Every company does planning, but maybe it’s not always efficient and consistent. Too many books and white papers have been written about strategy and planning, but the basic concepts have not changed. Strategic planning can be distilled into a simple 4-step process:
Assess the current state (where are you now)
Create a vision for the future state (where do you want to be - in the future)
Measure the gaps between current & future states (this can get complex)
Create a roadmap of changes to achieve the future state vision
The order of steps 1 and 2 may vary by organization. Some companies start with Step 2 so they can focus on where they want to be next year or perhaps establish multi-year goals (3yr, 5yr). Then, they go back to Step 1 and assess where they are today (current state). If you already have a good handle on your business, it’s fine to start with Step 2. If you really don’t know how well your organization is performing today, Step 2 can be a challenge because you may not be able to create realistic goals that are achievable in the next year. Either way, you’ll want to take stock of Step 1 and revisit Step 2 so your roadmap of changes still make sense. It’s a dance, not a formula.
Experienced leaders are not afraid to set aggressive goals while being prepared to adapt and adjust expectations along the way. The key is to make sure you meet your commitments with customers and investors. There are other stakeholders that have expectations, including your employees so you can’t sacrifice one stakeholder for others. The right balance needs to be struck, but you want to start with your customers since that’s where the buck stops and starts.
Step 3 is where things can get complicated. There’s a lot of stuff to measure so it can get challenging to figure out what to measure and how much is good enough. Start with the following three areas to establish a baseline:
Profit (revenues, growth, cost containment)
Quality (less waste, fewer returns, Op-Ex), and
Productivity (speed, cycle time, efficiency)
Most companies are able to pull this information together to manage their financials, guide resource hiring & management, and drive continuous improvement in their operations. Where it gets complicated is figuring out how all of these measures impact each other, since any metric that spikes could trigger a response from management to “fix it”.
Let’s look at an example where waste goes up in a manufacturing plant by 15%. That’s a lot of cost eating into your margins (impacting profit), which could lead to work slowdowns (impacting productivity), and drive up operating costs (reducing Quality). Remember, this is just one of many metrics that might require a response from management. So, each one of these metrics may require analysis to figure out why this is happening and a plan to fix each one (temporarily to stop the “bleeding” or permanently to prevent it from recurring).
By now, you probably figured out that each problem requires a certain amount of measurement (current state, what changed, and why something changed) and analysis to come up with a plan to resolve each problem (moving from current state to a desired future state), and then scheduling the work that needs to get done to make the necessary changes (to fix the problem).
In many cases, companies try to resolve problems individually (divide and conquer), but this may not always be possible since some problems (or their resolutions) require careful planning because of the impact on other problems or existing operations. So, they get thrown into the big bucket as part of strategic planning. This takes us back to where we left off with measurement.
Step 3 involves measuring the gaps (current state & future state) to determine how much change is required to address the list of problems and opportunities (to drive growth and improvement) and align all of these changes with the strategic plan (current year and future years). Once you’ve got a handle on Step 3, then you’re ready for Step 4.
Step 4 is when you create your game plan to figure out what you need to get done (priorities), what you can get done (capabilities and funding), and when you need to get started (priorities and dependencies). This is where budgeting and portfolios are reworked to align everyone in the company on how to coordinate and execute all of the changes to achieve the strategy (short term and long term). Ideally, Step 4 should be set the plan and execute it. But, life isn’t so easy. Things are always going to change and new problems will arise, which throws the best plans into chaos. So, now you may find yourself having to respond to new problems and changing priorities for individuals, teams, or whole departments. Your roadmap may have to get adjusted and this will likely impact dependencies, projects, and perhaps alter your strategic goals for the current year.
Good project managers understand how to manage through these changes and work with management and leadership to coordinate changes to roadmaps (portfolios of projects under their control). But, it can get complicated trying to coordinate change across multiple portfolios and across functional areas and operations. This is where companies are additional expertise and technology can be helpful. I’ll explore options for managing this type of change and complexity in future articles. For now, try leveraging this 4-step approach for planning your strategy, measuring the gaps, and setting a roadmap to drive your strategy.