vision Statement defines your desired future state and directs where we are going as an organization.
Where are we going?
Step 4: identify your competitive advantages.
A competitive advantage is a characteristic of an organization that allows it to meet its customer’s need(s) better than its competition can. It’s important to consider your competitive advantages when creating your competitive strategy.
What are we best at?
Step 5: crafting your organization-wide strategies.
Your competitive strategy is the general methods you intend to use to reach your vision. Regardless of the level, a strategy answers the question “how.”
How will we succeed?
Want More? Deep Dive Into the “Build Your Plan” How-To Guide.
Action | Who is Involved | Tools & Techniques | Estimated Duration |
---|---|---|---|
Develop your strategic framework and define long-term strategic objectives/priorities | Executive Team Planning Team | Strategy Comparison Chart Strategy Map | Leadership Offsite: 1 – 2 days |
Set short-term SMART organizational goals and measures | Executive Team Planning Team | Strategy Comparison Chart Strategy Map | Leadership Offsite: 1 – 2 days |
Select which measures will be your key performance indicators | Executive Team and Strategic Director | Strategy Map | Follow Up Offsite Meeting: 2-4 hours |
If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to your strategy map to help you think about the options you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
External Opportunities (O) | External Threats (T) | |
---|---|---|
Internal Strengths (S) | SO Strategies that use strengths to maximize opportunities. | ST Strategies that use strengths to minimize threats. |
Internal Weaknesses (W) | WO Strategies that minimize weaknesses by taking advantage of opportunities. | WT Strategies that minimize weaknesses and avoid threats. |
Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.
Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? Check out examples of strategic objectives here. What are the “big rocks”?
Outcome: Framework for your plan – no more than 6. You can use the balanced scorecard framework, OKRs, or whatever methodology works best for you. Just don’t exceed 6 long-term objectives.
Once you have formulated your strategic objectives, you should translate them into goals and measures that can be communicated to your strategic planning team (team of business leaders and/or team members).
You want to set goals that convert the strategic objectives into specific performance targets. Effective strategic goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you must do in the short term (think 1-3 years) to achieve your strategic objectives.
Organization-wide goals are annual statements that are SMART – specific, measurable, attainable, responsible, and time-bound. These are outcome statements expressing a result to achieve the desired outcomes expected in the organization.
Outcome: clear outcomes for the current year..
Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter. See examples of KPIs here.
Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators (KPIs), ask, “What are the key performance measures we need to track to monitor if we are achieving our goals?” These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.
To move from big ideas to action, creating action items and to-dos for short-term goals is crucial. This involves translating strategy from the organizational level to individuals. Functional area managers and contributors play a role in developing short-term goals to support the organization.
Before taking action, decide whether to create plans directly derived from the strategic plan or sync existing operational, business, or account plans with organizational goals. Avoid the pitfall of managing multiple sets of goals and actions, as this shifts from strategic planning to annual planning.
Department/functional goals, actions, measures and targets for the next 12-24 months
Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal.
Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.
1 Increase new customer base. |
1.1 Reach a 15% annual increase in new customers. (Due annually for 2 years) |
1.1.1 Implement marketing campaign to draw in new markets. (Marketing, due in 12 months) |
1.1.1.1 Research the opportunities in new markets that we could expand into. (Doug) (Marketing, due in 6 months) |
1.1.1.1.1 Complete a competitive analysis study of our current and prospective markets. (Doug) (Marketing, due in 60 days) |
1.1.1.2 Develop campaign material for new markets. (Mary) (Marketing, due in 10 months) |
1.1.1.2.1 Research marketing methods best for reaching the new markets. (Mary) (Marketing,due in 8 months) |
Want more? Dive Into the “Managing Performance” How-To Guide.
Action | Who is Involved | Tools & Techniques | Estimated Duration |
---|---|---|---|
Establish implementation schedule | Planning Team | 1-2 hours | |
Train your team to use OnStrategy to manage their part of the plan | HR Team, Department Managers & Teams | 1 hr per team member | |
Review progress and adapt the plan at Quarterly Strategy Reviews (QBR) | Department Teams + Executive Team | Department QBR: 2 hrs Organizational QBR: 4 hrs |
Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.
Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:
Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned.
By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings. Need help comparing strategic planning software ? Check out our guide.
Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and strategic plan implementation by asking these key questions:
Guidelines for your strategy review.
The most important part of this meeting is a 70/30 review. 30% is about reviewing performance, and 70% should be spent on making decisions to move the company’s strategy forward in the next quarter.
The best strategic planners spend about 60-90 minutes in the sessions. Holding meetings helps focus your goals on accomplishing top priorities and accelerating the organization’s growth. Although the meeting structure is relatively simple, it does require a high degree of discipline.
Strategic planning frequently asked questions, read our frequently asked questions about strategic planning to learn how to build a great strategic plan..
Strategic planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy..
Your strategic plan needs to include an assessment of your current state, a SWOT analysis, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with strategic goals, OKRs, and KPIs.
A strategic planning process should take no longer than 90 days to complete from start to finish! Any longer could fatigue your organization and team.
There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.
Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:
Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?
Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?
Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.
Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?
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Starting a project without a strategy is like trying to bake a cake without a recipe — you might have all the ingredients you need, but without a plan for how to combine them, or a vision for what the finished product will look like, you’re likely to end up with a mess. This is especially true when working with a team — it’s crucial to have a shared plan that can serve as a map on the pathway to success.
Creating a strategic plan not only provides a useful document for the future, but also helps you define what you have right now, and think through and outline all of the steps and considerations you’ll need to succeed.
While there is no single approach to creating a strategic plan, most approaches can be boiled down to five overarching steps:
Each step requires close collaboration as you build a shared vision, strategy for implementation, and system for understanding performance.
Related: Learn how to hold an effective strategic planning meeting
Building a strategic plan is the best way to ensure that your whole team is on the same page, from the initial vision and the metrics for success to evaluating outcomes and adjusting (if necessary) for the future. Even if you’re an expert baker, working with a team to bake a cake means having a collaborative approach and clearly defined steps so that the result reflects the strategic goals you laid out at the beginning.
The benefits of strategic planning also permeate into the general efficiency and productivity of your organization as a whole. They include:
Next, let’s dive into how to build and structure your strategic plan, complete with templates and assets to help you along the way.
There are many brainstorming methods you can use to come up with, outline, and rank your priorities. When it comes to strategy planning, it’s important to get everyone’s thoughts and ideas out before committing to any one strategy. With the right facilitation , brainstorming helps make this process fair and transparent for everyone involved.
First, decide if you want to run a real-time rapid ideation session or a structured brainstorming . In a rapid ideation session, you encourage sharing half-baked or silly ideas, typically within a set time frame. The key is to just get out all your ideas quickly and then edit the best ones. Examples of rapid ideation methods include round robin , brainwriting , mind mapping , and crazy eights .
In a structured brainstorming session, you allow for more time to prepare and edit your thoughts before getting together to share and discuss those more polished ideas. This might involve brainstorming methods that entail unconventional ways of thinking, such as reverse brainstorming or rolestorming .
