So many strategic plans are vague, incomplete and misunderstood with the result that they are typically under-funded and not fully implemented. In this article, FSN senior writer and author of “The Strategy Gap”, Michael Coveney, shows you how to judge a strategic plan and what’s required in them to reduce the risk of failure.
In the context of business, a strategic plan is ‘a carefully devised plan of action to achieve a goal’, and as such should be the blueprint for the way a company operates.
It should drive the management processes of operational planning and budgeting whose purpose is to implement strategy, and be the focal point of forecasts and management reports to determine whether the strategy is working.
For this to be effective, the plan must achieve the three C’s – it must be Complete, Clear and Communicated. If any of these are lacking, then the chances are that the plan will fail. For fun we have assigned points for each key element that should be present, so you can judge your own organisation’s strategic plan.
Is Your Plan Complete?
A strategic plan is like a high-level road map of how an organisation will achieve its objectives. Like any road map it needs to inform its readers of what lies ahead, the landscape that will be travelled through, and the route that will be taken.
From this ‘map’, the organisation should have enough information on how it can be achieved (the operational plan) and the milestones that should be attained if everything is on track.
But all too often, strategic plans are vague and incomplete. Problems remain undetected as most organisations develop their plans in either a word processor or a presentation package where there is no enforceable structure. These technologies allow plans that sound good, but which on close scrutiny will fail, as there is no common, consistent view of how they are to be implemented.
In terms of completeness, there are 7 key elements that need to be covered:
Objectives
What are the objectives/goals of the company and how will success be measured? If the goal is to grow, then by how much? If it is to be profitable, then how much profit? Award 1 pt if all objectives have measurable goals.
Values
These are the guiding principles on how the organisation should act when carrying out the plan, e.g. ‘fostering good community relations’ or developing a ‘can do’ work ethic. It goes without saying that all actions should be legal, but stating organisational values here will help guide managers when creating operational plans. Award 1 pt.
Strategies
What direction should the organisation take to achieve its objectives? If it is by ‘building strong customer relationships’ or by ‘expanding into new markets’, then there needs to be a measure of success associated with each strategy.
Without measures of success, actions that will be defined later in the operational plan are likely to multiply, as there is no goal on what needs to be achieved. Award 1 pt if strategies have measurable goals.
Timescale / Milestones
For each strategy, there needs to be a ‘milestone’ measure and an associated date, so that managers will know what’s expected to be delivered and by when. This will also be used in management reports to check if the overall plan is on track to achieve the objectives. Award 1 pt if all strategies have milestone measures.
Responsibility
The plan needs to make clear which departments (and ultimately which people) are responsible for developing and carrying out action plans to implement each strategy. Award 1 pt.
Risks & Assumptions
The plan needs to identify the things that could happen (or are assumed to happen), that could prevent defined strategies from being a success. For example, the non-availability of raw materials, or competitors substantially cutting prices. Putting a percentage risk factor on each can help restrict this list to the things that are most likely to happen, or are assumed that will definitely happen. For each assumption/risk there needs to be a set of measures that can be monitored. Award 1 pt for defining risks and assumptions.
Actions
To make the strategic plan a reality, an operational plan will need to be developed that details actions (that will later become the focus of the budget) for each strategy.
Subsequent monitoring of the operational plan will measure the status of implementation and how these actions have contributed to the success of each strategy and objective. It should also inform if any risks and assumptions have been breached and whether associated measures of success need revising. Award 1 pt if operational plans are clearly linked to defined strategies.
Is Your Plan Clear?
From the previous section it can be seen that strategic plans have a logical structure. Objectives are supported by strategies, which in turn are supported by actions. Associated with each strategy are risks and assumptions, while all parts have measures that show success and/or the status/milestone of implementation.
This structure is best documented as a ‘strategy map’ where each element can be shown in a ‘cause and effect’ relationship. Nigel Rainer of Gartner states that “Without cause-and-effect links, metrics can give contradictory messages.” Paul Niven in his widely acclaimed book on the Balanced Scorecard comments “The importance of ‘Cause and Effect’ is that it tells a story of how to get success”.
As well as showing success, strategy maps will also show which objectives/ strategies need further support. Award 1 pt if there is a published strategy map.
Has the Plan Been Communicated?
Norton Kaplan, authors of the Balanced Scorecard’, state that success comes “… when strategy becomes everyone’s everyday job”. This requires strategy to be both communicated and understood by all employees.
There are some who feel that the strategic plan should be kept a secret in case competitors find out what it is. But surely the greater fear is that people within their own organisation won’t know, and it is they who are required to carry it out?
Communication doesn’t just refer to telling employees what is being planned – it also relates to how people are measured and rewarded as this dictates organisational behaviour. A well-communicated plan will include:
- Each employee having a clear ‘line of sight’ between their daily activities and what the organisation is trying to achieve. Award 1 pt.
- Budgets that are directly allocated to strategic initiatives. Award 1 pt.
- Compensation schemes that reward on a combination of implementing strategic initiatives and on the organisation attaining strategic goals. Award 1 pt.
So how does your organisation fare on the above? There were 11 points on offer – scoring anything less than 11 means your plan is lacking clarity and is in danger of not being impleme
