In our consulting practice we take a team of people through a process to build a strategic plan for their organization. While this is best done in a group situation, it is possible to replicate the steps as a piece of “staff work”.
Here are the six steps to building a strategic plan.
Step 1 – Assess Your External Environment.
When we work with companies we use Michael Porter’s Five Forces model to examine the competitive forces within the industry. We have taken Porter’s model and created a handout, which we will be pleased to forward to you. We ask questions about:
- What is the power of suppliers?
- What is the power of buyers?
- What are the barriers to new entry into the industry?
- What is the potential for substitutes to blindside the industry?
- What are the general competitor characteristics in the industry?
- What are the characteristics of your top competitors?
We have developed a scoring system to identify the relative degree of difficulty in doing business within the industry. This should inform the strategy going forward.
Step 2 – Identify the Pillars of Success
Here you are trying to determine the areas of focus for your organization – the foundations of future success. At a minimum they should include a focus on customers, operations and your people. They could include other areas like innovation, product quality, growth (organic or acquired), sustainable profitability or market leadership.
Choosing the Pillars of Success is a judgement call. Decide on at least three Pillars, but no more than six. In terms of focus, less is more.
Step 3 – Set Strategic Objectives
In sports, individuals and teams need to know what results they must achieve to win. Similarly, businesses need to know what they are expected to produce or achieve, in order to be successful. Everyone must understand what success looks like. For each Pillar of Success, develop Strategic Objectives that include outcomes (e.g. revenue from new products), with measurements (e.g. totalling 15% of sales), within a timeframe (by 2022). A couple of big macro Strategic Objectives, with outcomes, measurements and time frames, per Pillar of Success should be appropriate.
Step 4 – Identify the Measures
The Strategic Framework needs to be relevant as a touchstone for decision-making. One of the tools to track results and decide on the need for corrective action is the business dashboard. This is a collection of Measures across the Pillars of Success that can be tracked, and which reflect the current progress of the organization to attain the Strategic Objectives.
So, for each Strategic Objective in each Pillar of Success, consider the measures that should be tracked.
Step 5 – Select Key Initiatives
Key Initiatives are the medium-term projects or programs that will lead to the achievement of the Strategic Objectives. They are the link between the Strategic Objectives and Work Plans, or Action Plans and the budget.
A planning hierarchy might look like this from the perspective of height:
- Strategic Objectives – viewed at 30,000 feet
- Key Initiatives – viewed at 20,000 feet
- Annual Work Plans and Budget – viewed at 10,000 feet
- Project Action Plans – viewed at 1,000 feet
For a copy of these models just send us an email at info@hewatstrategic.com indicating you would like to receive the Five force’s model and our Strategic Framework model.