I really do.
But I keep asking myself: "Where’s the beef?"
The current approach is usually explained to boards and management in four points:
- Where are we?
- Where do we want to go?
- How do we get there?
- How will we know we are there?
This explanation does not go far enough for me. I want more! Where's the meat in it? I wonder, as did a hamburger chain about its competitors: "Where's the beef?"
Here's how we would add the beef to each step.
Question 1: How do you determine where we are now?
Beefy Answer: Understand current strategy and the external factors impacting it. That will tell us where we are.
When we target a company for competitive analysis, we study its current strategy and the external factors impacting it. This should be the starting point for all strategic planning. Don’t assume board members and the management team share a common understanding of current strategy. The research does not support that assumption.
To study a company, we look at its strategy, which we define as a chosen course of action. We believe there are 8 strategies common to all companies, from for-profits to nonprofits. We want to know all about the target’s business definition strategy, or mandate as it is called in many nonprofits and all government corporations and agencies. We want to know about its risk, growth, financial management, organization management, R&D/technology, and service delivery strategies (also known as production or manufacturing depending on what the company does). Finally, we want to know about its marketing/sales strategy, known as communication strategy for many nonprofits and government companies and agencies.
We use the understanding of those strategies to identify external factors impacting the performance of each of them.
The exact same approach can be used to understand our current situation for strategic planning; i.e., where we are now.
Question 2: How do you determine where we should want to go?
Beefy Answer: Selecting one of the 8 strategy categories on which to focus is the key to taking you where you want to go.
If you truly understand current strategy and the external factors impacting it using the research approach described under step one, you will be able to see clearly where the business is going if you do nothing.
The question then becomes “Do we want to change that direction or are we satisfied with where we are going if we do nothing?”
To change direction requires focusing on one of the 8 strategy categories in order to make desired change happen. That focus will then impact all the other 7 strategy categories. Here’s how it works.
Select which of the eight strategy categories should be the focus of the strategic plan over the next 3 to 5 years. This decision is based on the learning under question 1.
Should we focus on our business definition strategy? Our risk strategy? Our growth strategy? Our financial management strategy? Our R&D/technology strategy? Our organization management (our people) strategy? Our marketing/sales strategy? Our service delivery (production / manufacturing) strategy? The focus on that one strategy category will impact all the other seven over the life of strategic planning
The selection to focus on a specific strategic category as the priority of the strategic plan will set in motion the action to take us where we have decided to go.
Question 3: How do we get there?
Beefy Answer: Identify the impact on the remaining 7 strategy categories of the selected strategy focus in question 2.
This question really drives home the point that the strategic plan is not about developing detailed strategy! The strategic plan provides broad descriptions of strategy. The focus on just one strategy in question 2 leads to a cascading impact on the remaining seven.
Consider the private school that decides, after consideration of the external factors impacting its strategy, that it needs to grow in order to stay relevant and sustainable over the long term. The decision is made to double the number of its students. This is clearly a focus on the growth strategy.
But that single focus quickly involves the service delivery strategy (with a decision to build a new facility), financial management (raising the funds to pay for the facility); marketing (attracting donors); organization management strategy (hiring and orientation of more teachers and staff); risk (all of the issues associated with a doubling in population); and business definition/mandate (how the school defines its business).
And that's the beef we would add to Question 3.
Question 4: How will we know when we get there?
Beefy Answer: The broad description of selected strategy in the strategic plan will tell us when we are there.
The good news is there is no need for question 4.
All the strategic plan needs to do is to describe broad strategy. It should be apparent from the broad description whether or not the strategy has been successfully implemented.
The next iteration of strategy development, commonly known as “business planning”, will describe in detail the recommended implementation plan for the board's approved strategic plan.
Now you have some real food for thought.
There should be a lot of comfort knowing that strategic planning is not a mystical journey. It is a review of strategy already in place across 8 strategy categories. The responsibility of the board is to determine if those strategies remain appropriate given changing external factors and to monitor the implementation by management of authorized strategy.
For more on our strategy thinking, see: The Alpha Strategies, Understanding Strategy, Risk, and Values in Any Organization free in ebook form at thealphastrategies.com
And be sure to try our interactive, online Drag'n'Drop Strategy tool