What Every Executive Should Know About Strategic Planning

In last week’s article, we covered the first two questions related to planning effectiveness. In the continuation of analysis this week, and over the final two segments of this article series, we will cover others. These questions are intended to help you to objectively evaluate your planning process and identify potential issues and risks that may exist in your organization’s current planning world. How would you answer the following?

3. Is your plan timeframe (not your strategy) spanning more than 12 months?

With the uncertainty we face in our current economic recovery and the care we must take in the management of working capital, a “no” answer would be preferred. If you answered yes, you might have answered in terms of your overall strategy and the fact that strategic goals are naturally longer-term to accomplish than twelve months. However, the plan tactics to accomplish corporate strategy are more effective in shorter time-frames, therefore, you should consider a shorter and more impactful planning horizon to attenuate operational plans and fiscal budgets with measurable accomplishments in the next four quarters.

Although traditional strategic planning approaches have typically been oriented around longer-term planning windows, a shorter plan cycle has some definite advantages. Consider planning on a rolling 12-month basis with quarterly updates for instance. This approach is better suited for defining and achieving outcomes that are based on higher quality information, because it is more current. Let’s face it, the further out plans are made, the more likely it is that you begin dealing with missing, incomplete or inaccurate data to base decisions upon. Having a 3-year strategic plan is not considered a bad thing, we are just recommending that the strategic plan be updated quarterly along with operational plans. Utilization of near-term goals and data based on current competitive and economic factors contains more relevant detail and more adeptly addresses contingency. Companies need the agility that a 12-month rolling plan provides, especially considering that with quarterly updates to support detail planning of desired key outcomes, you are always working with more factual data points to base decisions upon.

4. Do you have more than five strategic goals in your plan?

As with the previous question, “no” answer is preferred here as well. Fewer and more focused plan goals tend to be much more effective. The key here is to avoid overloading your plan with more than you can accomplish. It is far easier to envision numerous plan goals during strategic or operational planning sessions that it is to have a disciplined and more restrained approach that limits the number of plan outcomes to a manageable set.

The problem with having too many plan goals is that each goal must be threaded through the layers of the organization in order to be ultimately accomplished. Each goal mushrooms into many supporting initiatives as the plan gets fully developed, often leading to a tangled mess that lacks any clarity or focus of what the plan goal was there to accomplish in the first place. Another reason that it is problematic to have too many simultaneous operational initiatives supporting a bloated strategic plan is that managers don’t have the time themselves nor the resources at their disposal to maintain focus in such circumstances, leading to plan goals that carry-over into the next plan cycle and are not achieved on time. As suggested in last week’s article post, it is a good idea to have a prioritization process in place that applies a balanced set of criteria against each desired outcome and allows the plan to focus on the most important goals first.