Using a platform like Mural, you can easily capture and organize your team’s ideas through sticky notes, diagrams, text, or even images and videos. These features allow you to build actionable next steps immediately (and in the same place) through color coding and tagging.
Whichever method you choose, the ideal outcome is that you avoid groupthink by giving everyone a voice and a say. Once you’ve reached a consensus on your top priorities, add specific objectives tied to each of those priorities.
Related: Brainstorming and ideation template
Whether it’s for your business as a whole, or a specific initiative, successful strategic planning involves alignment with a vision for success. You can think of it as a project-specific mission statement or a north star to guide employees toward fulfilling organizational goals.
To create a vision statement that explicitly states the ideal results of your project or company transformation, follow these four key steps:
For example, say your vision is to revolutionize customer success by streamlining and optimizing your process for handling support tickets. It’s important to have a strategy map that allows stakeholders (like the support team, marketing team, and engineering team) to know the overall objective and understand the roles they will play in realizing the goals.
This can be done in real time or asynchronously , whether in person, hybrid, or remote. By leveraging a shared digital space , everyone has a voice in the process and room to add their thoughts, comments, and feedback.
Related: Vision board template
The next step in creating a strategic plan is to conduct an assessment of where you stand in terms of your own initiatives, as well as the greater marketplace. Start by conducting a resource assessment. Figure out which financial, human, and/or technological resources you have available and if there are any limitations. You can do this using a SWOT analysis.
SWOT analysis is an exercise where you define:
For example, say you have an eco-friendly tech company and your vision is to launch a new service in the next year. Here’s what the SWOT analysis might look like:
This SWOT analysis will guide the company in setting strategic objectives and formulating a robust plan to navigate the challenges it might face.
Related: SWOT analysis template
Once you've identified your organization’s mission and current standing, start a preliminary plan document that outlines your priorities and their corresponding objectives. Priorities and objectives should be set based on what is achievable with your available resources. The SMART framework is a great way to ensure you set effective goals . It looks like this:
For instance, going back to the eco-friendly tech company, the SMART goals might be:
With strategic objectives like this, you’ll be ready to put the work into action.
Related: Project kickoff template
In this stage, individuals or units within your team can get granular about how to achieve your goals and who'll be accountable for each step. For example, the senior leadership team might be in charge of assigning specific tasks to their team members, while human resources works on recruiting new talent.
It’s important to note that everyone’s responsibilities may shift over time as you launch and gather initial data about your project. For this reason, it’s key to define responsibilities with clear short-term metrics for success. This way, you can make sure that your plan is adaptable to changing circumstances.
One of the more common ways to define tactics and metrics is to use the OKR (Objectives and Key Results) method. By outlining your OKRs, you’ll know exactly what key performance indicators (KPIs) to track and have a framework for analyzing the results once you begin to accumulate relevant data.
For instance, if our eco-friendly tech company has a goal of increasing sales, one objective might be to expand market reach for its solar-powered products. The sales team lead would be in charge of developing an outreach strategy. The key result would be to successfully launch its products in two new regions by Q2. The KPI would be a 60% conversation rate in those targeted markets.
Related: OKR planning template
Once your plan is set into motion, it’s important to actively manage (and measure) progress. Before launching your plan, settle on a management process that allows you to measure success or failure. In this way, everyone is aligned on progress and can come together to evaluate your strategy execution at regular intervals.
Determine the milestones at which you’ll come together and go over results — this can take place weekly, monthly, or quarterly, depending on the nature of the project.
One of the best ways to evaluate progress is through agile retrospectives (or retros) , which can be done in real time or asynchronously. During this process, gather and organize feedback about the key elements that played a role in your strategy.
Related: Retrospective radar template
Retrospectives are typically divided into three parts:
This structure is also sometimes called the “ rose, thorn, bud ” framework. By using this approach, team members can collectively brainstorm and categorize their feedback, making the next steps clear and actionable. Creating an action plan during a post-mortem meeting is a crucial step in ensuring that lessons learned from past projects or events are effectively translated into tangible improvements.
Another method for reviewing progress is the quarterly business review (QBR). Like the agile retrospective, it allows you to collect feedback and adjust accordingly. In the case of QBRs, however, we recommend dividing your feedback into four categories:
Strategic planners know that planning activities continue even after a project is complete. There’s always room for improvement and an action plan waiting to be implemented. Using the above approaches, your team can make room for new ideas within the existing strategic framework in order to track better to your long-term goals.
Related: Quarterly business review template
The beauty of the strategic plan is that it can be applied from the campaign level all the way up to organizational vision. Using the strategic planning framework, you build buy-in , trust, and transparency by collaboratively creating a vision for success, and mapping out the steps together on the road to your goals.
Also, in so doing, you build in an ability to adapt effectively on the fly in response to data through measurement and evaluation, making your plan both flexible and resilient.
Related: 5 Tips for Holding Effective Post-mortems
Mural unlocks collaborative strategic planning through a shared digital space with an intuitive interface, a library of pre-fab templates, and methodologies based on design thinking principles.
Outline goals, identify key metrics, and track progress with a platform built for any enterprise.
Learn more about strategic planning with Mural.
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In conference rooms everywhere, corporate planners are in the midst of the annual strategic-planning process. For the better part of a year, they collect financial and operational data, make forecasts, and prepare lengthy presentations with the CEO and other senior managers about the future direction of the business. But at the end of this expensive and time-consuming process, many participants say they are frustrated by its lack of impact on either their own actions or the strategic direction of the company.
This sense of disappointment was captured in a recent McKinsey Quarterly survey of nearly 800 executives: just 45 percent of the respondents said they were satisfied with the strategic-planning process. 1 1. “ Improving strategic planning: A McKinsey Survey ,” The McKinsey Quarterly , Web exclusive, September 2006. The survey, conducted in late July and early August 2006, received 796 responses from a panel of executives from around the world. All panelists have mostly financial or strategic responsibilities and work in a wide range of industries for organizations with revenues of at least $500 million. Moreover, only 23 percent indicated that major strategic decisions were made within its confines. Given these results, managers might well be tempted to jettison the planning process altogether.
But for those working in the overwhelming majority of corporations, the annual planning process plays an essential role. In addition to formulating at least some elements of a company’s strategy, the process results in a budget, which establishes the resource allocation map for the coming 12 to 18 months; sets financial and operating targets, often used to determine compensation metrics and to provide guidance for financial markets; and aligns the management team on its strategic priorities. The operative question for chief executives is how to make the planning process more effective—not whether it is the sole mechanism used to design strategy. CEOs know that strategy is often formulated through ad hoc meetings or brand reviews, or as a result of decisions about mergers and acquisitions.
Our research shows that formal strategic-planning processes play an important role in improving overall satisfaction with strategy development. That role can be seen in the responses of the 79 percent of managers who claimed that the formal planning process played a significant role in developing strategies and were satisfied with the approach of their companies, compared with only 21 percent of the respondents who felt that the process did not play a significant role. Looked at another way, 51 percent of the respondents whose companies had no formal process were dissatisfied with their approach to the development of strategy, against only 20 percent of those at companies with a formal process.
