Strategic planning guide for leaders & business owners

For successful organizations, few tasks are as important as strategic planning. As business professor Lee Bolman once said, “A vision without a strategy remains an illusion.”

A well-made strategic plan serves as a map toward an organization’s idea of success. The plan must start with a vision, the driving force behind the organization. Then, executives must identify the goals that will bring their vision to life.

Once those goals are in place, strategic planning entails finding the tactics that will move the company closer to its goals. This means understanding the company’s markets, products and infrastructure, as well as how they can be used to meet organization goals.

Organizations must continuously identify threats and opportunities that may disrupt the plan. This helps them to prepare for adjustments that will need to be made as the world changes.

Strategic plans operate as a continuing process, according to Marc Emmer, a Vistage speaker and president of consulting and strategic planning firm Optimize Inc.

“It’s critical that companies think of strategy as a process, not an event,” Emmer says. “The process is about discipline, like maintaining your health. If the gym is on my calendar for five days this week but I have a last-minute crisis that makes me miss the gym on Thursday, that doesn’t dissuade me from my discipline of going back the next day. You plan, then adjust based on reality.”

The best companies are methodical in how they plan, Emmer says. In mid-market companies, senior managers spend as much as 5-10% of their time planning. By giving themselves time to step back from daily tasks to plan, these organizations allow themselves the space to adjust based on their collision with reality.

Where strategic planning goes wrong

Unfortunately, few organizations know how to create, implement, and execute a successful strategic plan.

Authors David Norton and Robert Kaplan wrote in their book, “The Balanced Scorecard,” that 90% of organizations fail to execute the plans they’ve created. The Economist Intelligence Unit has reported that 61% of executives say their firms struggle to bridge the gap from strategy to day-to-day implementation.

Too many executives get caught up in the tactics — the immediate objectives, today’s to-do list, and reacting to changes in the business environment. This distracts them from planning the organization’s future beyond strategic planning meetings, which are too often merely annual events.

Dr. Alison Grizzle, founder and president of business management consultancy Clearview Strategy Partners, says that most organizations create plans that are too simple to influence the business. These plans are made to check boxes throughout a single year rather than helping the organization grow over many years, she says.

And when organizations do have consistent strategic planning in place, they often use simple downloadable models and templates, Emmer says. He estimates one-third of Vistage members use such templated systems.

And while they are great useful for teams that lack structure, canned systems outlive their usefulness.

“Professional managers are not satisfied making strategy decisions without analysis and data,” Emmer says. “At this point in a company’s life cycle, downloadable templates and canned systems are no longer sufficient.”

No two plans are alike

One size “does not fit all” when it comes to strategic planning, Emmer says. A plan must evolve throughout the company’s life cycle. Rather than relying on a simple model, organizations hoping to grow must work to understand their limitations as part of the planning process.

Emmer suggests that executives think of their strategy as a set of look at inputs and outputs. What work is the company putting in and what results are they getting from that work? This is a line of inquiry that will take a company far deeper than any model, as it will lead smart organizations to follow the data and analytics.

Good data is truthful, showing organizations areas where they’re succeeding and highlighting areas where they struggle. Data and analytics make strategic plans work better and give companies the visibility they need into their operations, Grizzle says. Clean data allows executives to be sure they’re steering the organization’s proverbial ship with a well-drawn map, landing closer to the organizational vision.

Behavioral analytics, for example, allows an organization to clearly define expectations for employees, and then examine how employees met those expectations by way of their actions and behaviors. This shows the organization whether these expectations are being met, but it also gives employees a well-defined vision of what the organization expects.

“Executing on a plan is just a dream if the people aren’t ready to execute,” Grizzle says. “If you aren’t thinking about the people on your team, what they bring to the team, and how they are positioned to move the needle, then you’re going to miss a key component of the plan. And the odds of the plan being executed decrease significantly. And then your plan is just a pretty piece of paper on the wall.”

How CEOs can lead strategic planning

A well-made strategic plan comes from a well-led process, and that starts with the CEO. CEOs must have ownership of the organizational vision, Grizzle says, and hold tightly to that vision through growth.

CEOs are the decision-makers and the ship’s captain for any strategic plan, but they are likely not the person ensuring that a plan is carried through. For that, they delegate, giving other executives the freedom to lead on issues like measurement, accountability and communication.

“You need a person who is responsible for ensuring that the deliverables are on paper and that you’re reviewing them routinely,” Emmer says. “We always advocate that our clients meet every month after the strategy meeting and go through their common objectives. If you have four or five projects, CEOs will have someone who serves as champion or project manager for each one of those projects.”

Done correctly, this sentiment moves through the entire organizational structure. Managers who are given a clear understanding of the business (thanks to the planning process) can create a clear sense of understanding for each employee on their team.

CEOs must also set the tone in using the strategic planning process to confront cognitive biases. Biases are frequently exposed during planning meetings, Emmer says. Confirmation bias — favoring information that confirms rather than challenges one’s beliefs and values — is the most common bias he sees.

“You have to make decisions based on facts,” Emmer says, adding that people are often surprised to be challenged and find out they were wrong. “When people make a claim to me like we ought to do X, Y, and Z, I’ll ask them, ‘Based on what evidence?’ That helps to overcome bias.”

The main task of a CEO leading a strategic planning process is to remove barriers that get in the way of success, Grizzle says. This will be especially important as the plan is executed and areas of struggle are revealed.

