Best Practices to Developing an Effective Strategic Plan

By Omodiaogbe Samuel

February 28, 2024

Introduction

In the ever-changing landscape of business, strategic planning serves as the compass that guides organizations toward their goals and aspirations. Whether you’re an entrepreneur seeking to launch a startup, a nonprofit seeking to make huge impact, a government institution that wants to create real value, or a seasoned executive aiming to steer your organization toward greater heights; in all cases, the ability to create robust strategic plans is an invaluable skill you need to master. It can be the difference between thriving for success or succumbing to failure. Essentially, strategic planning is the process of determining an organization’s long-term goals and figuring out the best approach to achieving them. At its core, a strategic plan aligns the organization’s resources, capabilities, and efforts in a cohesive manner towards fostering a clear direction it needs to take. The plan is a forward-looking blueprint that align resources, guide decision-making, and foster adaptability in the face of change. It enables organization to navigate complexities, capitalize on opportunities, and overcome challenges while ensuring a cohesive direction for the organization. The purpose of a strategic plan is to provide a clear and structured roadmap that guides the organization in achieving its long-term vision and objectives. As a result, it serves as a compass that aligns the efforts of all stakeholders — from top-level executives to front-line employees — toward a common direction. In fact, the strategic plan serves as a documented roadmap to guide the organization toward its desired future state while considering the internal and external factors that may impact its success.

 

Strategic Planning Process

The strategic planning process is a structured and systematic approach used by organizations to develop an actionable strategic plan that guides their long-term direction, goals, and actions. It involves a series of steps and activities that help them analyze the internal and external environment, set objectives, devise strategies, and create a roadmap for the organization’s future success. Particularly, businesses need direction and goals to work toward. Strategic planning offers that type of guidance. Essentially, a strategic plan is a roadmap to get to business goals. Without such guidance, there is no way to tell whether a business is on track to reach its goals or not. Therefore, the strategic planning process involves taking your organization on a journey from point A ―where you are today, to point B―your vision of the future. Ideally, there are myriad different ways to approach strategic planning, depending on the type of business and the granularity required. The following are core to the process:

Setting the Process in Place

 The following are the strategic planning pre-activities:

Acknowledging the need for a strategic plan: This usually takes place at the board or top management level of an organization. The first and perhaps most important step of the planning process is to acknowledge the need for a plan. To the executives, this brings into consciousness the need to access the organization’s performance, given the internal and external environments. As a result, the management will decide the need to set the organization on the right direction. It equally means reviewing the existing plan― if there was a plan on ground.

Assembling the Right Team: The next step is to assemble the strategic planning committee involving the key stakeholders.   The committee should be comprised of a cross-functional team that involves members of the board or leadership, along with representatives from finance, human resources, operations, marketing, sales, and any other critical functions. Your plan will be more realistic—and you’ll get better buy-in—when you involve the right people in your decisions. All the strategic planning steps offer opportunities to open the lines of communication and engage people at all levels.

Setting Up Review Meetings: Strategy review meetings are necessity for staying on track over the long haul. The team need to decide how often they meet and who should be involved. The team leader needs to assign functions and responsibilities, set timelines, and determine the expected outcomes of the process. Ideally, the CEO, aided by members of the executive team, should as a rule lead the strategy review, as that ensure backing the plan up with right leadership. To achieve the goal of the strategic planning, the first step is to run a strategic planning workshop with the team. That means getting the team in the room, and gathering their opinions and insights on how to set the ball rolling. By running the workshop, you foster collaboration and fresh perspectives. Essentially, the process of co-creating and collaborating to put the plan together with stakeholders is one of the most critical steps in achieving the right outcome.

Determine the Scope: Scope deals with the length of time that is covered by the strategic plan and how in-depth the plan will be. Some plans are scoped for one to two years, others five to ten years in the future. Some include only top-level initiatives while others include detailed action plans. Scope may be dependent on a variety of factors such as answers to these questions:

  • Is the marketplace stable or highly-dynamic?
  • When was the last strategic plan completed?
  • What are the expected outcomes of the plan?