So what can managers do to improve the process? There are many ways to conduct strategic planning, but determining the ideal method goes beyond the scope of this article. Instead we offer, from our research, five emergent ideas that executives can employ immediately to make existing processes run better. The changes we discuss here (such as a focus on important strategic issues or a connection to core-management processes) are the elements most linked with the satisfaction of employees and their perceptions of the significance of the process. These steps cannot guarantee that the right strategic decisions will be made or that strategy will be better executed, but by enhancing the planning process—and thus increasing satisfaction with the development of strategy—they will improve the odds for success.
Ask CEOs what they think strategic planning should involve and they will talk about anticipating big challenges and spotting important trends. At many companies, however, this noble purpose has taken a backseat to rigid, data-driven processes dominated by the production of budgets and financial forecasts. If the calendar-based process is to play a more valuable role in a company’s overall strategy efforts, it must complement budgeting with a focus on strategic issues. In our experience, the first liberating change managers can make to improve the quality of the planning process is to begin it by deliberately and thoughtfully identifying and discussing the strategic issues that will have the greatest impact on future business performance.
Granted, an approach based on issues will not necessarily yield better strategic results. The music business, for instance, has discussed the threat posed by digital-file sharing for years without finding an effective way of dealing with the problem. But as a first step, identifying the key issues will ensure that management does not waste time and energy on less important topics.
We found a variety of practical ways in which companies can impose a fresh strategic perspective. For instance, the CEO of one large health care company asks the leaders of each business unit to imagine how a set of specific economic, social, and business trends will affect their businesses, as well as ways to capture the opportunities—or counter the threats—that these trends pose. Only after such an analysis and discussion do the leaders settle into the more typical planning exercises of financial forecasting and identifying strategic initiatives.
One consumer goods organization takes a more directed approach. The CEO, supported by the corporate-strategy function, compiles a list of three to six priorities for the coming year. Distributed to the managers responsible for functions, geographies, and brands, the list then becomes the basis for an offsite strategy-alignment meeting, where managers debate the implications of the priorities for their particular organizations. The corporate-strategy function summarizes the results, adds appropriate corporate targets, and shares them with the organization in the form of a strategy memo, which serves as the basis for more detailed strategic planning at the division and business-unit levels.
A packaged-goods company offers an even more tailored example. Every December the corporate senior-management team produces a list of ten strategic questions tailored to each of the three business units. The leaders of these businesses have six months to explore and debate the questions internally and to come up with answers. In June each unit convenes with the senior-management team in a one-day meeting to discuss proposed actions and reach decisions.
Some companies prefer to use a bottom-up rather than top-down process. We recently worked with a sales company to design a strategic-planning process that begins with in-depth interviews (involving all of the senior managers and selected corporate and business executives) to generate a list of the most important strategic issues facing the company. The senior-management team prioritizes the list and assigns managers to explore each issue and report back in four to six weeks. Such an approach can be especially valuable in companies where internal consensus building is an imperative.
An issues-based approach won’t do much good unless the most relevant people are involved in the debate. We found that survey respondents who were satisfied with the strategic-planning process rated it highly on dimensions such as including the most knowledgeable and influential participants, stimulating and challenging the participants’ thinking, and having honest, open discussions about difficult issues. In contrast, 27 percent of the dissatisfied respondents reported that their company’s strategic planning had not a single one of these virtues. Such results suggest that too many companies focus on the data-gathering and packaging elements of strategic planning and neglect the crucial interactive components.
Strategic conversations will have little impact if they involve only strategic planners from both the business unit and the corporate levels. One of our core beliefs is that those who carry out strategy should also develop it. The key strategy conversation should take place among corporate decision makers, business unit leaders, and people with expertise essential to the discussion. In addition to leading the corporate review, the CEO, aided by members of the executive team, should as a rule lead the strategy review for business units as well. The head of a business unit, supported by four to six people, should direct the discussion from its side of the table (see sidebar, "Things to ask in any business unit review").
Are major trends and changes in your business unit’s environment affecting your strategic plan? Specifically, what potential developments in customer demand, technology, or the regulatory environment could have enough impact on the industry to change the entire plan?
How and why is this plan different from last year’s?
What were your forecasts for market growth, sales, and profitability last year, two years ago, and three years ago? How right or wrong were they? What did the business unit learn from those experiences?
What would it take to double your business unit’s growth rate and profits? Where will growth come from: expansion or gains in market share?
If your business unit plans to take market share from competitors, how will it do so, and how will they respond? Are you counting on a strategic advantage or superior execution?
What are your business unit’s distinctive competitive strengths, and how does the plan build on them?
How different is the strategy from those of competitors, and why? Is that a good or a bad thing?
Beyond the immediate planning cycle, what are the key issues, risks, and opportunities that we should discuss today?
What would a private-equity owner do with this business?
How will the business unit monitor the execution of this strategy?
One pharmaceutical company invites business unit leaders to take part in the strategy reviews of their peers in other units. This approach can help build a better understanding of the entire company and, especially, of the issues that span business units. The risk is that such interactions might constrain the honesty and vigor of the dialogue and put executives at the focus of the discussion on the defensive.
Corporate senior-management teams can dedicate only a few hours or at most a few days to a business unit under review. So team members should spend this time in challenging yet collaborative discussions with business unit leaders rather than trying to absorb many facts during the review itself. To provide some context for the discussion, best-practice companies disseminate important operational and financial information to the corporate review team well in advance of such sessions. This reading material should also tee up the most important issues facing the business and outline the proposed strategy, ensuring that the review team is prepared with well-thought-out questions. In our experience, the right 10 pages provide ample fuel to fire a vigorous discussion, but more than 25 pages will likely douse the level of energy or engagement in the room.
Managers are justifiably concerned about the resources and time required to implement an issues-based strategic-planning approach. One easy—yet rarely adopted—solution is to free business units from the need to conduct this rigorous process every single year. In all but the most volatile, high-velocity industries, it is hard to imagine that a major strategic redirection will be necessary every planning cycle. In fact, forcing businesses to undertake this exercise annually is distracting and may even be detrimental. Managers need to focus on executing the last plan’s major initiatives, many of which can take 18 to 36 months to implement fully.
Some companies alternate the business units that undergo the complete strategic-planning process (as opposed to abbreviated annual updates of the existing plan). One media company, for example, requires individual business units to undertake strategic planning only every two or three years. This cadence enables the corporate senior-management team and its strategy group to devote more energy to the business units that are “at bat.” More important, it frees the corporate-strategy group to work directly with the senior team on critical issues that affect the entire company—issues such as developing an integrated digitization strategy and addressing unforeseen changes in the fast-moving digital-media landscape.
Other companies use trigger mechanisms to decide which business units will undergo a full strategic-planning exercise in a given year. One industrial company assigns each business unit a color-coded grade—green, yellow, or red—based on the unit’s success in executing the existing strategic plan. “Code red,” for example, would slate a business unit for a strategy review. Although many of the metrics that determine the grade are financial, some may be operational to provide a more complete assessment of the unit’s performance.
Freeing business units from participating in the strategic-planning process every year raises a caveat, however. When important changes in the external environment occur, senior managers must be able to engage with business units that are not under review and make major strategic decisions on an ad hoc basis. For instance, a major merger in any industry would prompt competitors in it to revisit their strategies. Indeed, one advantage of a tailored planning cycle is that it builds slack into the strategic-review system, enabling management to address unforeseen but pressing strategic issues as they arise.
