The 2010 Twelve-step Checklist to Help You Evaluate Your Strategic Business Planning Process

Posted by on January 1, 2010

Have you given much consideration to the possibility that your strategic and operational plans may be far less effective than they could be?  How would you begin to measure the effectiveness of your current plan?  This article should help you to objectively evaluate your own process and self-diagnosis potential issues that may exist in your organization’s current planning world.  As you read this article, answer along as we ask the questions to help you honestly evaluate your current business planning process.

Let’s start with the checklist.  Scan through the list and do your best to give a first impression “yes” or “no” answer to each question. 

Here is the list:

  • Is your plan timeframe spanning more than 12 months?
  • Do you have more than five strategic goals in your plan?
  • Are any of your plan goals not related directly to measurable outcomes?
  • Do all employees within the company know the plan goals for the current plan year, and can they explain how they are expected to contribute to the achievement of the goals?
  • Have you communicated with key business partners or suppliers of the organization about the plan goals that might affect them and where they could assist in the achievement of one or more plan goals?
  • Is there any room for misinterpretation of the intent or desired outcome for any plan goals?
  • Do any job descriptions for employees or officers of the company fail to correlate to defined plan goals?
  • Do performance measurements for employees and officers of the company define accountabilities that tie back to the measurement of plan goals?
  • Was culture overlooked when defining the plan’s underlying execution tactics?
  • Are all plan outcomes / goals related in some tangible way to creating value for the customers and markets served by your organization?
  • Does your planning process make the distinction between strategic and operational planning?
  • Are the supporting initiatives of your plan goals adjusted to account for seasonal peaks and valleys?

Now let’s evaluate your responses. 

I’ll restate the question and offer some guidance as to the preferred answer for each.  Here we go.

1.  Is your plan timeframe spanning more than 12 months?

With the uncertainty we face in our current economy and the care we must take in the management of working capital, a “no” answer would be preferred. If you answered yes, you might consider a shorter and more impactful planning horizon.  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 a bad thing, we are just recommending that plans utilize near-term component contains more 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.

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

A “no” answer is preferred.  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.  We suggest that as part of your planning process, you conduct a relative valuation of each plan goal (key outcome) in order to see how it stands out relative to to the others on the table.  We use various formulas in our approach to accomplish this, but a simple technique is to use variables like “Importance of the outcome” and “Satisfaction with the current-state” to help score and rank your goals.  The key is to have a prioritization process in place that applies a balanced set of criteria against each desired outcome.

3.  Are any of your plan goals not related directly to measurable outcomes?

If you answered “yes”, then why is that the case? Plan goals should really be thought of in terms of outcomes that will mean something tangible to your customers and the markets your organization serves.  Following that thought, outcomes can and should always be measured and managed vertically and laterally through the layers of the organizational units responsible for taking action related to initiatives supporting plan goals.  Likewise, plan outcomes need to be managed and measured where they involve parties external to the enterprise, such as: suppliers, channel partners, lobbyist, etc.

4.  Do all employees within the company know the plan goals for the current plan year and can they explain how they are expected to contribute to the achievement of the goals?

The answer should be “yes”.  Strategic and operational plans break down when they fail to consider those responsible for executing the plans.  There are two factors to consider related to this point.  The first is the need for plans to be well constructed so as to offer the needed details of the underlying layers of supporting initiatives.  Detailed plan components should offer great clarity related to who, what, when, where and why. Of equal importance to the completeness and thoroughness of the plan, is the communication aspect.

Communication strategies as a plan component are critical in order to promote the major themes behind the plan’s goals / key outcomes.  The communication plan component must insure that each area of the business enterprise has been considered relative to who needs to know what information about the plan and by when they need to know it.  We are an over communicated to society, so well-timed, concise and clear communication will go further towards gaining support in the organization and producing meaningful contributions during execution.  We recommend the creation of marketing pitches for each of the plan goals / key outcomes.  The idea here is to provide as much clarity as possible when communications related to the plan are considered.  Also, consider developing personas of the “customer” that is the primary recipient of the value the plan goal will create.  The customer can be an internal customer in the event that the goal does not relate to an actual market or customer group.

5.  Have you communicated with key business partners and suppliers of the organization about the plan goals that might affect them and where they could assist in the achievement of one or more plan goals?

