It may be one of the cornerstones of their job but many corporate strategists struggle to produce a strategic plan that senior managers take seriously.
Senior staff will either not spend enough time answering the strategy team’s questions and so not providing the right level of information needed or they will do their best to ignore the plan once it’s completed.
CEB data show the average executive believes that two-thirds of strategic planning time is simply wasted, and only half believe their company produces high-quality, growth-oriented plans. This is not encouraging for strategy teams who spend more than half their time producing the annual plans (see chart 1).
Chart 1: Time spent on different activities by corporate strategy groups n=47 Source: CEB 2014 Strategy Functional Benchmarks
From reviewing the strengths and weaknesses of hundreds of planning documents, there are seven proven techniques that can improve the process at any company.
Learn from past mistakes: Less than half of the plans reviewed included “lessons learned” from past performance against targets. The best plans incorporate such reviews so that avoidable mistakes aren’t repeated.
Be realistic: Your plan should reflect the capabilities of your company. If executives have trouble arriving at consensus on where the organization should look for future growth, you might have better luck getting them to agree on what the organization currently does and does not do well.
Develop a clear — but non-financial — vision for the future: Only about a quarter of plans plainly defined what a successful future version of the company looks like. If your five-year strategy is too focused on financial goals, stakeholders might end up concentrating on financial solutions.
Align goals with your vision: Your vision should be supported by a comprehensive set of goals that show exactly how the organization would change. Unfortunately, only one in three plans align specific goals with the strategic vision.
Use a reasonable number of metrics: A full 70% of the plans did not contain a manageable number of performance metrics focused on proper business goals. What’s more, none of the plans provided reasoning as to why particular measures were selected.
Strategy teams should select a balanced number of strategic and financial metrics to avoid either a lack of accountability (too few metrics) or information overload (too many metrics).
Define your terms: Failing to clarify the meaning of various terms – and using jargon – will only add confusion to the process. Still, only one in four plans included some sort of a glossary to pin down the exact meaning of words like “mission,” “goal,” or “target.”
Focus on growth: The best strategic plans keep executives thinking about the long term while preventing operational issues from taking over the process.