In the end, many companies fail to execute the chosen strategy. More than a quarter of our survey respondents said that their companies had plans but no execution path. Forty-five percent reported that planning processes failed to track the execution of strategic initiatives. All this suggests that putting in place a system to measure and monitor their progress can greatly enhance the impact of the planning process.
Most companies believe that their existing control systems and performance-management processes (including budgets and operating reviews) are the sole way to monitor progress on strategy. As a result, managers attempt to translate the decisions made during the planning process into budget targets or other financial goals. Although this practice is sensible and necessary, it is not enough. We estimate that a significant portion of the strategic decisions we recommend to companies can’t be tracked solely through financial targets. A company undertaking a major strategic initiative to enhance its innovation and product-development capabilities, for example, should measure a variety of input metrics, such as the quality of available talent and the number of ideas and projects at each stage in development, in addition to pure output metrics such as revenues from new-product sales. One information technology company, for instance, carefully tracks the number and skill levels of people posted to important strategic projects.
Strategic-performance-management systems, which should assign accountability for initiatives and make their progress more transparent, can take many forms. One industrial corporation tracks major strategic initiatives that will have the greatest impact, across a portfolio of a dozen businesses, on its financial and strategic goals. Transparency is achieved through regular reviews and the use of financial as well as nonfinancial metrics. The corporate-strategy team assumes responsibility for reviews (chaired by the CEO and involving the relevant business-unit leaders) that use an array of milestones and metrics to assess the top ten initiatives. One to expand operations in China and India, for example, would entail regular reviews of interim metrics such as the quality and number of local employees recruited and the pace at which alliances are formed with channel partners or suppliers. Each business unit, in turn, is accountable for adopting the same performance-management approach for its own, lower-tier top-ten list of initiatives.
When designed well, strategic-performance-management systems can give an early warning of problems with strategic initiatives, whereas financial targets alone at best provide lagging indicators. An effective system enables management to step in and correct, redirect, or even abandon an initiative that is failing to perform as expected. The strategy of a pharmaceutical company that embarked on a major expansion of its sales force to drive revenue growth, for example, presupposed that rapid growth in the number of sales representatives would lead to a corresponding increase in revenues. The company also recognized, however, that expansion was in turn contingent on several factors, including the ability to recruit and train the right people. It therefore put in place a regular review of the key strategic metrics against its actual performance to alert managers to any emerging problems.
Simply monitoring the execution of strategic initiatives is not sufficient: their successful implementation also depends on how managers are evaluated and compensated. Yet only 36 percent of the executives we surveyed said that their companies’ strategic-planning processes were integrated with HR processes. One way to create a more valuable strategic-planning process would be to tie the evaluation and compensation of managers to the progress of new initiatives.
Although the development of strategy is ostensibly a long-term endeavor, companies traditionally emphasize short-term, purely financial targets—such as annual revenue growth or improved margins—as the sole metrics to gauge the performance of managers and employees. This approach is gradually changing. Deferred-compensation models for boards, CEOs, and some senior managers are now widely used. What’s more, several companies have added longer-term performance targets to complement the short-term ones. A major pharmaceutical company, for example, recently revamped its managerial-compensation structure to include a basket of short-term financial and operating targets as well as longer-term, innovation-based growth targets.
Although these changes help persuade managers to adopt both short- and long-term approaches to the development of strategy, they don’t address the need to link evaluation and compensation to specific strategic initiatives. One way of doing so is to craft a mix of performance targets that more appropriately reflect a company’s strategy. For example, one North American services business that launched strategic initiatives to improve its customer retention and increase sales also adjusted the evaluation and compensation targets for its managers. Rather than measuring senior managers only by revenue and margin targets, as it had done before, it tied 20 percent of their compensation to achieving its retention and cross-selling goals. By introducing metrics for these specific initiatives and linking their success closely to bonus packages, the company motivated managers to make the strategy succeed.
An advantage of this approach is that it motivates managers to flag any problems early in the implementation of a strategic initiative (which determines the size of bonuses) so that the company can solve them. Otherwise, managers all too often sweep the debris of a failing strategy under the operating rug until the spring-cleaning ritual of next year’s annual planning process.
Some business leaders have found ways to give strategic planning a more valuable role in the formulation as well as the execution of strategy. Companies that emulate their methods might find satisfaction instead of frustration at the end of the annual process.
Renée Dye is a consultant in McKinsey’s Atlanta office, and Olivier Sibony is a director in the Paris office.
This article was first published in the Autumn 2007 issue of McKinsey on Finance . Visit McKinsey’s corporate finance site to view the full issue.
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Every successful business has a plan and knows where it is heading in the future. Setting a plan with goals, target dates, and a purpose should be finalized before embarking on a business. Taking the time on an ongoing basis to review the company's past performance, and predict its future performance, gives it a road map to follow.
Without strategic planning , which is knowing the current state of your business and where you want it to go, most businesses will fail. A strategic plan allows you to see what is important, how to get there, the pitfalls to avoid, and the noise to ignore. Below we discuss some of the reasons why strategic planning is important and how to implement it.
The very first strategic planning most businesses do is a business plan . When you first start your business, you will likely have prepared a mission statement , a budget, and a marketing and promotion plan. The business plan is a good first step, but it needs to be reviewed and updated as the business continues and grows. If you shove it in a drawer and let dust gather on it, it won't serve as the foundation of your business, as it was meant to.
A business plan serves as the blueprint for a company's success, providing a comprehensive roadmap that outlines its objectives, strategies, and tactics for achieving growth and profitability. In some cases, a business plan is also necessary for attracting external funding and support from an outside investor or bank.
How you go about conducting strategic planning will depend on many variables, including the size of your business, the time frame included, and your personal preferences. The most common style of plan is goals-based. In this type of plan, you set goals for the business (financial and non-financial) and map out the steps needed to meet those goals.
For example, if your goal is to have $100,000 in revenues next year, the steps to get there might include bringing in five new clients a month and attending three trade shows. Whatever the goals you set for your business, they should be concrete and measurable so that you know when you reach them. Another method of strategic planning is mission-based.
When you first started your business, you likely developed a mission or values statement, outlining the purpose of your company and its overall reason for being. A mission-based strategic plan ties each part of the plan into the mission, to ensure that the company is always operating in the service of that mission.
For example, if your mission statement is to be recognized as a leader in the financial services sector and to help families become financially independent, your strategic plans should address how you will meet those goals.
It can be difficult to find the time to plan your business. Other, more pressing priorities, like trying to bring in revenue , may grab your attention; however, carving out time regularly will help you keep on top of your business.
Blocking off a few hours a day or week to focus on your plan should be part of your business operations. During that time, you can examine the prior week's financial performance and update any marketing initiatives to make sure that your business is on track with your initial plan. If it's not, then you'll need to make adjustments to get back on track.
Regardless of how often you plan, make sure that you set it in stone in your day planner. Block off the time and don't let anything else get in the way. Turn off your cell phone and, if at all possible, go somewhere away from your office to plan in order to minimize distractions.
