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Leo Tolstoy is famous for pointing out that “All happy families are alike; each unhappy family is unhappy in its own way.”
The same can be said of businesses.
I often work with business leaders to assess the return on investment received from various strategic investments in their companies, investments spanning from manufacturing and inventory to technology and people. Interestingly, these business leaders are frequently disappointed with the return yielded — regardless of where the investment was made.
It’s impossible to generalize why they are disappointed. Much like Tolstoy’s reflection on families, each business is unhappy with its business investments in its own way. The disappointment could come from weaknesses in the actual investments’ potential or management’s unrealistic expectations. Or it could be coming from something else.
In my experience, there is a clear correlation between the frequency and degree of disappointment with those routine business investments mentioned and a lack of effective long-term strategic planning. Bottom line, effective long-term strategic plans drive successful business performance and result in better business investments.
While intertwined, it’s important to recognize there is a difference between a long-term strategic plan and a shorter-term annual operating plan. The annual plan reflects a shorter time period (12 months) during which the organization targets achieving objectives that are on-track with the long-term strategic plan.
First, here is an essential question: How much are you investing in your long-term strategic plan? I’m often impressed by the accelerated growth achieved by business leaders who view their long-term strategy as an asset and a driver of their competitive advantage. These leaders understand that they need to invest in that strategy development process.
The investment consists of standard resources: time, people and money.
- Time: An effective long-term strategy process cannot be a once-per-year event. Management teams that are committed to operating with a strong strategic roadmap invest time in a disciplined process throughout the year to update their long-term strategic plan.
- People: An effective strategic planning process balances ownership, accountability and integration. One person (or a few staff members) will own the coordination of the overall process, but all leaders are individually accountable, and the different sub-teams and departments are effectively integrated in the long-term strategic planning process.
- Money: The internal team may not possess all the skills (or capacity) to establish and manage an excellent strategy development process. Strategically oriented companies will not compromise in this area; they invest and they engage external expertise as needed.
What does it take to create and sustain an effective long-term strategy process?
There are four fundamental phases associated with an effective long-term strategic planning process:
1. Define the current state
Start the process with a firm understanding of your company’s current or “baseline” state. This phase asks the basic question, “Where are we now”? Further, this phase forces the team to assess what’s working and what’s not working.
Use this phase to thoroughly quantify the organization’s current health related to core operating areas, such as the customer, consumer/end-use, operations, financial, data and systems.
2. Create a desired future state
Following the deep dive into understanding the current state, the team must define where it wants to lead the company going forward. Creating the future state challenges the team to define the company’s objectives, goals, core initiatives and timing for a three- to five-year timeframe.
This phase is an opportunity to define where the company wants to be and what it needs to do to get there. The key to success in this phase involves applying a capabilities assessment framework to define the skills and expertise the organization needs to achieve the long-term objectives identified.
3. Use gap treatment to move from the current to future state
Now that you know where you want your company to be, how do you get there? It’s vital to look at what people, processes or technologies are needed to achieve the future state.
This phase defines a carefully-prioritized action plan to guide the process. The roadmap to successfully move forward will entail quantifiable metrics, disciplined initiative charters and a multiyear implementation timeline.
4. Execute your plan
Now it’s time to execute, right? Almost. Before rushing ahead, it’s critical to ensure all internal and external stakeholders are aligned with and understand the strategic plan. Furthermore, this will ensure that the enabling capabilities are ready to support the successful implementation. This will help ensure the new plan has the needed support and capabilities to succeed.
Best practice for achieving cultural acceptance of the long-term strategic plan
The most effective approach for gaining cultural acceptance relies on a consistent effort toward four change management drivers:
- Awareness phase: Informs the organization of the new long-term plan. All staff must understand what’s going on and who to contact for more information.
- Understanding phase: Clarifies the plan and provides information on how changes will affect jobs, roles and responsibilities.
- Acceptance phase: Integrates the team (at all levels) into the plan and encourages individuals to leverage the new plan to improve performance.
- Commitment phase: Sustains the implementation and motivates all team members to explore how to take the plan to the next level.
Self-diagnosing the health of your long-term strategy
Monitoring the ongoing health of the long-term strategy is essential. Here are the key questions to gauge your long-term strategic plan’s health score. If you answer no to any of these questions, there is significant room for improvement with your organization’s long-term strategy development process.
- Is your long-term strategic plan documented in a one- to two-page, easy-to-read format where key stakeholders can quickly understand the organization’s mission, objectives, strategies, key performance indicators and core initiatives for a three- to five-year time frame?
- Is the long-term strategic plan clear about what the organization will stop doing (or opportunities that will be ignored)?
- Is your long-term strategic plan producing results — is the company achieving its goals?
- Is your long-term strategic plan linked to a multiyear action plan with a list of concrete initiatives?
- Are your current-year operating plan priorities and projects consistent with the long-term roadmap?
- Does the long-term strategic plan provide strong guidance to senior and mid-level staff regarding quarterly priorities and operating decisions?
- At the supervisor level and above, is it clear who owns the strategy development process?
- Does the organization have a disciplined process for revisiting the long-term strategic plan and engaging a broad group of stakeholders at least three times per year?
- If an outside firm interviews/surveys key staff in the organization (down to the ‘street level’ or factory floor) regarding the long-term strategic plan, would the research demonstrate a very high degree of consistency and understanding of the long-term strategic plan?
Most business leaders are frequently disappointed with their routine investment results. In many cases, the frequency and degree of that investment disappointment is linked to a lack of management’s effective long-term planning.
Consider a transformational shift in your mindset related to the strategic planning process. Imagine transforming the strategic development process into a valuable asset in the company. How would you manage that important asset?
You’ll likely dedicate the appropriate amount of resources to that strategy development process in order to leverage its high value. Invest in your long-term strategy, achieve a higher return on investment on your long-term strategic plan and perform ahead of your competition.