Timeline: Part of keeping your organization accountable during the strategic planning process includes determining a timeline. The committee need to determine the time commitments and deadlines for the strategic planning process right from the onset. They need to work out a timeline in which they can complete the plan by following the process step-by-step. Ideally, the timeline has the following:

  • If you refresh your strategic plan every year, process might take between 4-5 weeks.
  • If it’s a new strategic planning, 6 months would be more realistic

Choose a Facilitator: While you might be tempted to handle your organization’s strategic planning process internally, hiring a strategic planning facilitator is essential to getting the most out of the process. You need someone who is unbiased and able to bring fresh insight and outside perspective to the development of the plan. As a result, hiring a strategy consultant is recommended.

Gathering the inputs for the Strategic Plan

The assessing following factors will help you develop a robust strategic plan:

 Current state section: This answers the question: “Where are we?” Before you can define where you’re going, you first need to understand where you are. Understanding the external and internal environments, including market trends and competitive landscape, or your capabilities is crucial in the initial assessment phase of the strategic planning. To do this, the strategic planning committee should collect a variety of information from internal and external environments including stakeholders like employees and customers. In particular, you need to gather the following:

  • A company overview: Here you assess the past milestones and achievements, current products or services, markets, key competencies, financial analysis, sales performance and trends in recent years, and current key performance indicators
  • Relevant industry and market data: They will help you understand the market opportunities, as well as any potential upcoming threats in the near future.
  • Customer insights: You need to understand what your customers want from your company
  • Employee feedback: What employees concerns need to be addressed? This could bother on the product, business practices, or the day-to-day company culture.
  • Strategic analysis of the internal and external environments: To better understand the competitive landscape

 

External and Internal Environments

External Environment

Macro Environment: A strategic planning system has two major functions: to develop an integrated, coordinated, and consistent long-term plan of action; and to facilitate adaptation of the corporate environmental changes. Conducting an environmental scan will help you understand your operating environment. A very useful tool to analyze the external macro environment such as PESTEL Framework is very important

         

PESTEL Analysis

PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis is a business strategy framework which is used to identify, categorize and analyze the key external threats and opportunities a firm faces now and into the future. It is often termed a macro-scanning tool. This is because it involves looking at the big-picture, long-term changes in the external environment. Let’s now take a deep dive on each of the components:

Political Factors: Here you are looking at how government policy and actions intervention in the political economy can affect your organization. Factors to consider here includes the following:

  • Tax Policy
  • Trade Restrictions
  • Tariffs
  • Bureaucracy

Economic Factors: These factors take into account how the various aspects of the economy, and how the outlook on each area could impact your organization. You can assess this information on the publications of the relevant agencies and institutions of the government such as NBS (National Bureau of Statistics), CBN (Central Bank of Nigeria) and other relevant agencies. The published data include the include the following:

  • Economic growth rates
  • Interest rates
  • Exchange rates
  • Inflation
  • Unemployment rates
  •  

Social Factors: Sociocultural factors account for how the societal and cultural aspects of a chosen market might affect the business. These relates to factors that bothers on cultural and societal norms. Social influence and pressures are key to determining consumer behavior. Factors to be considered are the following:

  • Cultural aspects & perceptions
  • Health consciousness
  • Populations growth rates
  • Age distribution
  • Career attitudes

Technological Factors: Technological factors are linked to innovation in the industry, as well as general innovation in the society. This space changes the most rapidly compared to others and provides’ areas that can impact every part of your company. You don’t need to be a technology company for this important pillar – think about how you use technology each day. Technological factors include the following:

  • R&D Activity
  • Automation
  • Technological Incentives
  • The Rate of change in technology

Environmental Factors: Environmental factors concern the ecological impacts on businesses. Here, a significant amount of discussion is devoted to climate change, the environment we live and operate in, and the impact that has on our business. As weather extremes become more common, businesses need to plan how to adapt to these changes. Key environmental factors include the following:

  • Weather conditions
  • Temperature
  • Climate change
  • Pollution
  • Natural disasters

Legal Factors: Legal factors tend to have a large overlap with political factors in PESTLE analysis, but they broadly refer to the laws and regulations your business needs to adhere to. Political and legal factors can intersect when governmental bodies introduce legislature and policies that affect how businesses operate.