As a business owner, you will most likely have employees. It is critical to inform them of your strategic plan so that they are on the same page and working towards the same goal as you.
Including your staff in your strategic plan will instill a feeling of responsibility in their jobs that will help ensure productivity.
For example, if you have a sales team and your strategic plan involves bringing in five new clients a month, your sales team needs to be aware of this so that they know the goal to achieve. If they don't, perhaps they would be under the assumption that bringing in two new clients a month is excellent, when in actuality, it is only 40% of your goal. Without clear communication to your employees, your business will be a boat set adrift without any course to follow.
A critical part of the planning process is reviewing your previous plan and comparing it to your actual results. Were you able to bring in five new clients last month? If not, why not? Tweak the plan going forward to account for changes in your business or the general economic climate. The more experience you get with the planning process and with the operational side of your business, the more accurately you will be able to plan.
Once you have had your business running for a while and block out time to follow up on your strategic plan, you will be able to determine where the strengths and weaknesses in your business lie. This would allow you to correct course, perhaps changing your business plan and goals slightly to focus on your strengths, while allowing you to eliminate your weakness, making your business stronger and increasing the likelihood of achieving your goals.
Strategic planning is crucial for businesses because it provides a roadmap for achieving long-term objectives, identifying opportunities, and mitigating risks. It helps align organizational resources, activities, and goals, ensuring that everyone is working towards a common vision.
The key benefits of strategic planning include improved decision-making, enhanced resource allocation, increased organizational alignment, better risk management, and the ability to seize opportunities for growth and innovation.
Without a strategic plan, organizations may struggle to maintain focus, allocate resources efficiently, or adapt to changing circumstances. They may miss opportunities for growth or become vulnerable to competitive threats. Companies with a strategy may be more likely to face challenges in sustaining long-term success.
Best practices for effective strategic planning include involving key stakeholders in the process and conducting thorough environmental scans to fully understand all aspects of a company that will be impacted. This can be done through a SWOT analysis. Once your strategy is in place, set clear and measurable objectives, regularly monitor progress, and don't be afraid to realign the strategy with new information as it comes available.
Planning out the future of your business is the best way to ensure success. Creating an initial plan and communicating that plan to your employees will ensure that everyone is working towards the same goal.
Taking out time to review your business's results and comparing them to your plan will help ensure that the right policies and procedures continue whereas those that are not benefiting the company will be removed. It may seem awkward and difficult at first to create a strategic plan, but with practice, you will be able to move your business in the right direction.
Noah Parsons
5 min. read
Updated October 27, 2023
Many business owners know and understand the value of a business plan. The business plan is a key component of the startup and fundraising process and serves as a foundation for your organization. However, it only tells part of the story. To get the whole picture and have a framework on which to build your business you also need a strategic plan and an operational plan.
In its simplest format, a business plan describes the “who” and the “what” of your business. It lays out who is running the business and what the business does. It describes the products and services that your business sells and who the customers are.
A strategic plan looks beyond the basics of a business plan to explain the “how”. It explains the long-term goals of the business and how it expects to achieve those goals over the long term. A strategic plan explores future products and services that your business might offer and target markets that you might expand into. The plan explains your strategy for long-term growth and expansion.
An operation plan zooms into the details of your business to explain how you are going to achieve your short-term goals . It is the “when” and “where” of your planning process. The operational plan covers the details of marketing campaigns, short-term product development, and more immediate goals and projects that will happen within the next year.
First, let’s look at the difference between a business and a strategic plan. For review:
A business plan covers the “who” and “what” of the business. The strategic plan gives us long-term goals and explains “how” the business will get there, providing a long-term view.
In broader terms, the business plan tells us who by showing us:
The business plan answers the “what” by telling us:
The strategic plan, on the other hand, outlines long term goals and the “how”, focusing on the following:
So, your business plan explains what you are doing right now. Your strategic plan explains long-term aspirations and how you plan to transition your business from where it is today to where you want it to be in the future. The strategic plan helps you look more deeply into the future and explains the key moves you have to make to achieve your vision.
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While strategic planning looks at the long term and explains your broad strategies for growth, an operational plan looks at the short term. It explains the details of what your business is going to do and when it’s going to do it over the next twelve months or so. An operational plan covers details like:
The bottom line, your operational plan is the short-term action plan for your business. It’s the tasks, milestones, and steps needed to drive your business forward. Typically an operational plan provides details for a 1-year period, while a strategic plan looks at a 3-5 year timeline , and sometimes even longer. The operational plan is essentially the roadmap for how you will execute your strategic plan.
A great business plan can encompass both the basic plans for the business, the long-term strategic plan, and the near-term operational plan. Using a lean planning method, you can tackle all three phases of planning and make the process easy to review and revise as your business grows, changes, and adapts.
The lean planning methodology starts with a simple, 30-minute business plan that outlines the fundamentals of your business: who you are, what you are doing, and who your customers are. It’s a great way to provide a brief overview of your business.
From there, you can expand your plan to include your longer-term strategy. Adding greater detail to elements of the plan to explain long-term goals, milestones, and how your products and services will change and expand over time to meet changing market conditions.
Finally, your lean plan will cover financial forecasts that include monthly details about the short-term revenue and expenses, as well as longer-term annual summaries of your financial goals, including profitability and potential future loans and investments.
Regardless of the type of plan, you are working on, you need a team of players on hand to help you plan, develop, and execute both the operational and strategic plans. Remember, your business needs both to give it a clear foundation and a sense of direction. As well as to assist you with identifying the detailed work that has to happen to help you reach your long-term goals.
Learn how LivePlan can help you develop a business plan that defines your business, outlines strategic steps, and tracks ongoing operations. You can easily share it with your team and all of the right stakeholders, explore scenarios and update your plan based on real-world results. Everything you need to turn your business plan into a tool for growth.
Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.
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You don’t need dozens of strategic goals.
Many strategic plans aren’t strategic, or even plans. To fix that, try a six step process: first, identify key stakeholders. Second, identify a specific, very important key stakeholder: your target customer. Third, figure out what these stakeholders want from you. Fourth, figure out what you want from them. Fifth, design your strategy around these requirements. Sixth, focus on continuously improving this plan.
Why is it that when a group of managers gets together for a strategic planning session they often emerge with a document that’s devoid of “strategy”, and often not even a plan ?
Strategy and planning are both essential … but don’t confuse them.
SANTA CLARA, CALIFORNIA - OCTOBER 29: Brock Purdy #13 of the San Francisco 49ers checks his playbook ... [+] during the fourth quarter of the game against the Cincinnati Bengals at Levi's Stadium on October 29, 2023 in Santa Clara, California. (Photo by Loren Elliott/Getty Images)
Corporate planning season is upon us. With only about a hundred days left in the year, execs are limbering up for the annual marathon of meetings to decide next year’s goals, metrics, and resource allocations. Even those with financial years that don’t start in January are feeling the pull to plan.
In doing so, though, they risk falling into a common trap: confusing planning with strategy.