“It’s about having honest conversations with people,” she says. “Here’s what we wanted from you, but here’s where you ended up. What were the barriers that got in your way? What resources don’t you have? How can I help you to be successful?”

Dedicating time to strategic planning

A strategic planning process begins in earnest when a company decides to make time to plan, Emmer says. Most companies do not dedicate time, treating strategic planning casually.

At most companies, Emmer sees that people barely prepare for strategic planning meetings, which typically only happen once per year. In the meeting, a few lists of objectives are created and rarely are those lists distributed to employees.

Instead of this, Emmer suggests that executives ensure that managers and fellow C-level executives take strategic planning seriously.

As part of a strategic planning process, executives can create a team of five-to-10 key stakeholders, known as a strategy team or management committee, to drive the strategic planning process. Management teams that take strategy seriously spend months preparing for a strategy meeting.

For example, says Emmer, executives will be better prepared by conducting market analysis, competitive analysis and employee satisfaction survey.

“They’re going to have data and information that they can act on,” Emmer says. “And then they make informed decisions based on that data. And then they crystallize that in a set of overarching objectives for the management team. And then when they leave that meeting, there is clarity on who is responsible for what.”

This committee — using the data they have from within and outside the company (via the market) — will determine where the company stands, how it can best meet its goals, and what tactical steps can best be taken to meet those goals. They’ll also be looking out for potential threats.

“Identify three or four threats and come up with a way to mitigate them,” Emmer says. “That way, you’re always looking at threats in real time.”

Identifying benchmarks

An overarching question through this strategic planning process, Grizzle says, is “What are the benchmarks?”

Benchmarks will be important for having proof that goals are met, but it will also be essential to know when strategic shifts must be made.

Grizzle says that a shift in strategy will always affect how people do their jobs and, thus, their benchmarks. However, most companies don’t adjust their expectations when they make strategic changes.

“As your business strategy shifts, your people strategy shifts,” Grizzle says. “How are you reexamining your people strategy every step of the way to make sure that your strategy is going to get the results?”

To get the cleanest benchmarks, a company must dedicate itself to finding clean streams of data and refine these streams over time.

Many companies don’t have well-integrated systems, Emmer says, and are often piecing together multiple streams of incongruent data. But Emmer says to remember strategic planning as a series of inputs and outputs — if the input of data is bad, it won’t be able to create a good strategic plan as output.

“Companies that are good at key performance indicators are able to measure the effectiveness of their plan better,” Emmer says. “Most companies use operational KPIs, lagging indicators in the rearview like revenue. We want to look at things that are predictive of future success. For example, good KPIs may be external numbers from the Producer Price Index that will tell me what my materials are going to cost two months from now. That’s better than examining how many parts you put out yesterday.”

The data and KPIs of the plan — taken in concert with knowing the skill set of the employee base — can be used to determine what is needed from employees. This will ensure that the right people are in place to do the work, Grizzle says, and benchmarks will show whether that work is being done well.

“What does the right person in the seat look like for this job, from a behavioral perspective, from a cognitive perspective, and from an experience perspective?” Grizzle says. “That will have companies looking at whether they need to shift hiring, coaching, or development.”

Emmer advises defining the deliverables — a set of overarching objectives each team is responsible for — across the company rather than for individual positions or teams.

“A mistake companies make is organizing objectives by job function,” Emmer says. “If you tell marketing that we need better case studies but not sales, the marketing guy will spend the whole year trying to chase a sales team down to get content for his case studies. But when you create an overarching objective for a corporation that’s co-owned by numerous people, then you have a better chance of achieving success.”

Executing the plan

Perhaps the biggest part of the process of strategic planning is execution and reassessing.

For Emmer, this means dedicating more time throughout the year to planning and adjusting, just as the captain of a ship would slowly steer based on weather and potential obstacles.

“If you’re a company with 100 employees, and those 100 employees work 2,000 hours, you have 200,000 labor hours each year,” Emmer says. “Doesn’t it make sense that a management team takes 200 hours to ensure that time is used well? We spend virtually no time planning, and most of our time reacting when all the bad things are happening. We have it backward in our business narrative.”

Executing a plan also means engaging employees in the process. For some CEOs, this may mean leading the engagement charge. But for others, it will mean finding the right person in the organization to lead company-wide implementation and delegating leadership of the engagement effort to them.

“If my president or COO is great at inspiring and engaging people, they can manage the people part of the plan,” Grizzle says. “It’s important for every role in the company to understand how they support the vision and strategy of the company. They need to be able to say, ‘Here’s my part of making this come alive.’”

‘A living, breathing document’

Once in place, a strategic plan is something of a project management exercise, Emmer says. The problem is that most companies are not good at project management.

Luckily, strategic planning is a perfect way to get better at managing the most important project: The overall success of the company.

Grizzle says that successful companies create a 3-year target for goals — it’s hard to know if a plan is successful without measuring over many years — then do a deep dive to create each year’s strategic plan.

Once created, successful companies hold quarterly meetings to see how the plan is progressing, checking benchmarks and looking for any areas where strategic shifts are needed.

The most successful companies come back to their plan each week during pulse meetings focused on the quarterly targets, Grizzle says. These companies are looking at what success looks like every week, gaining an intimate understanding of what moves the needle and what does not.

“The people that are more effectively executing on their strategic plans are the ones that have it as a living, breathing document,” Grizzle says. “They always know how they’re progressing because they always have the right metrics at the table.”

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