If you want to succeed and to continue succeeding, you need a solid strategic plan. Of course, creating your strategic plan isn’t the most glamorous thing about running a business. But it doesn’t have to get overwhelming and complicated. As long as you follow a structure whose elements flow into one another, you should have no problem preparing your strategy plan document and enjoying your experience putting it together.
In this post, we have simplified the process of writing a strategic plan. Have a look at this step-by-step approach that gradually fleshes out all the key elements that go into creating an actionable strategic plan.
1. Define Your Mission
Your organization’s mission encapsulates why it exists. The mission is the basis on which you plan your organization’s direction, and the common goals towards your people should work.
An authentic, compellingly crafted mission infuses pride and meaning into work. It is why your people feel motivated to come to work every day.
Most, if not all, organizations aim to grow and flourish. Sustenance and success depend on how effectively organizations can adapt to their environment, overcome challenges and exploit opportunities. The mission serves as a ’true calling’ for organizations, reminding them why they came into being and what they promised stakeholders.
2. Build Out Your Vision
Like a living, breathing entity, an organization changes, grows, and evolves. The vision conveys where the organization aspires to be in the future.
Your stakeholders are most interested in your vision as their destiny is linked to yours! So being a part of and contributing to your growth story benefits them too. In particular, your vision inspires your employees to work harder in elevating the organization to greater heights. This is why a great vision statement takes customers, shareholders, employees, and communities into account.
Vision statements are ambitious and do not limit themselves to easily achievable goals. Instead, they serve as a guide that aligns the organization to its philosophy and goals.
The mission statement serves as a bedrock for envisioning a future, helping you answer ‘what can we achieve?’, ‘can we become a leader in our industry?,’ ‘will we pioneer great things in the next couple of years?,’ and other aspirational questions.
The vision articulates what you wish to achieve in the next 10-15 years. Once you realize your vision, it keeps moving forward and sets new bars for your organization.
3. Clarify Your Values
An organization’s values are the ethics and principles that it commits to upholding across its actions, behaviors, and policies. Every organization has its own set of beliefs and philosophies, which derive from its mission and long-term vision. For example, a for-profit company may have different values from its non-profit counterpart because its reasons for existing are distinct from the altruistic reasons for which non-profits are established.
Your values reflect in everything you do. They’re most visible in the actions taken by executive leadership and board members. Modeling the values you promote encourages employees to practice the expected behaviors. Remaining aligned to your values is critical during large-scale change and major crises.
Learn more about mission, vision, and value statements here.
4. Determine Your Focus Areas
People know their organization’s vision, but putting it to work makes it real for them. This is where focus areas come in. They are the high-level areas around which you mobilize efforts to meet your vision.
- Sales growth.
- Innovative company.
- Top employer brand.
- Boost customer experience.
As you can see, focus areas are broad rather than specific. If your vision is to evolve into a regarded innovator in your domain, then new product development, unique features, or disruptive services may be on the agenda. Focus areas do not describe what you need to achieve or do. They are there to guide and organize your efforts around the things that matter most to your organization.
Why create focus areas?
- State clearly what you care about achieving.
- Empower people.
- Unify people around a common purpose.
- Amplify output.
What is a good number?
Derive 3-5 focus areas from your vision. Then, ponder over whether those focus areas are sufficient and meaningful in helping you realize your vision. If you have doubts, review your vision or rethink your strategic focus areas. It is important to make this judgment early on so that you can proceed to draft your strategic objectives.
Learn more about developing Focus Areas here.
5. Establish Your Strategic Objectives
Strategic objectives are high-level statements describing what the organization wants to accomplish. They are based on the focus areas you’ve already identified.
Create at least one objective and not more than six for each of the focus areas. With strategic objectives in place, you can:
- Quantify and show progress
- Maintain everyone’s focus on initiatives that deliver the most significant business impact
- Rally people around the same priorities
The objectives need to be:
Specific: State what needs to be achieved to make it actionable and guide employees’ efforts.
Relevant: The objectives should align with your purpose and vision.
Achievable: There is no point in going after an objective that isn’t yet feasible for your organization.
Challenging: The objectives should inspire employees to strive to greater heights.
Measurable: Only by collecting the outcomes of efforts will you know whether you’ve met your objectives.
Timed: A timeline for meeting the objective allows you to plan, prioritize and monitor efforts efficiently.
Examples of strategic objectives:
Focus Area: Sales growth
Objective: To exceed $10 million in revenue in the next three years.
Focus Area: Innovation
Objective: To increase product pipeline from 5 to 10 products within two years.
Focus Area: Customer retention
Objective: Achieve a 90% customer retention rate in 2021.
When to create strategic objectives:
A company that hasn’t defined its strategic objectives doesn’t have a clear vision for the future. Therefore, it would be best to clarify what you must accomplish to attain the future state you desire for your organization. If you have modified your mission or vision, your focus areas and strategic objectives will change accordingly.
Learn more about writing strategic objectives here.
6. Develop Projects Aligned to Objectives
A project is the work that people undertake to meet your strategic objectives. It operationalizes objectives by specifying the actions that need to be taken and ensuring the necessary coordination and collaboration. You can create multiple projects for each of your strategic objectives.
To exceed $10 million in revenue in the next three years.
Expand to new domestic markets by June 30, 2022.
Sell through intermediaries within the next two months.
What does a project involve?
Tasks or subprojects: A project is a set of tasks. A task is a small element of the project and can be broken down further into steps. A project is closed after all tasks associated with it have been completed.
