The strategic planning process is critical for startups and scale ups because it establishes the "What" and the "How" that will keep the company on track toward its purpose for roughly the next year. By creating a clearly defined path that is realistic and achievable based on comprehensive analysis of both the company and the marketplace, going through the strategic planning process creates aligned expectations that will keep stakeholders focused on what's most important.
We’ll pull apart some of the most important steps and considerations that go into creating a strategic plan based on stakeholder consensus to provide direction throughout all levels of the company
Key Takeaways:
- Strategic planning should have a realistic timeline horizon. Strategic plans take time to build and even more time to implement. Strategic planning is not a quick fix, but a plan for the next six to eighteen months to achieve the overall impact. At the same time, planning ahead for more than 18 months can be more aspirational than applicable, as too much can change substantially over a longer timeframe.
- Employ the SMART goals principles in your planning so that your teams are aligned with outcomes that are clearly defined and attainable. Make sure your goals are worthwhile for investing time and resources into, and they are measurable so you know when you reach them.
- Current state analysis, a desired future state and a SWOT analysis are all important components of the strategic planning process, helping to identify the gaps, biggest opportunities and potential threats to reaching your goals.
Have A Plan For Your Strategic Planning Process
The strategic planning process includes a good deal of pre-planning to make sure that it serves the organization and is properly structured to be executable, especially when major, ambitious objectives are a part of your strategic plan.
The process begins by establishing a framework for the strategic plan. This takes into account the company's mission and purpose, looks at relevant internal and external factors, identifies strategic challenges, designates roles, and outlines the communication and assessment methods that will be used throughout the planning process.
Select the stakeholders who will take part in the strategic planning process. Company leaders, top executives, shareholders and department heads are the most significant group of participants, but they should not be the only people involved. Effective strategic planning requires a diversity of viewpoints and opinions from within the company, so it is important to select the thought leaders, key influencers, and future leaders who can also add value because of the role they play and the unique talents or experience they can add to the process.
A facilitator is a crucial role in the creation of a strategic plan, to keep all participants engaged throughout the process, provide equal representation of ideas to consider, and minimize groupthink. The chosen facilitator can be an internal resource with strong facilitation experience or can be an external consultant. Either way, the facilitator should have expertise with strategic planning as well as communication and conflict resolution skills to address any issues that are likely to arise from the range of ideas and viewpoints being shared.
Look Far Ahead, But Not Too Far
The strategic plan needs to be thought of like a story that unfolds one chapter at a time. There are events and dependencies that may require prerequisite activities to be completed. Ideally, strategic planning often covers a 12 month time frame from start to finish. There will need to be progress monitoring of selected KPIs and the ability to adjust and adapt throughout the implementation and execution of the plan. If a goal can be achieved in a timeframe shorter than six months, evaluate to determine if it is really a goal, or simply an executable delivery. Likewise, if a goal has too long of a timeline it may be too broad for the strategic planning process, and can end up as unattainable.
Horizons of 6 months to 18 months are considered the sweet spot for most strategic planning processes because data and analysis gathered about the market is likely to remain relevant and accurate across that timeframe. That means the goals and action steps attached to them will remain fairly achievable and won't leave the company pursuing objectives that no longer matter or are far out of reach.
A strategic plan that attempts to look too far into the future leaves too much to chance, and will almost certainly need to be radically revised to accommodate unforeseen events, both within the company and within the business environment. From legislative and economic changes, to cash flow challenges and employee retention, there are many unknowns that can negatively influence the ability to effectively act on a far reaching strategic plan.
SMART Goals Make Smart Strategic Plans
The strategic plan needs to include goals and milestones that will move the organization forward and align with company mission and vision. The plan goals should solidify a direction that unites the entire company, provides a path to new levels of success, and rewards successful outcomes. It is essential to employ a SMART Goal framework for when creating a plan to drive your organization forward and set the most important priorities over the next 12 to 18 months.
SMART goals are specific, measurable, attainable, relevant and time-bound, and will incorporate an understanding of the market, the current state of the business and the potential opportunities and challenges that can influence a successful outcome. The market analysis performed prior to the actual plan development should evaluate the inside and outside factors that are likely to impact the company's performance, and serve as important considerations in developing strategic planning goals. Make sure to “rightsize” your SMART goals, aligned with your company mission, vision and values.
An example of a SMART goal for financial growth could be "grow revenue by 17 percent, with a 22 percent gross profit margin and an 80 percent year-over retention rate by the end of fiscal 2022." Those figures are specific and easily measurable, with a deadline to frame the period of time needed to achieve the goal. That stated goal needs to be attainable to have a productive impact on the players involved in achieving it. If the company has been stuck in revenue growth for a while, then more than doubling that performance in a year's time may be unrealistic without an ambitious commitment of resources, outside market influences that will substantially change growth opportunity, or an influx of substantial investment that can enable transformational operations. Meanwhile, if the company has been consistently growing by 20 percent annually and easily meets those profit and retention numbers, the goal is not worthwhile or challenging. SMART goals should be motivating and challenging, but also attainable and relevant.
As with all other phases of a strategic planning process, the key is finding the balance that makes the just-out-of-reach objectives attainable with the right commitment of effort and resources from throughout your organization. The answers are out there for creating your company’s strategic plan. Sellerant will show you how!