How to Write a Strategic Plan that Seriously Improves your Business Performance
Strategic planning is not just about aspiration, ambition, leadership, and visioning; it is about articulating the challenges that face your organisation and encapsulating how you are going to address those challenges.
The outcomes that you are looking for must be expressed in a set of measurable objectives that define what you are trying to achieve, along with an explanation as to why you are trying to achieve them and, most importantly, how you intend to achieve them.
The most significant aspect of strategy is that it should articulate how your objectives will be accomplished and not just a definition of what they are.
Strategy is not about woolly vision, mission and value statements,
it is about identifying significant challenges that an organisation faces – assessment;
defining an overall approach for dealing with those challenges - approach,
and designing a coherent set of actions that implement the approach - action.
The assessment, approach and action plan enable a set of clear Business Objectives to be identified that define a successful Business Outcome i.e. that the obstacles have been overcome and the challenges met.
It is important that, through the definition of Business Outcomes, Business Objectives are:
Achievable, Quantified, Prioritised, Owned, Scheduled, Cohesive, Measured
A good strategy is realistic, achievable, timely and delivers the desired Business Objectives
A Model for Strategic Planning – the Business Life-System
Sirius Partners has adopted an innovative strategic and operational planning model called the “BusinessLife-System” (copyright © 2014 Philip Trickey).
The Business Life-System has three aspects to it:
1. Environment - the External Environment. An assessment of the opportunities for, and threats against the business.
2. Nurture - the Internal Environment. An assessment of the strengths and weaknesses within the business.
3. Nature - the Business DNA. The architecture of what the business is trying to achieve expressed as a cohesive set of Business Objectives and Business Outcomes.
These three aspects manifest themselves as six layers within the business model:
1. External Business Drivers - threats and opportunities external to the organisation
2. Internal Value Drivers - strengths and weaknesses within the organisation
3. Business Objectives - an articulation of what the organisation is trying to accomplish
4. Business Outcomes - a quantification of the business value or benefits.
5. Enablers - the assets, processes, deliverables, capability and capacity
6. Delivery Management Vehicles (DMV) - governance, structures, processes and methodologies. DMVs include Portfolios, Programmes, Projects and Workstreams.
External Business Drivers - PERSPECTIVE
External Business Drivers are threats and opportunities in the external environment (i.e. external to the organisation) that could have either a positive or negative impact on the business.
As these external dynamics are the single most important factors that can impact the business, a thorough assessment is recommended, referred to in the Business Life-System as PERSPECTIVE, as follows:
Internal Value Drivers - CHOICES
Internal Value Drivers are the perceived strengths and weaknesses within the organisation and are what constitutes the culture within the business. An assessment of this capability or inability can be undertaken across multiple aspects of the business, referred to in the Business Life-System as CHOICES, as follows:
Business Objectives are an articulation of what the organisation is trying to accomplish, driven by the External Business Drivers and the Internal Value Drivers.
Business Objectives are best categorised into four Perspectives of a balanced scorecard:
1. Customer - who are the customers of the business now and in the future?
2. Proposition - what products and services are being offered by the business to those customers now and in the future?
3. Capability – what assets, deliverables, people, partners and processes are required to deliver the propositions?
4. Finance - how will the capabilities be funded (revenue and investment)?
Each of these Business Perspectives is further broken down to specific Business Objectives that demonstrate progress, development and delivery across the balanced scorecard.
Business Outcomes - the Business Value
Business Outcomes are a quantification of the business value, benefits and targets attributable to the Business Objectives that make them quantifiable, measurable, timely and specific.
Key Business Outcomes are often referred to as Key Performance Indicators (KPIs)and can be used in an executive dashboard to monitor the progress of the business towards achieving its strategy.
Enablers – the Business Costs
Enablers are the assets, processes, deliverables, capability and capacity in which the organisation invests in order to deliver the Business Outcomes.
While Business Outcomes articulate and quantify the business value, Enablers articulate and quantify the business costs.
Risk and Prospect Management
When an external threat aligns with an internal weakness creating a potential negative impact on the business then this creates a risk to the business.
Such risks must be quantified in terms of their potential impact on the business and the likelihood of them occurring.
Mitigating actions can then be identified and carried out in order to reduce, overcome or eradicate the negative impact on the business.
When an external opportunity aligns with an internal strength creating a potential positive impact on the business then this creates a prospect for the business.
Such prospects can be quantified in terms of their potential impact on the business and the likelihood of them occurring.
Managing actions can then be identified and carried out in order to maximise the positive impact on the business.
Delivering the Strategy
Strategy is about identifying key challenges and how to overcome the associated obstacles in order to meet those challenges through a set of coherent actions.
It is therefore crucial that the achievement of those actions and associated outcomes are managed effectively.
Anything that needs to be delivered or achieved within a business (whether seen as business-as-usual, business change programmes, delivery projects, benefits realisation projects or innovation initiatives) should have a controlling structure or vehicle managing it.
These include governance, methodologies, processes, resource allocation/management and risk management.
In fact, managing delivery has ten main aspects to it:
1. Outcome Definition - a breakdown and definition of what is required to be delivered in terms of Outcomes (benefit and value).
2. Work Breakdown Structure - a breakdown and definition of what enablers need to be delivered in order to achieve those Outcomes.
3. Activity - a breakdown and definition of what action and activity is required to be taken in order to deliver the Enablers.
4. Plan - a plan of when that activity will take place and the dependencies between the activities, with associated achievement milestones.
5. Resource - an assessment and ongoing management of the resources required to undertake the activity and deliver the plan. This should include allocation of clear responsibility and accountability for delivery.
6. Finance - an assessment and ongoing management of the budget (capital and revenue) required to pay for the resources and other assets required.
7. Stakeholder Engagement and Communication - regular, appropriate and timely engagement and communication with the different stakeholder groups that are affected by, or contribute to delivery.
8. Risk Management - identification of the risks and assumptions that need to be mitigated and managed in order to maximise the potential for successful delivery.
9. Progress Reporting - regular reporting on the progress of delivery both in terms of achievements and exceptions to the plan.
10. Lessons Learned - an assessment of lessons learned at the end of delivery in order to refine and improve the process for the future.
Programme and Project Management
The Business Life-System refers to these controlling structures as ‘Delivery Management Vehicles’ (DMVs) and they can be portfolios, programmes, projects, workstreams, initiatives, departments etc.
Strategy is an assessment of business challenges and the definition of an approach to overcome the obstacles in order to meet those challenges.
It requires a clear set of cohesive and coordinated actions to be identified, managed and delivered.
A structured approach to strategic planning ensures clarity, consistency and collaboration.
It enables the organisation to focus its resources appropriately on resolving its biggest challenges, seriously improving the performance of the business.