Specifically, legal factors include the following:

  • Industry regulation
  • Licenses & permits
  • Labor laws
  • Intellectual property laws

 

Competitive Environment

 The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business as you. You need to understand what your competitors are or aren’t offering your potential customers. A good model for analyzing an industry is Porter’s Five Forces

Five Forces Analysis

Porter’s Five Forces is a great model to help you evaluate the different external factors that will impact your competitive position. According to this framework, competitiveness does not only come from competitors. Rather, the state of competition in an industry depends on five basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and existing industry rivalry. The collective strength of these forces determines the profit potential of an industry and thus its attractiveness. When you understand the forces affecting your industry, you’ll be able to adjust your strategy, boost your profitability, and stay ahead of the competition. Essentially, Porter’s Five Forces Model can help you to analyze the attractiveness of a particularly industry, assess investment options, and measure competition intensity. Your analysis will tell you where your business stands relative to your competition.

Below is the summary of the model and key factors it will help you to consider

Internal Environment

An Internal analysis is the process of an organization examining its internal components to assess its resources, assets, characteristics, competencies, and capabilities. An internal analysis provides the means to identify the strengths to build on and the weaknesses to overcome when formulating a strategic plan. The internal analysis process considers the firm’s resources, the business the firm is in, its objectives, policies, and plans; and how well they were achieved. Two very important frameworks for analyzing the internal environment are Value Chain Analysis and VRIO Framework

 

Value Chain Analysis

Value chain analysis focuses on analyzing the internal activities of a business in an effort to understand costs, locate the activities that add the most value, and factors that differentiate the organization from the competition. Value chains include both primary and support activities. Primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) are actions that are directly involved in creating and distributing goods and services. Support activities (infrastructure, human resources management, technology, and procurement) are not directly involved in the evolution of a product, but instead provide important underlying support for primary activities. Value chain framework is a useful to help you create a competitive advantage. Essentially, combining the Value Chain with the VRIO Framework is a good starting point for an internal analysis

 

VRIO Framework

VRIO stands for value, rarity, inimitability, and organization. The VRIO framework is a vital tool designed to help organizations identify and leverage the unique resources and capabilities that makeup long-term, sustainable competitive advantages. Essentially, competitive advantage is a set of assets, characteristics, or capabilities that allow an organization to meet its customer needs better than its competition. Answers to the questions on the diagram will enable you determine your position (competitive disadvantage, competitive parity, temporal competitive advantage, or sustainable competitive advantage)

The components of VRIO Framework are:

  • Value: Do you offer a resource that adds value for customers? Are you able to exploit an opportunity or neutralize competition with an internal capability?
  • Rarity: Do you control scarce resources or capabilities? Do you own something that’s hard to find yet in demand?
  • Imitability: Is it expensive to duplicate your organization’s resource or capability? Is it difficult to find an equivalent substitute to compete with your offerings?
  • Organization: Does your company have organized management systems, processes, structures, and culture to capitalize on resources and capabilities?

Combining the External and Internal Factors in SWOT Analysis

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company’s competitive position and to develop strategic planning. SWOT analysis enables you to bring together the analysis you conducted on both the external and internal environments under one roof. It’s difficult to conduct effective SWOT analysis without first conducting an indebt analysis on both the external and internal environment, as information from them inform the date you compute on SWOT. Internal environment assessment tools such as VRIO and Value Chain Analysis can lead to organizational strengths and weaknesses. Using external environment analysis tools like PESTEL and Porter’s Five Forces help to determine opportunities and threats

          Below is an example of a SWOT analysis

Strengths
 What is our competitive advantage?
 What resources do we have?
 What products are performing well?

Weaknesses
Where can we improve?
What products are underperforming?
Where are we lacking resources?

Threats
 What new regulations threaten operations?
What do our competitors do well?
What consumer trends threaten business?

Opportunities
What technology can we use to improve operations?
Can we expand our core operations?
What new market segments can we explore?

The Strategic Plan

Now that you have all the background information necessary for your strategic planning, the strategic plan is the end result of the strategic planning process.

