Jul 6 2011
What is a strategic plan?
Type the words “Strategic Planning” into a search engine and you’ll find everything from strategic planning templates to “simplified strategic planning” and more. I’m all for simplicity but my experience is that a useful, and well thought out strategic plan isn’t simple and requires a great deal of critical thinking, market analysis, creativity, vision, and communication. It is a plan to improve a company through a three to five year period into the future with some stated goal(s) as part the overall plan. A good strategic plan with yearly updates keeps a company moving in the right direction.
The plan should consider all functions of the business and resources needed to take the company forward, including financial budgeting for each of the years in the plan. This will ensure that the required resources are identified and improved profit and revenue is validated. I prefer five year plans because they drive more thinking and innovation. The longer the plan time wise, the less accurate the plan will be - simply because there are more unknowns and estimates required in the later years. However, this lack of certainty does not necessarily mean lack of usefulness. A five year plan will drive creativity, innovation and forward thinking by encouraging executives to consider the best, most innovative scenarios, and then incorporating them into realistic, achievable plans.
5 Year Strategic Plan: A Case Study
After becoming President of a publically held international company and getting the company on track through clear direction and communication, I was tasked with presenting a strategic plan to double profit and revenue in five years. The Board’s thinking was that it was time to do better long range planning and that this would be a good start. I took it as a challenge and formidable goal that we would achieve in five years or less, not just a “get started” process that may or may not be achieved.
After communicating this assignment to every employee as a positive step that would open up promotional opportunities, make the company a stronger competitor, and enable the company to offer better benefits, etc., buy in was easy. Each leader who was responsible with a budget - from top to bottom - was assigned the task of presenting internally how they would either grow their area and/or deal with the growth, and what resources they would need.
This was fun! We analyzed our market, identifying key market opportunities, new innovative products that would enable us to take market share and product offerings that should be dropped. Part of the plan was to make an acquisition that we could integrate into existing operations. We did SWOT analyses on our company and each of our significant competitors. This enabled us to shore up our weaknesses, exploit our strengths, and to explore our competitor’s weaknesses. We identified human capital improvement needs, organizational capability and capital requirements. A financial budget and detailed plan was created for each of the individual years, along with concept drawings of new innovative products we planned to introduce to the market. All of this and other relevant information was compiled into an organized presentation by the team of company officers.
The end result was an approved comprehensive five year strategic plan that was successfully executed in three years by a team that wasn’t interested in limitations or status quo. From then on, the plan was updated each year with profit and revenue records set for 5 ½ consecutive years. The rewards were excellent and the effort was obviously worthwhile!
Turnaround Strategic Planning
The turnaround situation was desperate in this privately owned company. Customers were swarming like bees; quality was poor; labor costs were out of control; and sales were stagnant. As a new company leader, I thought the best thing to do was lead and implement change now!
Turnaround changes were done including a new organization chart, thorough communication of expectations, and the unpleasant but necessary temporary fire fighting. After three months, things stabilized. I led the creation of a new zero based budget that was realistic and useful. The question now was, where to go from here? Enter the strategic plan. We knew our processes, had a product line, customers, improved leadership, and a newly focused workforce.
Once again, from the bottom up, we created a five year plan that would exploit our processes in this very diversified Tier One automotive supplier. Quality systems were implemented and used to our business advantage, leadership accountability was implemented, and process control became our hallmark.
This company was transformed from a business failure to a world class company that attracted new business through its reputation of delivering quality product in a very demanding business market. The company profitably tripled in size in seven years through a renewed focus on ROI and superior human capital.
A challenging and comprehensive strategic plan can drive competitive excellence and provide great satisfaction across the organization when stretch goals and plans are attained through superior leadership, communication and teamwork. Not to mention that analytical, aggressive, and well executed strategic plans made through complete employee involvement, innovation, and critical thinking can lead to a very respectable ROI. Will your organization’s current strategic plan provide for a superior ROI or is it time to rethink your core strategy?
BlueSteps Member Guest Writer
Jim Morris - A highly successful leader with international P&L and high growth experience at the Presidential level. Excellent strategic and tactical planning skills that are executed with measureable success. Very well trained and experienced with Lean manufacturing with outstanding people and team building skills. Contact Jim via LinkedIn or using firstname.lastname@example.org.
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