Of course, the right answer here is “yes”.  Always enlist the help of business relationships within the value chain that in some way support the products and services that are supplied by your organization. An external communications plan is important to the successful execution of plan goals and should contain messaging tailored to help suppliers understand why they are being asked for price reductions or quantity discounts not currently part of your normal purchasing arrangements.  By communicating openly about your organization’s goals and the role your external business relationships play in your success towards achieving those goals, cooperation can be gained and closer…more rewarding business relations established. 

6.  Is there any room for misinterpretation of the intent or desired outcome for any plan goals?

If you answered “yes”, the plan goals should be revisited to correct for vagueness.  Ambiguous plan goals lead to variability of interpretation and misfires in execution.  Not saying what we want clearly leads to misinterpretation and in planning efforts that in turn translates into risk that the actual achievement of the desired strategic outcomes may fail.  Most planning processes introduce variability into the plan from the very beginning – at the time plan goals are defined.  If there is room for interpretation in your plan goals, you have this issue.  By using a very controlled vocabulary in defining outcome-driven goals, you can avoid this mistake.  For example, a clearly defined outcome would look like this:  “Reduce raw materials cost for XYZ unit by 3%.”  An example of a vague and more ambiguous plan goal would look like this:  “Trim production costs in XYZ unit.”

7.  Do any job descriptions for employees or officers of the company fail to correlate to defined plan goals?

If you answered “yes” to this question, you have a big opportunity area with this one.  A planning approach should be accountability and performance driven. This may seem intuitively obvious, but in order to realize an organizational desired outcome, you must have a plan that is good and reasonable, yes, but you must also have the people to carry it out and they must have incentive and understanding to execute to that plan. Therefore, job descriptions and accountabilities must be in alignment with plan goals.  Failure to do so jeopardizes the effectiveness of strategic and operational plans.  This is a common issue that must be addressed, even in very mature organizations.  We see many clients that have strategic and operational plans in place that would otherwise be considered very sound, but they lack the staff accountability to bring that plan to fruition.

Good alignment of job descriptions and job responsibilities creates accountable employees, reinforces strategic plan goals by using the communications strategy to relate directly to employees about their role and the organization’s expectations of them relative to the plan.  Furthermore, job alignment allows management to affect the outcomes through careful measurement of progress over time and take action when needed when tactical elements of the plan are not meeting expectations.

Staff incentive, understanding and value to the execution of the plan are far more important than specific expertise. Employees that understand what is being done, why, when and how they can contribute become empowered team players.

8.  Do performance measurements for employees and officers of the company define accountabilities that tie back to the measurement of plan goals?

Hopefully you answered “yes” to this question.  If not, keep in mind that as with good job descriptions and well-aligned job accountabilities, a strategic planning process must address performance measurements that support plan goals and execution while tying back to incentives.  While this is crucial to do, it adds a level of complexity to planning that is to often overlooked.  This is due in part to the level of cooperation required with Human Resources and with management across the functional areas. Aligning accountabilities with performance measurements requires a lot of discipline to think through all of the angles the first time it is enacted as a legitimate part of the planning process.  Regardless of the initial effort involved, constructing well thought out plan goals that can be measured and  aligning job responsibilities and corresponding performance measurements to reinforce those goals should not be considered an optional component of the planning process.  Organizations already require the structures be in place to manage performance across the enterprise.  This work has already been done in almost all cases.  The added dimension of alignment to plan goals puts the planning effort on good footing to providing all layers of management empowerment to measure and manage towards achievement of plan goals.

9.  Was culture overlooked when defining the plan’s underlying execution tactics?

The preferred answer is “no”, of course!  Culture is a critical component to short and long-term planning that, if not properly understood, can dramatically affect the execution of strategic and operational plans. Culture is the foundation of HOW the organization works and HOW work will be completed on the plan in order to realize the key outcomes. By aligning planning with culture, it is possible to harness the organization’s potential to dominate within their market place.

Method Frameworks classifies corporate cultures into one of four models:

  • Cooperative: The organization or team focuses on the customer and delivery to the customer, resulting in customization and tailoring to customer needs.

  • Merit Focused:  The organization or team focuses on how it can organize and create predictability, reliability, low cost and structure.