Typically, your strategic plan should include the following elements:

Mission and Vision

Mission Statement: Strategic planning starts with a mission that offers a company a sense of purpose and direction. The organization’s mission statement describes who it is, what it does, and where it wants to go. Essentially, it outlines why your organization exists, the value of the product or service you provide, as well as the problems you’re seeking to solve. Mission statements often answer the questions of what, how, who, and why (we care).

A typical mission statements should do the following:

  • Define your company’s purpose. Say what you do, who you do it for, and why it is valuable.
  • Use specific and easy-to-understand language.
  • Be inspirational while remaining realistic.
  • Be short and succinct.

Vision Statement: Vision statement is forward-thinking, broad proclamations about how your organization is going to leave an impact. One significant benefit of strategic planning is that it creates a single, forward-focused vision that can align your company and its shareholders. By making everyone aware of your company’s vision, how and why you created it, and what your people can do to help attain the vision, then you can create an increased sense of responsibility throughout your organization. The vision serves as the guiding star, setting the ultimate destination for the organization to strive for.

Below questions will help you come up with a powerful vision statement.

  • What impact do we want to have on your industry or society?
  • How will you interact with your environment?
  • What is the culture of the business?

Vision statements should accomplish the following:

  • Be inspiring.
  • Focus on success.
  • Look at and project about five to 10 years ahead.
  • Stay in line with the goals and values of your organization.

Your strategic plan mission and vision statements are closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan. Mission and vision go hand in hand and are the foundation of your strategy. Knowing the difference between the two and crafting the statements appropriately is important

Mission and vision statements are both important, but they serve very different purposes.

 

Mission Statement

Vision Statement

Focuses what your organization does today

Focuses on what you want your company to become

Drives the company forward

Gives the company direction

Could change as business changes

Should not change often since it is linked to company’s foundation

Values: Values are the enablers of your vision statement as they represent how your organization will behave as you work towards your strategic goals. You need to ensure that you integrate your organization’s core values into everyday operations and interactions. The values are the core of how you operate, and how you treat your people, both internally and externally. It describes the behaviors you really want to advance. Your values should align with your vision statement and highlight your strengths while mitigating weaknesses

 

Goals and Objective

Goals: Goals form the basis of your strategic plan. They set out your priorities and initiatives, and therefore are critical elements and define what your plan will accomplish. Goals are broad statements about what you want to achieve as a company, and they’re usually qualitative. They function as a description of where you want to go, and they can address both the short and long term. Your entire organization and stakeholders should be able to remember and understand your goals. Goals should be precise and concise statements, not long narratives. For example, your goals might be the following:

  • To be a dominant player in the industry
  • Lower production costs
  • Increase total revenue

Objectives: After setting the goals, the next step is to determine how to get there, via a few different objectives that support each goal.  Objectives support goals, and they’re usually quantitative and measurable. They describe how you will measure the progress needed to arrive at the destination you outlined in the goal. More than one objective can support one goal. Think of the acronym SMART when writing objectives: Make them specific, measurable, achievable, realistic/relevant, and time-bound.

  • Specific: What do you really want to achieve?
  • Measurable: What level of effort, time, and cost will it take to reach that goal?
  • Attainable: Is the goal really attainable after weighing all the pros and cons?
  • Relevant: Is the goal really relevant to you and your business?
  • Timely: What are your deadlines, timelines, and measurable time restrictions?

 

Goals

Objectives

Broad scope

Narrow scope

General in direction, generic action

Specific direction, specific action

Abstract

Solid

Qualitative (not necessarily measurable)

Quantitative (easily measured)

Longer term

Shorter term

Developing the Action Plan

Based on the analysis you conducted, you now come up with strategies the organization will pursue to achieve its objectives. Action plan identifies the key initiatives and projects that need to be undertaken to execute these strategies effectively. This is the stage at which you take your general assessment of goals and objectives and translate them into detailed action steps with assigned responsibilities. The functional action plan should be a formal document that summarizes the sequence of steps or initiatives required to attain an objective. This is the primary source of information for how you will execute, monitor, and control your strategic initiatives

Before you choose your action plan, there are a few things you’ll need to keep in mind:

  • Avoid a plan that could potentially cost the business too much money. This is something to consider whether it’s in the short term or the long term.
  • Be sure you select the plan with the least amount of potentially negative consequences. Every plan you can choose will naturally have drawbacks, but some plans will have more disadvantages than others. Compare the different options for completing your goal, and choose the one that has the highest chance of success.
  • Choose a plan of action that’s adaptable. While you’re executing your plan, you may encounter obstacles that you did not anticipate. If your plan is flexible, you should be able to overcome these obstacles more easily than with a plan that’s static.

