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  1. 1. Field Report M O .C R T: TS EP C IN R A N NT Strategic Planning: TO CO EN N .P IO An Executive’s Aid for Strategic W T W A W RM Thinking, Development and R O O INF Deployment By George Palmatier 51 T 88 IN 8- R 85 EP The author works with senior management of manufacturing companies to 8- R achieve results that provide a competitive advantage. 88 OR "S F trategic planning is an ongoing pro- cisions; and measuring the results of these decisions against cess and carries an intense customer/ the expectations through organized, systematic feedback. community, shareholder, and employee As such, planning, whether long range or short range, focus. The strategic planning process is nothing new. It is the organized performance of an old provides direction to all elements of the company and task. But we have learned that the task will rarely get drives decisions and actions. Employees at all levels can done unless organized. Above all, it will rarely become articulate and share the company’s vision and its overall achievement unless done purposefully."2 strategic direction. They can also articulate their roles in the implementation and execution of the strategic A Strategic Planning Process is Comprised of plan."1 Four Primary Elements: 1. Strategic Planning (Development / Creation of A General Overview Strategy) ". . . Strategic planning is...the continuous process of mak- 2. Strategic Deployment (Communication, Feedback ing present entrepreneurial (risk-taking) decisions systemati- and Execution) cally and with the greatest knowledge of their futurity; orga- 3. Integration with other processes (Alignment and nizing systematically the efforts needed to carry out these de- Synchronization)
  2. 2. 4. Monitoring and Evaluation (“Continuous” Strategic 6. Sales / marketing method Management) 7. Distribution method 8. Natural resources Number 1—Strategic Planning 9. Size / growth Strategic Planning provides an ongoing opportunity 10. Return / profit for “Strategic Thinkings—which is a process that enables 11. Functional Strategies—Engineering, marketing, the management team to...think through the qualitative sales, manufacturing, distribution, financial aspects of its business and the environment it faces. The "The strategic planning process is initiated by Top team can then decide on a common and shared vision Management and represents input from key people and a strategy for the future of its company.”3 throughout the organization. Each and every strategy is "The most fundamental strategic decision is: What documented and is linked to and supports the strategic M should the scope of our products and markets be?"4 In goals."1 O .C its most basic form, three fundamental questions are to "Strategic goals are recognized as ends to which ef- R T: TS be answered in Strategic Planning: forts are to be directed. Strategic goals require significant EP C IN 1. Where are we? (Performance analysis, assessment changes in the way in which the business operates and R A and evaluation) N NT may take several years to implement."1 2. Where do we want to go? (Vision / mission and TO CO goal setting) Some Considerations for Strategy EN N 3. How are we going to get there? (Strategy develop- Development .P IO ment and deployment) Driving Force—The one strategic area that is most W T W A "Planning what is our business, what will it be and important to a company and is the engine that propels, W RM what it should need to be integrated. The skill we need or drives, the company forward to success. R O is not long-range planning but strategic decision-mak- "Value Disciplines – Driving Force: O INF ing… The work starts with the questions, 'Which of our • Product present businesses should we abandon? Which should • Operational Excellence 51 T 88 IN we play down? Which should we push and supply new • Customer Intimacy"5 8- R resources to?'1 Strategic Planning does not deal with the Core Competencies? What gives the company lasting 85 EP future decisions. It deals with the futurity of present de- uniqueness? 8- R cisions. What do we have to do today to be ready for an Internal SWOT (Strengths – Weaknesses – 88 OR uncertain tomorrow?"2 Opportunities – Threats) F Strategic questions to keep asking ourselves: Facilitator—A facilitator has a very specific role: to 1. What is our business? keep the discussion moving forward in a constructive 2. Who is our customer? manner. The facilitator also keeps the process honest, 3. What is value to our customer? balanced and objective. He or she will strive to ensure 4. What are his unsatisfied wants? everyone has a chance to speak his or her mind on the 5. What are our success requirements? various subjects. 6. What is our match with these success needs? 7. What are our strategic dependencies? Number 2—Strategic Development 8. What is our strategic position in the market? "The best plan is only a plan, that is, good intentions, 9. What must it be to gain lasting uniqueness? unless it degenerates into work."2 A study of 275 portfo- 10. What should our business be in the future? lio managers reported that the ability to execute strategy Areas for strategic thinking and direction: was more important than the quality of the strategy 1. Product / service concept itself... In the early 1980s, a survey of management con- 2. User / customer class sultants reported that fewer than 10% of effectively de- 3. Market type / category veloped strategies were successfully implemented. More 4. Production capacity / capability recently, a 1999 Fortune cover story of prominent CEO 5. Technology / knowledge failures concluded that the emphasis placed on strategy