Make no mistake, good planning is a crucial factor in any company’s success. But that planning should only be the result of a separate effort to review and revise the overall company strategy. With any luck, that strategy, in turn, grows out of a bigger vision of why the company exists and its place in the world.
Unfortunately, though, these very distinct ideas tend to get merged together under the comforting rubric of “strategic planning,” which in reality just means …planning. Strategy doesn’t get more than a cursory glance. And vision gets relegated to Super Bowl ads and success posters.
I recently had a conversation with a chief strategy officer at a media company that perfectly captured the issue. She wanted help figuring out how to confront her business’s growing competitive challenges. Core revenue is declining. New businesses have been slow to develop. And a raft of new competitors have appeared. In other words, she needed a strategy. But she needed to be finished in two weeks because that was the deadline for next year’s planning cycle.
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My advice to leaders in that situation is to just go ahead with the planning, assuming whatever strategy is in place now. But once that’s underway, it’s time to take a step back and face the bigger questions head-on.
Planning is the implementation of a strategy. It’s the process of agreeing and measuring specific actions, such as product launches, cost cuts, or geographical expansion, that over the next year should move an organization toward its longer-term strategic goals. My friend, the renowned management guru Roger Martin, describes planning as a “thoroughly doable and comfortable exercise” that doesn’t question assumptions.
Strategy is a very different beast. If planning is about templates and trade-offs, strategy is about insights and ideas.
A winning strategy should focus on how a business can play and win in a changing and uncertain world over a longer time horizon of 5-7 years. This makes it an inherently uncomfortable process, involving experimentation, risk, and coming face-to-face with painful scenarios such as how competitors or other threats could kill you.
Beyond that lies vision—the bigger “why” of a company’s existence. That could be a higher social purpose—such as Patagonia’s “to save our home planet”—or a more practical vision of where a company sees itself in the world over a longer time horizon stretching out a decade or more.
In short, if you know what you're going to do and when, you have a plan. If you know what might kill you and what you're going to do about it, you have a strategy. And if you know why you should even exist, you have a vision.
Strategy is the crucial bridge between vision and planning, but very few companies spend enough time on it and even fewer are really good at it. In a society that prizes doing things over learning things, planning feels good. It makes leaders and teams feel productive. It enables them to focus on the present rather than the future, which most of us are wired to do . And it’s much easier and more comfortable to tackle than the deep learning required for strategy work.
To be sure, strong planning and execution are vital qualities for businesses to have, and are more important at some times and in some industries than others. During the pandemic, many companies succeeded by just focusing on execution issues like overcoming supply chain challenges. Good planning was a differentiator.
For pharma companies Novo Nordisk and Eli Lilly, the big challenge right now is the planning and operational one of meeting exploding demand for Ozempic and Zepbound, their respective GLP-1 weight-loss drugs. Similarly, Nvidia’s main challenge now is to make enough of its GPU chips to satisfy booming demand for AI capabilities. These companies can focus on execution because they have a winning strategy.
But many companies in a range of industries are crying out for a strategy rather than a plan.
For example, dating apps are struggling as Gen Z singles desert them in droves, jaded by endless swiping and the lack of human connection provided by these sites. The Bumble CEO’s recent pitch for a near future in which personalized AI bots will “date” other users’ bots seemed tone-deaf to the fundamental reason why subscribers are leaving.
Companies like Hinge, Tinder, and Bumble don’t lack a vision—they see their place in the world as helping people to hook up and form relationships. And they have plans, which aren’t working so well. What they desperately need are new strategies centered on somehow restoring trust and humanity to the online dating experience.
Streaming platforms are in a similar mess. Many platforms spent big on content to compete with Netflix but are now losing subscribers who are overwhelmed with viewing choices and are only willing to pay for a couple of services rather than four or five. They need a strategy that differentiates themselves in a crowded market of similar services.
Therein lies one of the biggest problems of focusing solely on planning: when you focus solely on execution, you often end up copying the strategy of everyone around you. And that can lead to a sea of sameness.
Novo Nordisk and Nvidia may be coasting right now, but only thanks to a defining vision and strategy that were set years ago.
In Novo Nordisk’s case, the Danish firm’s development of Ozempic was born out of its decades-old push to become the leading developer of more effective ways to treat diabetes. The seeds of Nvidia’s dominance were sown by CEO Jensen Huang’s strategy of differentiating the chipmaker at least as far back as 2006 when he announced the CUDA software technology. That enabled Nvidia’s GPUs to go from chips used in video gaming to more general purpose ones that could be used to power a range of computing functions.
But no company can rest easy in the planning phase and ignore strategy for long. Novo Nordisk needs to be strategically wary of recent progress by other pharmaceutical firms to develop GLP-1 treatments that can be swallowed as pills instead of being injected. AMD’s recent $4.9 billion acquisition of AI infrastructure company ZT Systems is the latest signal that Nvidia’s dominance may be under threat and that it will need a revised strategy to defend it.
For leaders who are crashing into their annual planning cycles now, this isn’t a call to tear everything up and begin a strategy and vision quest. That would likely be a recipe for confusion and chaos. They should go ahead with the planning, but with a clear awareness that it is just planning. Planning season is upon us. But strategy and vision need their own seasons, too.
Dev Patnaik is the CEO of Jump Associates.
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Aug 28, 2024
The Rippling Team
In the rapidly-evolving business landscape, being able to forecast and plan for the future is a necessity. A recent KPMG survey revealed that an astonishing 46% of Australian companies acknowledge a significant unpreparedness in terms of leadership succession, underscoring a serious gap in strategic planning that could threaten their long-term sustainability. This alarming statistic highlights the urgent need for robust succession planning to safeguard the future of businesses across the nation.
In this article, we explore how strategic succession planning is central to organisational resilience and maintaining a competitive edge in today's dynamic market. From identifying potential leaders early through advanced performance management tools to nurturing them with tailored mentoring programs, you can fortify your leadership pathways and ensure your business thrives through transitions—even when your team is spread across the globe.
Read on to discover what an effective succession plan really involves, why it's integral for your business, and how you can effectively implement it to build a resilient future.
Succession planning is a strategic process that ensures businesses can maintain continuous leadership by identifying and developing new leaders who can replace existing ones when they leave or retire. It's imperative for organisational resilience as it prepares a business to handle transitions without disruption, preserving the continuity of leadership and expertise.
Deloitte's research highlights a significant disconnect in succession planning : while 86% of leaders deem it essential, only 14% believe they manage it effectively. This gap shines a spotlight on the widespread challenges companies face in creating effective succession strategies, underscoring the need for a more focused approach that balances human insights with procedural rigour.
Beyond an HR mandate, effective succession planning is a strategic business advantage. Companies that fail to implement robust succession plans risk leadership vacuums that can lead to operational disruptions and strategic misalignments. This is especially pertinent in dynamic markets, where leadership agility and foresight are tied directly to organisational success and competitiveness.
Key metrics, like 'time-to-fill' for leadership positions and the diversity of the leadership pipeline, are essential to monitor as part of your succession planning process. These metrics can help you measure the effectiveness of your succession planning efforts and ensure that they're creating an inclusive and competent leadership team.