  • Actualized: The organization or team focuses on fulfilling the human potential, helping create better lives for its customers and offering self-actualization.

  • Creative:  The organization or team focuses on creating superiority of product or service, uniqueness, one of a kind value-add service and product.

Associated with these four distinct culture signatures are corresponding organizational hierarchies.  The differences in culture and hierarchy relate back to the HOW the organization works and HOW work gets accomplished.  Aligning strategy, tactics and governance to address these dimensions will greatly affect the outcome of planning efforts.

10.  Are all plan outcomes / goals related in some tangible way to creating value for the customers and markets served by your organization?

If you answered “yes”, you can pat yourself on the back.  Congratulations!

Customer-centric planning creates competitive advantage for the business by aligning organizational action with value propositions perceived by the customers and markets served by the enterprise.  When this occurs, the planning effort literally creates value for the most important stakeholder of the firm – the end customer.  Not to say that all plan goals are or should be specifically aimed at the customer, but with the focus on what end-value we can create for the customer through our plan goals, we’ve put a face or persona on the reason for the desired outcome and can work the organizational culture and hierarchy more effectively to accomplish our strategic outcomes.

11.  Does your planning process make the distinction between strategic and operational planning?

Preferred answer – “yes”.  An effective planning approach should be a bifurcated process allowing for the organization to plan strategically at the enterprise level and then operationally at the business unit /divisional / departmental level - with each component supporting the other. Failing the expand the planning effort far enough to reach all the way down through the organizational layers and to extend beyond the enterprise boundaries is an all to common problem with planning efforts and processes.

Those involved with strategic planning understand that business strategy involves an integrated set of actions designed to help companies gain sustainable advantage over competitors. To address the needed integration, planning should be constructed in layers that address the overall business ecosystem.  The business ecosystem is a framework that allows a company to visualize the entire enterprise and design the key outcomes that will most likely benefit the company and help that organization dominate against its competitors.

In 1985, Harvard’s Michael Porter introduced the value chain framework in his book, “Competitive Advantage”. The client's business ecosystem looks at all of the functional areas that are involved with the developing and delivering the offering to the marketplace.  Through each segment of the circle, executives choose how they intend to serve their market. From planning standpoint, it is important to assess is how the business ecosystem operates and more specifically, how decisions within one segment of the ecosystem can impact (or have consequences on) the enterprise as a whole or to specific segments of the chain. This is where well-performed operational planning can make the game-changing difference. The ecosystem highlights enterprise alignment and individual value within the sphere as important components to the organizations overall success.

12.  Are the supporting initiatives of your plan goals adjusted to account for seasonal peaks and valleys?

A “yes” answer here is preferred. In addition to attenuating the many competing priorities of the business to the realities of financial budgets, the planning process must take into account the relevant business economic cycles within the business.  Economic cycles, or eco-cycles as we refer to them, will positively or negatively affect market conditions, access to capital, energy, focus and many other factors that will otherwise inhibit or accelerate goal achievement.  While operating budgets are annual in nature, eco-cycles are more sporadic and usually are seasonal to the business.  Planning for eco-cycles builds an added layer of realistic contingency into the plan.  Eco-cycles are not only financially related, but also affect the organization’s energy and focus to work on plan goals.

To the extent that these eco-cycles are known and understood, they should be accounted for within strategic and operational plans. A review of trend data for previous years can help identify the peaks and valleys that will serve as predictors and leveraged into the plan.  By reflecting the general timing of eco-cycles in the resulting plan, we’ve built in a reasonableness factor that can also be thought of as contingency to allow for the inevitable swings in activity associated with seasonal activity.  We’ve also built in the opportunistic and responsive dimensions to planning by allowing for available slack (agility) to exist within the business operations to seize on opportunities without missing plan deadlines and compromising on goal achievement.

Here is a bonus question that can help to ultimately evaluate your planning process. 

“Is the process effective and repeatable in consistently defining meaningful goals that get achieved as expected when the plan is followed?”

***

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For permission to use or reprint any portions of this copyrighted article, contact Method Frameworks at articles@methodframeworks.com.

About the Author:

Joe Evans is a management consultant, published author, frequent speaker and recognized expert in corporate strategy and strategic planning.

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