Strategic planning frameworks make this easy by enabling business shareholders to set goals, create actionable plans, and track their performance. Traditional planning methodologies that are most widely used include Balanced Scorecards, Objectives Key Results (OKR), Management by Objectives (MBO), Objective-Goals-Strategies-Measures (OGSM), Theory of Change (TOC), and Scenario Strategic Planning. Although, there is similarity among the tools, but the most popular tool is the Balanced Scorecard. So, the Balanced Scorecard is our focus

Balanced Scorecard

The Balanced Scorecard was developed by Robert S. Kaplan and David P. Norton of Harvard University. The tool has been one of the world’s top strategy management frameworks since its introduction in the early 1990s. A Balanced Scorecard—often abbreviated as “BSC”— is a strategy management framework that includes four perspectives of your strategy: Financial, Customer, Internal Process, and Learning and Growth. The scorecard puts strategy and vision, not control, at the center. The measures are designed to pull people toward the overall vision.

The BSC provides answers to the following questions:

  • How do we look to shareholders? (Financial perspective)
  • How do customers see us? (Customer perspective)
  • What must we excel at? (Internal perspective)
  • Can we continue to improve and create value? (Innovation and learning perspective)

Components of the model:

  • Financial perspective: Is your company earning a return on its investments? Every business aims to achieve profitability while managing the risks associated with running a business. Achieving these goals requires you to pay attention to the financials of your business, such as revenue, cost, and profit. A business’s financial metrics may include rate of return, revenue growth, costs control measures, and liquidity
  • Customer perspective: This measure how your business meets customer needs and how satisfied your customers are with your products or services. The customer metrics include customer loyalty, number of complaints, and retention rate etc. The Balanced Scorecard identifies how to improve customer satisfaction and differentiates it from the competition.
  • Business process: How your business processes perform is key to achieving your customer and financial goals. Processes are the building blocks of any organization; without effective management, they can become inefficient or, worse, ineffective. Process metrics include process cycle time, cost per output unit, delivery times, number of defects, and quality standards. Monitoring your planning process performance will help you identify areas for improvement
  • Learning & growth perspective: This perspective focuses on the people within your organization. It identifies the necessary skills, knowledge, and abilities to align them with organizational goals. Learning & Growth metrics include employee engagement scores, training, and development programs, return on investment in learning initiatives, and employee satisfaction.

Balanced Scorecard Mapping

The Balanced Scorecard enables you to break goals into measures, measures into projects, and projects into action items. Measures should always tie back to goals, giving you direct feedback around how you’re doing. By aligning actions with strategy—and measuring the outcome of those actions—you gain directly relevant insights on strategic performance.

  • Objectives are high-level organizational goals. When you create an objective, you should focus on what your organization is trying to accomplish strategically. The typical BSC has 10-15 strategic objectives.
  • Measures help you understand if you’re accomplishing your objectives strategically. Your measures might change, but your objectives will remain the same. You might have 1-2 measures per objective, so you are aiming to come up with 15-25 measures at the enterprise level of your strategy.
  • Initiatives are key action programs developed to achieve your objectives. Most organizations will have 0-2 initiatives underway for every objective (with a total of 5-15 strategic initiatives).

Note: simply having a scorecard doesn’t help you execute your strategy—you have to actually put it to work. This requires gathering data regularly, considering feedbacks, reporting on a consistent basis, and making adjustments as needed. When you integrate the scorecard throughout your entire organization, you’ll see great things happen.

