Strategic planning: Exercise or imperative?

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“We have a ‘strategic’ plan. It’s called doing things.”

Admittedly, Herb Kelleher’s legendary Rambo-esque style of leadership is appealing. The former CEO of Southwest Airlines has a point. Few enjoy sitting in a stuffy board room victimized by droning reports and deadly dull presentations — a common perception of strategic planning.

So some leaders, especially entrepreneurs, give the impression that they simply charge forward, reaping success intuitively. Intuition has been credited as a factor in individual success, but a more formal approach is required when coordinating the efforts of groups of people. Leaders are compelled to move their organizations forward by guiding others toward achieving clearly articulated results. This requires strategic thinking and collaborative dialogue, from which an operational plan with measurable actions, timelines, and persons responsible is created. In this way, effective strategic planning is about “doing things.”

Management guru Peter Drucker recommends blending entrepreneurial and formal approaches in his definition of strategic planning: “Strategic planning is the continuous process of making present entrepreneurial decisions systematically and with the greatest knowledge of their futurity; organizing systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations…”

Leaders of successful organizations, even those who disparage formal strategic planning, perform a series of steps in search of answers to several fateful questions.

These steps and accompanying questions are as follows:

Foster a collective vision by establishing or affirming organizational identity and purpose.

Leaders ask: Who are we and why do we exist? Who are our customers and what do they value and need? What do we give them and how do we do it? What can we do that others cannot? What is our desired image for the future? What does long-term, ongoing success look like? What are the guiding principles and/or core values that guide our decisions and behaviors?

Some of the most useful questions about an organization’s purpose are contextual. They address internal and external conditions.

Leaders ask: Looking inside the organization, what works for us and what works against us? What are our strengths and weaknesses? What are the issues and developments of which we should be mindful? What are the opportunities and threats? Who are our competitors and what are they doing? With whom might we collaborate for mutual benefit?

Often leaders invite key stakeholders to participate in these conversations. Stakeholder perspectives and opinions illuminate different ways of thinking and spark outcomes as dramatic as a paradigm shift or as simple as a tactical approach that saves thousands of dollars. All the while, these stakeholders gain a clear understanding and commitment to the vision they helped create, which carries through in the operational phase.

Set strategic direction by determining high level goals and strategies to accomplish success as defined in the vision.

Leaders ask: What we must address or take advantage of to be successful in the long run? In other words, what are our critical success factors? What high level goals must we set? What approaches (strategies) will we take to accomplish the goals?

By answering these questions leaders analyze ways to maximize strengths, minimize weaknesses, capitalize on opportunities, and neutralize threats. From this analysis they determine critical success factors — the three to five key things that must be addressed to ensure organizational success. Using critical success factors as the basis for the strategic plan, they create a few broad, long-term goals, along with strategies to support the goals. Due to the broad nature of the goals, an organization may have the same goals year after year (raise revenue, make a better widget, etc.), but the strategies and tactics are updated annually as the plan evolves and surrounding conditions change.

Write an operational plan that clearly spells out what is to be done, by whom and when.

Leaders ask: What specific actions should we take to accomplish our goals and strategies? What measures do we put in place to determine success? What is the deadline for each step? What are the milestones to mark our progress? Who is accountable for outcomes? What resources do we need? How should we align organizational structure and job responsibilities for optimal achievement?

The benefits of an operational plan are many. It greatly increases the likelihood of success. An operational plan clearly communicates where to focus and what specifically must done by who and when. It holds people accountable and instills a sense of purpose. If implemented correctly, shared accountability builds collaborative work environments and fosters high performance.

Many organizations don’t have an operational plan per se. Instead, the plan for operational success is laid out in individual, team, division performance plans. Operational plan achievement is linked to performance review and rewarded accordingly.

Plan progress is communicated in annual reports, shareholder notices, and for nonprofits, in fund raising materials.

Execute, evaluate and adjust the plan annually or as necessary

Leaders ask: Are we achieving expected outcomes? If not, what adjustments are needed? Are systems, structure, budgets, and people aligned to support the plan? What are our successes? To whom and how will we communicate our successes? How will we celebrate them collectively to inspire ongoing commitment to high performance?

Strategic planning is continuous and cyclical. Evaluation is key. The aforementioned steps are repeated periodically to ensure ongoing success.

Strategic planning is not a pointless exercise. It is a proactive endeavor, essential to achieving sustained organizational excellence. Drucker sums it up in a quote that even Herb Kelleher might appreciate: “You can either take action or you can hang back and hope for a miracle. Miracles are great, but they are so unpredictable.”

Kae Rader is president of Rader Consulting. Reach her at kae@raderconsult.com.