In the second of our series, we highlight the key takeaways from a report Boston Consulting Group did on strategic planning. Read the original report here.
TL;DR – Report Conclusion
Far too many strategic planning processes fall short. They focus on analyzing the current market and current competitors, rather than searching for or anticipating disruptive new entrants or business models. They make work but don’t offer insight.
It doesn’t have to be that way. By emulating the four strategic planning best practices, you can boost the ratio of insight to effort and align the organization around a strategy that is faithfully executed, constantly questioned, and regularly refreshed.
Most companies lack an effective strategic planning process. Although there is no one-size-fits-all approach to strategic planning, BCG found that the companies that get the most benefit from their strategic-planning activities have four things in common:
- They explore strategy at distinct time horizons.
- They constantly reinvent and stimulate the strategic dialogue.
- They engage the broad organization.
- They invest in execution and monitoring.
Explore strategy at distinct time horizons
It is important to think about strategy at different time horizons. Each has different goals and requires different approaches, a different frequency, and the involvement of different people.
- Long Term. The purpose of long-term strategic thinking should be to define, validate, or redefine the vision, mission, and direction of the company. It’s about projecting more than five years into the future and asking questions about what will change. Then determining the risks and opportunities of those changes.
- Medium Term. The purpose of medium-term strategic planning should be to enumerate the steps necessary to realize the vision—typically over a three- to five-year period. The focus is on developing clear, actionable business plans that describe the multi-year strategic initiatives required to transform vision into value.
- Short Term. The purpose of short-term strategic planning should be to challenge the current strategy, evaluate progress, and explore options to accelerate execution.
Constantly reinvent and stimulate the strategic dialog
With strategic planning—unlike sports or music—repetitive practice doesn’t make perfect. A more sustainable solution is to follow the same process year to year but to refresh it with different questions each year. Such an approach breaks the compromise between process efficiency and fresh thinking.
Great strategists—and great business leaders—have to learn the “art of questioning.”
Engage the broad organization
As a general rule, organizations that engage a broad group of internal and external stakeholders in their strategy development efforts yield better results than organizations that leave strategy in the hands of a small, central team.
Going broad prevents groupthink. By involving people from different backgrounds, generations, and geographies, an organization is more likely to surface alternative ideas and perspectives. Some companies even engage outsiders, among them customers and suppliers, in the process.
Engaging stakeholders early also increases buy-in and smooths implementation.
Invest in execution and monitoring
Having a great strategic planning process is only half the challenge. The other half—translating the strategy into results—can be even harder, particularly when the new strategy involves moves outside the core.
The following action plan recommends investments in several areas to help avoid the fate of not making measurable progress on the new strategy.
Clear and Engaging Communication to Foster Alignment.
It’s hard to overestimate the importance of clear communication that promotes the strategy with a common, proprietary vocabulary. The classic cascading-memo exercise can also be quite powerful. It starts with the CEO sending to direct reports a one-page memo that summarizes the strategy. The memo charges them to write their own version for their team that expresses the strategy and what it means for their slice of the organization. The process continues downward. At each stage, the strategy group reviews the memos for clarity and consistency with the overall strategy.
High-Profile Strategic Initiatives to Build Traction.
To ensure that the new strategy isn’t drowned out by day-to-day concerns, leading companies convert it into a set of manageable strategic initiatives that give the strategy both visibility and traction. Each initiative needs to be properly chartered, staffed, resourced, and given a clear timeline. It is important that initiative teams and the organization overall understand that these initiatives are priorities for the executive committee.
A Strategy Dashboard to Highlight Success Metrics.
Another powerful way to encourage the organization to embrace the new strategy is to identify quantitative metrics and goals that can measure progress. Complementing the organization’s financial and operational metrics, the strategy metrics should concentrate on new measures tied to the new strategy. And incentives for key players should be tied to these metrics and goals.
Omnistrat addresses a number of items outlined in this report.
Exploring strategy at distinct time horizons. Omnistrat captures long, medium, and short-term discussions and the strategies that emanate from them. There is more we can do to better integrate plans with different, but overlapping time horizons. This is already envisioned on our product roadmap.
Constantly reinvent and stimulate the strategic dialogue. Capturing the conversation is a core feature of Omnistrat. What we don’t provide, but do support, is providing good questions to stimulate and reinvent the process.
Engaging the broad organization. This is another core feature we deliver on. In fact, this is why Omnistrat was created.
Execution and monitoring. Clear and engaging communication to foster alignment is actually handled, not through cascading memos or internal PR efforts, but by having all employees interacting with the strategy on a daily basis through a business realization management (BRM) approach, i.e. initiatives tied to your strategy.
High-profile strategic initiatives are part of the overall plan. The strategic plan is elegantly converted into a performance dashboard tied directly to pre-defined success metrics.
Read the next in our Strategy Best Practices Series here.