While a project developed to meet a strategic objective can be extensive and consume significant effort, a task is manageable and usually gets over quickly. The team working on the project may create a task checklist defining what needs to be done, what can be left out, deliverables, etc. Preparing a checklist allows for better planning and easy progress tracking.
A large or complex project can also be broken down into sub-projects. For example, you can divide and distribute the work among employees based on their particular skill-sets. This way, the project feels less overwhelming to people and helps prevent burnout.
Milestones: Milestones are the specific things you will need to achieve for the project within a particular timeframe. Each milestone you complete brings you closer to implementing the project successfully.
Milestones can be visualized as checkpoints identifying the tasks or groups of tasks that have been completed or when a new phase of the project starts. Defining milestones is an essential aspect of managing a project efficiently and keeping people on track.
Timeline: A project timeline is a chronological order of tasks to be completed. It names each task, along with their start and end dates.
The timeline provides an overview of the entire project from start to finish, setting the direction, priorities, and expectations for team members. With one glance, people can understand the project, and upon commencing work on the project, refer to the timeline as and when needed.
Constraints: Certain things can limit or restrict the project, affecting it in its entirety. Common project restraints are scope, time, and cost.
If more deliverables are added to the project after a specific number of them have been already agreed upon, then your project is out of scope. A time constraint occurs when the project, for some reason, struggles to stay on schedule. Establishing a project timeline and effective project monitoring can prevent time constraints. A cost constraint occurs when you’re unable to control the project spend. Before beginning work on the project, estimate the associated costs as accurately as possible. With a baseline in place, you will be able to compare your spending and avoid going over the budget.
Resource planning: Successful project delivery depends on whether enough people are working on it and possess the right skills to accomplish tasks. The work should be distributed such that no one individual or team feels overburdened and eventually demotivated to do their best.
Resource planning also considers the impact on work from the exit of senior or key project members, sick leaves, and other circumstances when the planned number of resources may not be available. The project manager may add extra time into the timeline, known as buffer time, to address unforeseen events.
Risk mitigation: A project may run into risks and pose a roadblock to realizing the strategic objectives. Risk mitigation involves planning appropriate responses to threats to the project.
The commonly employed risk mitigation options are:
- Accepting risk is used when the risk’s loss is not significant enough to justify spending time, effort, or money avoiding it.
- Avoiding risk, where you adjust the project constraints or requirements to limit or remove the risk.
- Controlling risk, where you implement actions to reduce the impact of the risk or the chances of it occurring.
- Transferring risk, where you transfer ownership, responsibility, and accountability to another person willing and capable of managing the risk.
- Monitoring risk, where you keep an eye on the environment for changes that may affect the nature or impact of the risk.
Learn more about how to define and structure projects that align and contribute to your strategic objectives here.
7. Set KPIs
A Key Performance Indicator (KPI) shows the progress towards achieving your strategic objectives. In addition, KPIs provide a basis for evaluating performance correctly and transparently.
Strategic objective: To maintain an annual revenue growth rate of at least 7%
Quarter-on-quarter revenue growth
Number of new contracts won in a financial quarter.
Why use KPIs?
- To provide objective proof of advancing your efforts successfully.
- To keep the focus on what needs to be measured.
- To monitor how performance has changed over time.
- To track and review project management, team, and individual performance.
Leading vs. lagging KPIs
A leading indicator is an indicator of performance that measures future success. For example, if you’re focused on revenue growth, then new leads in the pipeline and the number of sales calls per sales representative are leading indicators.
A lagging indicator is an output that has already been measured. In this sense, it is an indicator of past performance. For example, sales revenue and sales cycle length are lagging indicators.
KPI best practices:
Include both leading and lagging indicators
Leading KPIs provide a broader, more complete view of performance by indicating likely future outcomes. As lagging indicators inform you of what you’ve already achieved, you can use them to compare performance internally or against competitors or the industry average.
Align KPIs to your strategic goals
Define KPIs that are meaningful to your strategic objectives. This will help you make better-informed decisions, implement the right improvements, and avoid changes that aren’t needed. Measuring the efforts and outcomes that have contributed positively to the strategic objectives is helpful when deciding on employee rewards and appreciation.
Emphasize quantitative measurements
Quantitative KPIs can be measured and expressed using numbers. They offer a far better indicator of actual performance, providing facts and uncovering trends. Qualitative KPIs are opinions and qualities, such as ‘an efficient process’ or ‘an elegant product,’ which don’t tell you whether you’re hitting your targets and inching closer to your strategic objectives. Instead, you can use qualitative KPIs to understand why you’ve achieved or failed at achieving a specific result.
Avoid an overload of KPIs
Identify the most important things that impact your strategic goals, and stick to them. Having one too many KPIs can scatter your focus or spread your resources too thin. Aim for 2-3 KPIs per strategic objective. Identify a minimum of two – one leading and one lagging indicator.
Set a measurement frequency
KPIs shouldn’t exist in a vacuum; KPIs must be acted upon so you’re able to implement your strategic vision successfully. You can measure KPIs on a weekly, monthly, or quarterly basis; The measurement frequency will depend on the type of KPI. Some outcomes will be clear only after a certain period has passed and can therefore be measured at longer intervals.
If there is any change in your strategic objectives, add, remove or modify your KPIs as needed. Your KPI list will evolve as your business grows and you pursue more ambitious goals.
Learn more about how to write effective KPIs here.
Keep these core constituents in mind to plan and implement a strong foundation for long-term organizational success:
- Focus areas
- Strategic objects
- Projects based on strategic objectives
Each of the elements is distinct from the other, yet they are interconnected. They can change with drastic changes or unpredictability in your business environment. Revisit your strategic plan every year to check its relevance and make amends as needed.