How To Make the Most of The Balanced Scorecard

Think of the Balanced Scorecard as a kind of “North Star,” setting the direction your company wants to go. From there, you can use it to:

  • Guide your resource usage: Linking budget to strategy allows you to use your resources as efficiently as possible in pursuit of specific goals. This type of budgeting approach helps translate high-level strategy down into actionable operational plans.
  • Project Evaluation: To decide whether to take on certain projects, measure them against your Balanced Scorecard. Will a particular project impact your key goals?
  • Tickle-Down. Extend the strategic planning process beyond the organizational level and down to the department level by having departments create their own Balanced Scorecards.
  • Performance management. Cascade strategy down even further by using the Balanced Scorecard to set employee goals. Connecting employee goals to organizational goals both creates accountability and also helps motivate employees to perform at their best

Generating Strategic Options with TOWS Matrix

The TOWS Matrix is a more advanced and comprehensive version of the SWOT matrix. It allows you to combine internal and external factors with each other to develop your strategic options. Whereas, the SWOT Analysis is used at the beginning of the planning process, the TOWS Matrix is opted at the later part of the planning process to decide the way forward for the business. The purpose of a TOWS matrix is to help you come up with strategic options based on your SWOT analysis. You will be able to better develop a more effective strategic plan based upon an in-depth understand of the internal and external environments. You use the TOWS Matrix to develop adaptive strategic alternatives by matching the organization’s strengths with the external environmental opportunities and threats, and in turn, matching the organization’s weaknesses with the external opportunities and threats. Essentially, TOWS analysis involving systematic and comprehensive assessment of external and internal factors that determine current competitive position and growth potential of the company

 

SWOT systematically sorts out information and sets priorities, but TOWS rearranges this information, and provide a framework to identify possible strategic options to pursue. Every one of the four individual factors can influence and impact each other. The four strategy combinations of a TOWS Matrix are:

 

  • Strengths/Opportunities (SO) or Maxi-Maxi Strategy: The aim of a Maxi-Maxi Strategy is to utilize internal strengths to make optimum use of the external opportunities available to the company. In other words, the company has to utilize the strengths by using its resources to cash-in on potential opportunities. This strategy has the greatest potential for success because it focuses on using your organization’s internal strengths to maximize external opportunities. You need to ask: What strategies can you use to best utilize your strengths and opportunities? How can your team’s skills, knowledge or tools work together with the opportunities in the market? How do we pursue the opportunity that fits our strengths?
  • Weaknesses/Opportunities (WO) or Mini-Maxi Strategy: In this case, you can look at how the opportunities in the market can be leveraged to overcome your organization’s weaknesses. To do that, you consider all weaknesses one by one listed in the SWOT Analysis with each opportunity to determine how each internal weakness can be eliminated by using each external opportunity. Ask, what elements of your business that need improvement? How can you use its opportunities to minimize or conquer weaknesses? Can you overcome your weaknesses by exploiting opportunities? How can your weaknesses feed into the opportunities in the market?
  • Strengths/Threats (ST) or Maxi-Mini Strategy: The aim of a Maxi-Mini strategy is to maximize the strengths of a company while minimizing the threats with the support of these strengths. Thus, a company should take advantage of the internal strengths to avoid massive external threats. You need to consider all strengths one by one listed in the SWOT Analysis with each threat to determine how each internal strength can help you avoid every external threat. Ask, how can your company exploit its strengths to avoid threats? How do you use your strengths to work against the threats?
  • Weaknesses/Threats (WT) or Mini-Mini Strategy: In the final strategy combination, the business assesses each weakness and threat and determines if they can be avoided. This position is any company’s worst nightmare. The company holds a number of weak sides, while it is also confronted by threats. The company’s very existence could be endangered. To compute this strategy, you need to consider all weaknesses one by one listed in the SWOT Analysis with each threat to determine how both can be avoided. How can you minimize weaknesses and avoid threats? How can we ensure that your weak sides don’t make us sensitive to threats?

 

 

Strategy Implementation

After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. Strategy implementation involves clear communication across the entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to buy-in. Essentially, effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.

Tips for effective strategy execution

  • Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively.
  • Define what success looks like by mapping your strategic plan to key performance indicators.
  • Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization
  • Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.
  • Establish regular check-ins to monitor the progress of your strategic plan and make adjustments when necessary

Select KPIs

Measuring progress towards strategic objectives is essential to effective strategic control and business success. That’s where Key Performance Indicators (KPIs) come in. KPIs are measurable values that track progress toward achieving key business objectives. They keep you on track and help you stay focused on the goals you set for your organization. To get the most out of your KPIs, make sure you link them to a specific goal or objective. Ideally, you will add both leading and lagging KPIs to each objective so you can get a more balanced view of how well you’re progressing. KPIs can be both financial and nonfinancial measures that help you chart your progress and take corrective measures if actions are not unfolding as they should. These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.

