The Value of a Comprehensive Strategic Planning Process

As a leader of your business, do you take your Executive Leadership Team (ELT) offsite, away from the whirlwind of the day-to-day distractions, at least once a year to spend a couple of days focusing on the future of your business?  If so, do you use a facilitator to conduct the meeting or do you do it yourself?


If you are not utilizing a comprehensive strategic planning process you may want to read further to understand how such a process can help you increase your company’s value and help you establish and reach your long-term goals.


Before we quantify the value of such a process, let’s understand the components of what is meant by the word “Comprehensive”.


The first step in this process is deciding whether to use an outside facilitator or lead the session on your own.  The benefits of an outside facilitator include the fact that the business leader can participate as one of the team members.   However, an outside facilitator doesn’t have institutional knowledge of your business, your culture, or how you go to market and it can be time consuming trying to get the facilitator up to speed with the rest of the team.  On the other hand, a facilitator encourages the ELT to participate more fully, instead of waiting to hear what the boss says.  You can often get much more out of your team when they are not influenced by how they think the business leader wants them to act, but rather when they feel empowered by their invitation to participate.


“It doesn’t make sense to hire smart people and tell them what to do, we hire smart people so they can tell us what to do”.  Steve Jobs


If you choose to utilize an outside facilitator, allow them to spend some time with your ELT members prior to the offsite session.  Furthermore, the business leader and the facilitator should spend some time together focusing on desired end results prior to the session. It’s also possible that you want participation from valued employees lower in the organization chart than the ELT.


At the beginning of the off-site session, it has proven to be very valuable to establish a list of guiding principles for the team members.  You want to stress that all members are welcome and should respect the participation of the other team members, and that, despite any differences of opinion that surfaces during the meeting, that each member pledges to support the group’s decisions after the meeting.  You want to make sure that while they certainly need to represent their own interests, they were invited under the assumption that they are representing other stakeholders such as customers, employees, owners, lenders and suppliers but that customers’ needs come first.


Some companies like to revisit their mission and/or vision statements but it’s important to keep this process brief.  It is suggested that the topic be introduced but allow for suggestions and improvements outside the meeting.


Almost everyone does a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) to critically assess the business and this is one area where preliminary work should be assigned to each team member prior to the meeting.  Personal agendas will come out during this discussion and this is normal but allow everyone’s ideas to be compiled during this process to encourage participation.  Make sure that the team considers how the marketplace views the company in comparison to the competitive environment and make sure that customer needs are considered, even if some needs are not being fulfilled by your offerings.  And, most importantly, be honest.  If a viewpoint offends a fellow team member, there are ways to do this by offering support to help shore up a weakness in another team member’s area of responsibility instead of being critical.  Ideally, the team member in a particular area identifies the weakness, instead of a colleague, but don’t let a weakness escape identification.


After critically assessing the current state, a next step could be to visualize an optimal future state at a time such as three years from now.  What would be the top line and bottom line (EBITDA, if more appropriate) attributes of this vision of the future?  How does that compare to the current results, or current year projected results?  How much does the top line grow and does that growth result in greater flow through to the bottom line?  Once you are in general agreement about this optimal future state, it’s time to consider the attributes of this future state vision of your company compared to the present.


This process yields a list of strategic initiatives that need to be performed to arrive at the desired future state.  The list should look daunting and somewhat unrealistic to achieve.  That leads into the next stage and arguably the most difficult.  You can’t always execute everything on the list and you usually can’t do everything at once.  There are resource, time, and financial constraints in any business.  It’s the job of the ELT to prioritize, execute and fund the highest priority items.  In fact, it is their most difficult job.  And only a small portion of the overall list can have the highest priority, otherwise it’s just a big wish list.


This is a great time for the business leader to relinquish his quieter than usual role as a team member, and provide some executive leadership, and maybe even referee some of the arguments.  In any event, at the end of the day, everyone must be pulling in the same direction, especially if the more important strategic initiatives are cross-functional in nature.  And there’s no reason some of the lower priority initiatives can’t be worked on if they don’t have resource or funding conflict with the higher priority items.


Finishing this list may not be achievable during the off-site, but the group can always assemble during the follow up phase of this process.


Once the strategic initiatives have been identified and prioritized for the upcoming year, it is also important to establish top line and bottom line goals for the financial performance during the upcoming year.  This is the framework for what hopefully results in a Business Plan (replacement term for budget) that will adequately fund the prioritized initiatives and achieve the financial goals.  This business plan should outline how the top line numbers will be achieved, the incremental profitability of the top line growth, and any other favorable or unfavorable spending variances due to management action plans, including headcount, that allow the company to achieve its bottom line goal.


The more detail is added to this business plan, the better the variance analysis will be able explain the differences.  Each month during the year you should have actual results to compare to the business plan for that month as well as comparisons to prior periods and a variance analysis for each.  During the year, you should also have a robust forecasting process that continually adjusts for the latest known information.


In fact, the process never ends.  The two day off-site is just the kickoff.  The process allows the ELT to work together toward common goals and to understand that the future is continually changing.


I left the last part for the end, and it may be the most important part of a truly comprehensive approach.  How do you drive the ELT’s strategic initiatives down into the organization so that all employees are pulling in the same direction to achieve the desired results?  This needs to be addressed and there is certainly more than one way successful companies have achieved a favorable outcome.  I include two processes here that are cultural in nature but also have been proven to be successful, and they are included in the spirit that there are other methodologies that could be a better fit for your situation.  The two that I want to mention are The 4 Disciplines of Execution by McChesney, Covey & Huling and the other is OGSM (Objectives, Goals, Strategies and Measures) which was developed and used by Procter & Gamble but whose initial origins are unclear.  A simple Google search can provide you with more information about each.


Finally, I want to mention the value and benefits that could potentially be realized by employing a comprehensive approach.  First on this list of benefits is that the approach is developed by a team of internal ELT members and is designed to create a sense of buy-in across the organization, through its key leadership members.  The employees lower in the organization chart will surely notice this, especially if the ELT appears to all be pulling in the same direction.


Secondly, the entire process is geared to create a framework to improve the company, which will in turn, improve the value of the company.  Should there be a business transition in the future, this process will undoubtedly result in a higher purchase price than would otherwise be achieved.  If you are proud of how it is executed, that pride will come out in discussions with potential buyers and lenders and be discovered during the sales process.  In any event, even if your company is not for sale, you and the current owners will realize the benefits of improved company value.


Also, when you combine the concept of a business plan, forecasts and variance analysis, you can discover how to alter your plan sooner rather than later.  After all, as a famous general once said “No battle plan survives the first contact with the enemy”.  This is so true in business as well, and the recurring nature of this process helps you discover and continually update your strategic goals.  I’ve seen a company that had a tremendous vision on how to transform their company from old technology to a more desirable future state.  The future didn’t unfold exactly like they planned, and they discovered a market place they didn’t initially envision, but they were able to alter their plan to the changing environment and achieve a wildly successful result.


The point of this article is that you too, can have a successful future outcome.

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