Having a strategic succession plan in place is vital for maintaining business operations and ensuring long-term success. The steps we outline below are key when embarking on your succession journey, ensuring a smooth succession planning process and preparing a new generation of leaders for future opportunities:
Identifying potential leaders involves recognising individuals with the capacity for future leadership roles through various methods, including performance management. Innovative performance management tools like those offered by Rippling’s full-suite HCM can significantly ease this process. These tools offer comprehensive analytics to identify high-performing employees, set performance benchmarks and regularly assess employees against these standards.
In recognising high-potential candidates early, you can allow for targeted development, ensuring they're ready to step into leadership roles when needed. This proactive approach reduces the risk of leadership gaps that can disrupt business operations and result in costly external hires. It ensures a pipeline of capable leaders who are prepared to take on higher responsibilities, thus safeguarding the organisation’s future.
Practical example : Through the use of comprehensive performance management tech, an Australian finance company identifies a financial planner who consistently exceeds performance targets. By recognising this potential, the company starts priming this developer for a future leadership role. They do this by providing leadership training, assigning the planner to cross-departmental projects, and involving them in strategic decision-making processes, thereby aligning their career path with the company’s strategic objectives.
Mentoring provides potential leaders with personalised guidance and development opportunities through structured programs. Platforms like Mentorloop streamline this process by matching mentees with experienced mentors who can offer insights, feedback, and support tailored to the mentee’s career goals and development needs.
Mentoring is pivotal for the personal and professional development of potential leaders, ensuring they acquire the necessary skills and confidence to succeed in higher roles. It accelerates their readiness by providing practical advice and real-world insights from seasoned professionals. 100% of Future 50 companies have mentoring programs , demonstrating the value of mentorship in leadership development. Without mentoring, potential leaders may lack the essential ingredients to succeed, leading to lower confidence and higher turnover rates among future leaders.
‘ In many ways, becoming a good leader rests in the development of soft skills - active listening, conflict resolution, motivational skills, navigating different personalities, etc. And while you can stress the importance of these skills and try to teach them in training sessions, it’s important to give future leaders closer exposure to how these skills have helped leaders within your organisation.’ Mentorloop Co-Founder and COO, Heidi Holmes, shares.
‘ This is because real-world interactions are how these skills are truly learned. And mentoring is what gives emerging leaders the best chance to start developing these skills with the guidance of someone who has refined them over years of leadership challenges and successes.’ she adds.
Practical example : To support its rapid growth, a tech startup pairs promising junior engineers with experienced senior developers through a mentoring platform. In mentoring sessions, the mentees are provided with hands-on coding tips, strategic career advice, and guidance on tackling leadership challenges.
Beyond accelerating the juniors' technical and leadership skills, this process prepares them to take on more significant roles as the company expands. As a result, the startup sees improved retention rates and smoother transitions into leadership roles, ensuring a steady pipeline of prepared and confident leaders.
Tailored development plans are customised strategies designed to address the specific development needs of potential leaders, ensuring they're well-prepared for their future roles. Combining insights from performance management systems and mentoring interactions , development plans focus on strengthening individual skills, addressing specific gaps in their knowledge or experience, and aligning career aspirations with organisational goals.
Implementing tailored development processes into succession planning is key to creating a more robust and prepared leadership pipeline.
Practical example : A large retail company uses data from performance reviews and mentoring feedback to identify a store manager’s excellent team management and customer service skills, but lagging strategic planning abilities. As strategic planning is an essential element of the store manager’s potential leadership role in the future, the company designs a tailored development plan, including a leadership training course focusing on strategic thinking and financial acumen.
The store manager is also assigned a project to streamline inventory management, working with the logistics and marketing teams. Through this comprehensive approach, the company ensures the store manager is well-prepared for a potential regional role.
Once potential leaders have been identified and enrolled in mentoring programs and tailored development plans, the need for continuous evaluation and feedback becomes critical. This involves regularly assessing the progress of potential leaders and providing ongoing feedback to guide their development. At this point, regular check-ins, performance reviews, and feedback sessions should be scheduled to monitor progress and adjust their tailored development plans as needed.
This approach is necessary for ensuring potential leaders remain on track with their development plans, allowing for timely adjustments to address any issues or new opportunities. By keeping the development process dynamic and responsive, organisations can ensure that potential leaders are always aligned with the organisation’s evolving needs.
Without continuous evaluation, organisations may miss signs of progress or issues that need discussing, leading to potential leaders not being adequately prepared for their future roles. This can result in ineffective succession planning, poor leadership transitions, and disruptions in business operations.
Practical example : A healthcare provider uses a comprehensive performance management system to continuously evaluate the progress of a nurse identified for a leadership role. The system schedules quarterly check-ins and performance reviews, during which the nurse receives feedback, and clinical performance and team management skills are assessed. These reviews highlight areas of improvement and achievements, allowing for timely adjustments to the nurse's development plan.
The ongoing evaluations reveal that, while the nurse demonstrates improved team management skills, there are struggles with conflict resolution. As a result, additional training sessions and real-world projects are assigned to address this gap. This responsive approach ensures the nurse develops the necessary skills and confidence to transition smoothly into a supervisory role, thereby maintaining a strong leadership pipeline.
Succession readiness assessments evaluate the preparedness of potential leaders to assume higher responsibilities. These assessments involve a comprehensive review of an individual’s performance, development progress, and readiness to step into a leadership role. Conducted periodically, they ensure continuous alignment with succession plans and help maintain organisational stability and continuity. By evaluating potential leaders objectively, these assessments facilitate a smooth transition when leadership roles need to be filled.
Without implementing succession readiness assessments, organisations risk promoting unprepared individuals, which can lead to poor leadership performance, decreased team morale, and operational inefficiencies. This oversight can disrupt business operations and hinder the organisation's ability to maintain stability and achieve long-term success. Therefore, succession readiness assessments are pivotal to a robust succession planning process, ensuring potential leaders are well-prepared and the organisation remains resilient through leadership transitions.
Practical example: A manufacturing company anticipates the retirement of a plant manager. To ensure a smooth transition, the company undertakes a succession readiness assessment for a senior engineer who has been through various development programs. This assessment involves a detailed review of the engineer's performance data, leadership qualities, and development milestones achieved through mentoring and tailored development plans. The assessment reveals the engineer’s strengths in technical expertise and team leadership while identifying the remaining gaps in strategic decision-making and financial acumen.
To address these, the company arranges for targeted training and strategic project assignments. By the time the plant manager retires, the engineer is fully prepared to step into the role, ensuring continuity and stability in leadership.
Rippling makes setting up and sustaining your performance management process across the employee lifecycle effortless.
Creating a culture that supports succession planning is a vital element of ensuring long-term organisational success. Cultural readiness involves fostering an environment where leadership development is a continuous priority, ensuring that the values, beliefs, and behaviours within an organisation support the ongoing identification and development of future leaders. This commitment can be particularly challenging with a remote or dispersed workforce, but intentional strategies can overcome these hurdles.
When an organisation prioritises leadership development, it creates a sustainable leadership pipeline, ready to fill key roles as they become vacant. This readiness mitigates the risk of leadership gaps that can disrupt business operations and hinder strategic goals.
