Have you built your strategic plan for 2024?
An essential process and tool for every company, strategic planning is needed as it defines a clear path and direction, allocates resources efficiently, and helps ensure a team is on track to successfully meet both short and longer-term objectives. The strategic planning process is essential for a company’s success, sustainability, and competitiveness in the ever-changing business landscape.
But remember a plan is only a solid tool if it is put into action. The creation of a strategic plan “playbook” will help a team move along to execution and translate the strategy into actions that can be tracked and monitored. And, during the creation of the plan, there MUST be both mutual agreement and a commitment to ensure alignment to the plan continues over time, otherwise, this will be a fruitless exercise.
First, let’s step back and revisit the purpose of developing a strategic plan. When built correctly, a plan will play a crucial role within a company as it will work to:
- Establish Clear Objectives: Strategic planning allows a company to define its goals and objectives for the upcoming year. It provides a roadmap for what the organization wants to achieve, helping to align all employees and stakeholders toward a common vision.
- Allocate Resources: A strategic plan helps the company determine how it will allocate its resources, such as budget, personnel, and time. By setting priorities and making informed decisions about resource allocation, the company can maximize its efficiency and effectiveness.
- Enable a Company to Seamlessly Adapt to Change: The business environment is constantly evolving. By engaging in strategic planning, a company can anticipate and adapt to changes, both internal and external. This proactive approach helps the organization stay competitive and resilient.
- Identify Opportunities and Threats: Through the strategic planning process, a company can assess its internal strengths and weaknesses as well as external opportunities and threats. This analysis enables the organization to make informed choices about which initiatives to pursue and which risks to mitigate.
- Ensure Accountability: Creating a playbook and executing the strategic plan establishes a framework for accountability. It defines specific actions, timelines, and responsibilities, ensuring that progress can be monitored and measured.
- Set the Stage for Better Decision-Making: Strategic planning provides a structured framework for decision-making. When unexpected challenges or opportunities arise, the plan can serve as a reference point for evaluating whether a course of action aligns with the company’s overall strategy.
- Ensure Stronger Communication: A well-defined strategic plan and playbook are valuable communication tools. They can be shared with employees, investors, and other stakeholders to convey the company’s vision and strategy, which fosters alignment and buy-in.
- Create Long-Term Sustainability: Strategic planning is not just about short-term gains; it’s about the long-term sustainability of the company. By looking ahead to 2024 and beyond, a company can ensure that its actions today support its future viability and growth.
- Manage Risk: Developing a strategic plan and playbook allows the company to identify and mitigate potential risks and challenges. This proactive risk management approach can help prevent crises and reduce their impact.
The above list includes the most commonly cited reasons to build a strategic plan.
We now add another layer of important considerations to consider before, during, and after the process:
- Planning is essential when a company’s team changes or is not aligned
It could be that a critical team member is added to the team, or someone essential leaves the team. As well, a team that is stagnant and not moving forward in the expected way or is not aligned and working together will also benefit from a concrete plan.
- The plan must align with the “MPVs” of a company
The MPVs – meaning the Mission, Purpose, and Values – must all be aligned internally and will be important guides to the direction of the organization’s strategy. If this isn’t the case, this needs to be resolved.
- A forward-thinking plan is essential for success
A well-structured plan will contain both annual and multi-year views – and by multi-view, 1-3 years out is what we are talking about. Anything beyond three years simply will not be accurate.
- Regular check-ins and reviews must take place
You don’t just set the plan and forget it: leadership must review the strategy and progress regularly. It can be reviewed at a high level monthly, with more in-depth quarterly reviews and of course the essential annual check-in. This is a time to determine what is on track and what’s working, and to also determine what’s not working. With the latter, the team must why certain elements are not moving in the expected direction, and outline the course correction plan.
- The plan must position a company and its business units for a desired end game or upcoming chapter
A strategic plan will ensure a company is set up for success moving into the future. There are different forthcoming events that a company plans for where a successful strategy will guide to a successful outcome, which can include:
– A platform for bolt-on acquisitions
– Organic growth
– Maximized cash flow
– Maximized value creation
- A solid strategic plan will also help a company’s operations run more smoothly and efficiently
This point speaks for itself.
And some additional observations come from years of working with companies to develop successful strategic plans:
- The financial schedules (income statement, balance sheet, working capital statement) must reflect the strategy of an organization. During the year, use a scorecard to monitor progress so adjustments can be made as needed.
- Tap into the power of KPIs, and identify leading KPIs vs those that are lagging financial and metric reporting. The leading KPIs will translate to the financial results. Examples of key numbers to review are on-time delivery metrics, out-of-stock percentages, pick error rate, customer retention, among many others.
- There are finite resources within a business, meaning a limited amount of time, people and talent, and capital. Truly determine where there is room for growth and margin improvement, and where you want to place your bets within the business as to where your focus should be.
You may decide to:
– Accelerate / double down on resources and investments
– Exit a piece of your business; remember “less is more” and be sure not to get caught up around revenue that is empty
– Emphasize pricing and margin management as these are crucial considerations
- Don’t forget about culture and engagement within an organization. We can understate the importance of this for a successful strategic plan. These are not just “warm and fuzzy” or “nice to have” components of a company – they are downright essential.
- You’ve heard it before and will hear it again because it is true: People – Process – Technology are three essential elements of the plan. Without all three ingredients, there will not be success.
And we’ll leave you with a final thought: execution of the playbook is key. If you can’t execute your strategic plan, it’s not worth the paper it is written on.
Want to find out more insight about how to best plan for the year ahead? Need help turning a plan into execution? Or do you have questions on how to best conduct your strategic planning session? Reach out to us via email at email@example.com, or give us a call (610) 994-1139.
This blog was penned by Jonathan Peters, Empirical’s Senior Partner. A strategic change management executive, Jonathan holds a long record of leading organizations through successful business transformation. Be sure to connect with Jonathan on LinkedIn.