  3. 3. Field Report and vision created a mistaken belief that operating departments of the company."1 throughout the organization and that re- the right strategy was all that was needed "The company has a business plan sults are reported from the organization to to succeed. “In the majority of cases, we which covers market share and projec- management. A process exists to monitor estimate 70%, the real problem isn’t bad tions, financial performance, new prod- progress against plans and to take correc- strategy but …bad execution.” “…with uct development, customer service tive action when needed."1 the rapid changes in technology, compe- levels, resources and desired inventory "Systematic reviews are done through- tition and regulations, the formulation levels. The business plan is used in the out the year to determine how annual and implementation of strategy must be- Sales and Operations Planning (S&OP) goals are being achieved. These reviews come a continual participative process.”6 Process."1 include: methods deployed, study of data "Execution will help you as a busi- As a practical matter, the goals and and comparison of plans against activities ness leader, to choose a more robust strategies developed through strategic and plans against results."1 strategy. In fact, you can’t craft a worth- planning need to be integrated with the “Executive management, individually while strategy if you don’t, at the same company’s other management processes. or as a group, dedicates time to reassess M time, make sure your organization has This is necessary to ensure minimization the logic of their strategies and related O goals and their achievements.”1 .C or can get what’s required to execute it, of conflicting directives/direction to indi- R T: TS including the right resources and the viduals tasked to execute the plans. In most companies, top manage- EP C IN right people. Leaders in an execution “It is recognized that the successful im- ment is expected to do three things: R A culture design strategies that are more N NT plementation of strategies is a direct func- 1. Run the business well. road maps than rigid paths enshrined in tion of people involvement and continu- 2. Grow the business. TO CO fat planning books. That way they can ous communication.”1 3. Improve the capabilities of the en- EN N respond quickly when the unexpected terprise. .P IO happens. Their strategies are designed to Number 4—Monitoring and Number 1 is supported by Class A plan- W T Evaluating W A be executed."7 ning and control processes and behaviors. W RM "A process exists whereby the strate- "It is recognized that strategic goals and We would expect properly managed prod- R O gies and goals are deployed throughout strategies are deployed from management uct portfolios, visibility of demand, supply O INF the organization to gain focus, alignment and engagement throughout the com- 51 T Terms often used in Strategic Planning 88 IN pany.”1 8- R Strategies are paths to a goal. A strat- 85 EP egy without a goal is a path to nowhere. Strategic Theme—a statement or reflection of what top management believes 8- R From the top down, an organization must be done to succeed. Strategic themes reflect executives’ view of what must 88 OR needs to set a combination of goals with be done internally to achieve desired outcomes. Strategic themes do not directly reflect financial outcomes. As such, strategic themes typically relate to internal F strategies to meet them. As one goes down through the organization, these business processes. goals become targets or sub-goals with Strategic Thinking—a process of analyzing, evaluating, and reflecting on the sub-strategies or tactics to achieve them. nature of the business—understanding its current situation, conceiving possible Every goal needs to be explicit, under- future states, creating a vision of the organization’s future, developing potential standable, measurable and time bound. means and methods to achieve the vision, weighing the choices and deciding This enables them to be integrated into upon a course of action. the company’s other planning processes Strategic Plan—an agreed-upon plan of action in support of the company’s vi- to identify gaps in expectations and syn- sion and mission incorporating top management’s strategic themes. ergies within the company. Strategy Map—a logical and comprehensive method for describing and com- Number 3—Integration with municating strategic plans demonstrating the linkages from strategic goals to tasks Other Processes /actions. "All goals and strategies are integrated Strategic Measures—key performance indicators of the degree of success in into the business plan, which is used to achieving the organization’s strategic goals. develop and communicate annual finan- cial plans that incorporate input from all