To integrate leadership development into the core of an organisation, consider employing the following strategies:
Managing succession planning in a remote or dispersed workforce adds complexity but can be addressed with specific strategies:
It's clear to see that strategic succession planning is essential for organisational resilience and maintaining a competitive edge. By identifying potential leaders early, nurturing them with tailored mentoring and development programs, and continuously evaluating their progress, companies can ensure a seamless leadership transition. This approach is essential for safeguarding business continuity and fostering a culture of continuous development and readiness for future challenges.
There’s no denying that effectively executing a succession plan can be labour intensive and resource-heavy. Luckily, there's a silver lining. Rippling and Mentorloop offer advanced, innovative tools to streamline this process. Rippling’s all-in-one platform provides comprehensive analytics and performance management capabilities, allowing for accurate identification and tracking of high-potential employees. Meanwhile, Mentorloop’s platform facilitates effective mentoring programs , matching mentees with experienced mentors who can guide their development.
Together, these tools can help you build a robust leadership pipeline, ready to navigate transitions smoothly, while significantly reducing the administrative burden of succession planning, so you can focus on developing your future leaders.Start your succession planning journey with Rippling and Mentorloop today and create a resilient, future-ready organisation.
Create a resilient, future-ready organisation with Rippling.
Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
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Definition of a business plan vs. a strategic plan. A strategic plan is essential for already established organizations looking for a way to manage and implement their strategic direction and future growth. Strategic planning is future-focused and serves as a roadmap to outline where the organization is going over the next 3-5 years (or more ...
The biggest difference between a strategic plan vs. a business plan is its purpose. Existing companies use the strategic plan to grow their business, while entrepreneurs use business plans to start a company. There is also a different timeframe for each plan. Generally, a strategic plan is conducted over several years while a business plan ...
Step 1: Assess your current business strategy and business environment. Before you can define where you're going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.
Overcoming Challenges and Pitfalls. Challenge of consensus over clarity. Challenge of who provides input versus who decides. Preparing a long, ambitious, 5 year plan that sits on a shelf. Finding a balance between process and a final product. Communicating and executing the plan. Lack of alignment between mission, action, and finances.
1. Basic model. The basic strategic planning model is ideal for establishing your company's vision, mission, business objectives, and values. This model helps you outline the specific steps you need to take to reach your goals, monitor progress to keep everyone on target, and address issues as they arise.
Devising a business strategy can ensure you have a clear plan for reaching organizational goals and continue to survive and thrive. According to a study by Bridges Business Consultancy , 48 percent of organizations fail to meet half of their strategic targets and 85 percent fail to meet two-thirds, highlighting why dedication to the business ...
Strategic plans bridge the gap from overall direction to specific projects and day-to-day actions that ultimately execute the strategy. Job No. 1 is to know the difference between strategy and strategic plans — and why it matters. Strategy defines the long-term direction of the enterprise. It articulates what the enterprise will do to compete ...
Strategic management is part of a larger planning process that includes budgeting, forecasting, capital allocation, and more. There is no right or wrong way to do strategic management — only guidelines. The basic phases are preparing for strategic planning, creating the strategic plan, and implementing that plan.
Strategic plans constitute the basis of operations and responsibilities within the business. These plans lay the paths out for each member of the organization to follow and define the functional outline and the key outcomes for every project and process within the business. A strategic plan goes on to define the operations and their outcomes ...
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization's goals, and ensure those goals are backed by data and sound reasoning. It's ...
Conclusion. Both strategic and business planning are vital to build and grow a business. While business planning focuses on setting up the business and handling investment, vision and overall goals, strategic planning concentrates on growing the business and processing operational efficiency and resource allocation on a longer-term basis.
Strategic planning is how the company designs that system, which is very different from an operational action plan in that it is never a static to-do list but constantly evolves as strategy makers ...
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees, and ensure organizational goals are backed by data and sound reasoning. ... A good strategic plan evolves ...
However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business. ... While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction. Additional Resources.
Estimated Duration. Determine organizational readiness. Owner/CEO, Strategy Director. Readiness assessment. Establish your planning team and schedule. Owner/CEO, Strategy Leader. Kick-Off Meeting: 1 hr. Collect and review information to help make the upcoming strategic decisions. Planning Team and Executive Team.
Determine your priorities and objectives. Define responsibilities. Measure and evaluate results. Each step requires close collaboration as you build a shared vision, strategy for implementation, and system for understanding performance. Related: Learn how to hold an effective strategic planning meeting.
"A business plan describes the foundations of a company, its owners, its capabilities, the industry and market(s) in which it operates, how it generates revenues and its financial projections," says Jérôme Côté, a Business Advisor with BDC's Advisory Services who counsels companies on strategic planning.
In conference rooms everywhere, corporate planners are in the midst of the annual strategic-planning process. For the better part of a year, they collect financial and operational data, make forecasts, and prepare lengthy presentations with the CEO and other senior managers about the future direction of the business.
Strategic planning is a critical business practice for positioning an organization for success, aligning leaders to a common plan, and guiding management decisions.
Strategic planning is crucial for a business as it creates a map for a business to follow and course correct when need be. The first part of a strategic plan is the business plan, which outlines ...
Planning is comforting but it's a terrible way to make strategy, says Roger Martin, former dean of the Rotman School of Management at the University of Toronto. In contrast, setting strategy ...
Strategic planning Magazine Article Joseph L. Bower Political scientists, legislators, educators, business executives, lawyers, consumerists—practically everyone, it sometimes seems—is calling ...
Save. Summary. Chief strategy officers and those responsible for shaping the direction of their organizations are often asked to facilitate "visioning" meetings. This helps teams brainstorm ...
It's the tasks, milestones, and steps needed to drive your business forward. Typically an operational plan provides details for a 1-year period, while a strategic plan looks at a 3-5 year timeline, and sometimes even longer. The operational plan is essentially the roadmap for how you will execute your strategic plan.
The goal of developing a strategic plan is to ensure everyone in the business is aligned when it comes to your small business's goals and objectives, as well as to create a formal strategic plan document. 1. Discussion Phase. The discussion phase is meant to gather as much information, opinions, and input as possible.
Summary. Many strategic plans aren't strategic, or even plans. To fix that, try a six step process: first, identify key stakeholders. Second, identify a specific, very important key stakeholder ...
Corporate planning season is upon us. With only about a hundred days left in the year, execs are limbering up for the annual marathon of meetings to decide next year's goals, metrics, and ...
Join us for a hands-on webinar that will walk you through a simplified approach to strategic planning using one of the most powerful tools that the Entrepreneurial Operating System (EOS) has to offer. As an attendee, you'll walk away with clear and actionable steps to position yourself for success in 2025.
In the rapidly-evolving business landscape, being able to forecast and plan for the future is a necessity. A recent KPMG survey revealed that an astonishing 46% of Australian companies acknowledge a significant unpreparedness in terms of leadership succession, underscoring a serious gap in strategic planning that could threaten their long-term sustainability.
2:30 PM to 3:30 PM - Memorial Student Center, Ballroom A: The Strategic Planning Group will develop and deploy a strategic plan for UW-Stout incorporating the values of participation, communication, and data-driven outcome-based results.