Strategy Evaluation

Once the strategic plan is adopted and shared, it’s critical to measure progress against the objectives, revisit and monitor the plan to ensure it remains valid, and adapt the strategy as business conditions change. These reviews should be at least once a quarter, and possibly monthly, depending on your organization and industry. Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and leadership at all levels, so as to help the firm to operate as a more functional and effective team

 Benefits of Strategic Planning

When you create and share a clear strategic plan it has the following benefits:

  • It helps in building a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.
  • It aligns everyone around a shared purpose and ensure all departments and teams are working toward a common objective.
  • Strategic plan enables you to proactively set objectives to help you get where you want to go
  • It helps in promoting long-term vision for the company rather than focusing primarily on short-term gains.
  • Strategic plan ensures resources are allocated around the most high-impact priorities.
  • It enables you to assess your current situation and help you to identify opportunities or threats you are exposed to, and at the same time, allowing you to mitigate potential risks.
  • Strategic plan helps you create a proactive business culture that enables your organization to respond more swiftly to emerging market changes, technologies, and opportunities

 

       Why Strategy Fails

There are many organizations that do take steps to develop a strategic plan, yet still fail to attain the desired results. Reasons for strategies failure includes:

  • Lack of communication: Research shows that 95% of most companies’ employees don’t understand their organization’s strategy, and 85% of executive leadership teams spend less than one hour per month discussing strategy.
  • Poor research: This bothers around customer trends, organizational threats, and market opportunities. Companies tend to spend more time on internal issues than they do analyzing important external information.
  • Lack of management support: Organizations neglect to rally support for middle managers and other lower rank staff who are key to making sure strategy is executed on a daily basis.
  • Poor performance evaluations—Organizations dedicate all their time to coming up with a plan, but either forget to follow through by tracking progress or have no organized, reliable way to track performance data.
  • Lack of clear priorities: Organizations try to do too much at once and/or fail to identify the right activities that will help them achieve their strategy.
  • Insufficient resources: Companies don’t acquire new resources, or shift existing resources, to support identified priorities.
  • Disjointed departmental goals and activities: There’s no alignment of departmental goals with organizational strategy. Without everyone working together, goals become more difficult to reach.

                                    Conclusion

A strategic plan is a comprehensive roadmap that outline an organization’s long-term vision, mission, and objectives, along with the strategies and actions needed to achieve them. By setting clear goals and defining initiatives, strategic plans empower organizations to thrive, grow, and achieve sustained success. In fact, evidence has shown that strategic planning has a positive and significant impact on organizational performance. It enhances an organization’s ability to achieve its goals. More importantly, strategic planning forces’ organizations to adopt a long-term view, it helps them better prepare for the future, and set them up to initiate influence, instead of just responding to situations. However, there are things you need to be wary of, such as, danger of “analysis paralysis,” failure to effectively implement the plan, not getting the buy-in of stakeholders, poor leadership support, and ineffective communication to the stakeholder. Despite those seemly problems, the advantages of strategic planning far outweigh the challenges

Omodiaogbe Samuel, MSc. CMC, ChMC, FIMC

Omodiaogbe is a Strategic Management Consultant, and he the Principal Consultant/CEO at Vast Thinking Consults Ltd where he help organizations and business leaders to create superior value. Omodiaogbe holds BSc. and MSc. in Economics. Also, he is a Certified Management Consultant (CMC), a Chartered Management Consultant (ChMC), and a Fellow, Institute of Management Consultants, Nigeria. He is an Instructor on Coursera, where he teaches 25 courses in Strategic Management. Omodiaogbe is one of the world’s leading learners on Coursera and Edx with over 500 Certificates from top-ranked Universities, Business Schools, and Organizations.

Contact him:
Email; somodiaogbe@vastthinking.com.ng
Visit: www.vastthinking.com.ng

1 thought on “Best Practices to Developing an Effective Strategic Plan”

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