  4. 4. chain effectiveness and efficiency, satis- Individual Objectives— the company’s strategies. fied customers and respectable financial What I need to do "Strategic Planning does results. However, without a strategic view Desired outcomes: not substitute facts for judg- to the future, the company may be at risk Delighted customers, satis- ment, does not substitute sci- in achieving number 2 and number 3. fied shareholders, effective ence for the manager. It does Strategic planning, properly performed, processes, a motivated and not even lessen the impor- will establish growth goals and strategies prepared workforce. Do the tance and role of managerial and improved capabilities goals and strate- current corporate commu- George Palmatier ability, courage, experience, gies. Measures supporting these goals are nications fulfill the Mission, intuition, or even hunch— an integral part of Class A strategic plan- Core Values, and Vision elements? just as scientific biology and systematic ning. Strategic planning provides: medicine have not lessened the impor- Kaplan and Norton, in The Strategy 1. Better informed, more timely deci- tance of these qualities in the individual Focused Organization6, expound on the sions through continuous strategic think- physician. On the contrary, the systematic M use of the balanced scorecard to help top ing and improved communication. organization of the planning job and the O .C management measure the strategy – both 2. Clear direction to the organization supply of knowledge to it strengthen the R T: TS financially and non-financially. Done cor- on what the company will do and per- manager’s judgment, leadership, and vi- EP C sion."2 IN rectly, these measures can address the haps more importantly what it will not do. R A three management areas above. N NT Focus is achieved not through prioritiza- The balanced scorecard focuses on tion but through deciding what will not be George Palmatier is a partner with the Oliver TO CO the following measures: done. This frees up synchronized, cross- Wight Companies. He is co-author of the EN N 1. Financial Perspective (traditional fi- functional resources to do what top man- books, The Marketing Edge, Enterprise Sales .P IO nancial performance measures) agement has strategically chosen to do. and Operations Planning, and Demand W T W A 2. Customer Perspective (basic require- 3. Greater empowerment with clearly Management Best Practices. For more informa- W RM ments, differentiators) understood boundaries communicated to tion, contact Oliver Wight Americas by calling R O 3. Internal Perspective (internal capa- the entire organization. Every element of 800-258-3862, email at info@oliverwight.com O INF bilities, operational excellence) the organization understands the direction or visit the web at: www.oliverwight-americas. 4. Learning and Growth Perspective (To and his or her actions required to support com. 51 T 88 IN achieve our vision, how must our organi- 8- R zation learn and improve?) 85 EP Once strategies have been agreed upon 8- R in support of strategic goals, appropriate References 88 OR measures should be in place to measure This article includes multiple references to a number of sources for support. They F the strategy. include: 1 The Oliver Wight ABCD Checklist for Operational Excellence, Fifth Edition, John Food For Thought Wiley & Sons, New York, 2000 Strategy is an element in a hierarchy 2 Drucker, Peter F., Management: Tasks, Responsibilities, Practices, Harper Collins, (note: The following is a variation of New York, 1974 a hierarchy presented in The Strategy Focused Organization.6) 3 Robert, Michel, Strategy Pure and Simple, McGraw-Hill, New York, 1993 Mission—Why we exist 4 Tregoe, Benjamin, & John W. Zimmerman, Top Management Strategy, Simon & Core Values—What we believe in Schuster, New York, 1980 Vision—What we want to be 5 Treacy, Michael & Fred Wiersema, The Discipline of Market Leaders, Addison- Strategic Goals—What we want to Wesley, Reading MA, 1995 be—quantified 6 Kaplan, Robert & David Norton, The Strategy-Focused Organization, McGraw-Hill, Strategy—How we will get there New York, 2000 Balanced Scorecard—Implementation 7 Bossidy, Larry & Ram Charan, Execution: The Discipline of Getting Things Done, and focus Crown Business, New York, 2002 Strategic Initiatives—What we need to do Copyright © 2008 by Penton Media, Inc.