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The 2011 Strategic Planning Checklist: Evaluate Your Strategic Planning Process and Strategy Effectiveness

Guest post by: Joe Evans

Article Overview: One of our most popular articles last year dealt with a simple checklist for evaluating strategic planning process effectiveness. Having ushered in the new year and a fresh decade, we decided it would be a worthwhile exercise to revisit the list and analysis done last year and submit an updated, more fitting set of evaluation criteria for 2011. There are new criteria added in this year’s evaluation, and many that have carried over from last year but have enhanced analysis.

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The 2011 Strategic Planning Checklist: Evaluate Your Strategic Planning Process and Strategy Effectiveness

One of our most popular articles last year dealt with a simple checklist for evaluating strategic planning process effectiveness. Having ushered in the new year and a fresh decade, we decided it would be a worthwhile exercise to revisit the list and analysis done last year and submit an updated, more fitting set of evaluation criteria for 2011. There are new criteria added in this year’s evaluation, and many that have carried over from last year but have enhanced analysis. To get into the spirit of introspection, let’s start with the following questions:

Have you given much consideration to the possibility that your strategic and operational plans may be far less effective than they could be?
How would you begin to measure the effectiveness of your current strategic planning process?
Is the process effective and repeatable in consistently defining meaningful goals that get achieved as expected when the plan is followed?

Strategy and the planning associated with creating and implementing it is all about the results, but how do you evaluate your process for strategic planning and know if it is on track or as optimized as it might be? This article should help you to objectively evaluate your planning process and identify potential issues and risks that may exist in your organization's current planning world. As you read this article, answer along as we ask the questions to help you honestly evaluate your current business planning process.

Let us now reveal the 2011 checklist. Scan through the list and do your best to give a first impression "yes" or "no" answer to each question.

Here is the list:

Did you conduct a current-state analysis of your organization’s ecosystem as part of your planning process?
Were all strategic goal “candidates” systematically prioritized to ensure that the “right” goals were selected?
Do you have more than five strategic goals in your plan?
Is your plan timeframe (not your strategy) spanning more than 12 months?
Are any of your plan goals not related directly to measurable outcomes?
Do all employees within the company know the plan goals for the current plan year, and can they explain how they are expected to contribute to the achievement of the goals?
Have you communicated with key business partners or suppliers of the organization about the plan goals that might affect them and where they could assist in the achievement of one or more plan goals?
Is there any room for misinterpretation of the intent or desired outcome for any plan goals?
Do any job descriptions for employees or officers of the company fail to correlate to defined plan goals?
Do performance measurements for employees and officers of the company define accountabilities that tie back to the measurement of plan goals?
Were the organization’s core values and culture considered when defining the plan's underlying execution tactics?
Are all plan outcomes / goals related in some tangible way to creating value for the customers and markets served by your organization?
Does your strategic plan include detailed operational plans to support the execution of all goals defined in the corporate strategy?
Are the supporting initiatives of your plan goals adjusted to account for seasonal peaks and valleys?
Does your organization have a strategic planning office or formal strategy governance structure?

Now let's evaluate your responses.

Now that you have scanned the list and formed some initial response in your mind to each question, let’s go back through the list... this time with some guidance offered as to the preferred answer for each. Here we go.

1. Did you conduct a current-state analysis of your organization’s ecosystem as part of your planning process?

We are looking for a “yes” here. The odds are, you scratched your head and wondered “What is the point of doing a current-state analysis when we are planning our go-forward strategy?” At best, you might have answered with a “qualified” yes. Don’t be embarrassed if that is the case, but do consider adopting a new approach to your planning that includes the critical component of current-state analysis.

Since strategic planning models are intended to manage the strategic actions of an organization, a thorough understanding of the current-state provides the foundation on which to build. The graphical model, shown below, offers a simplified view of the major dimensions that the strategic planning process should account for. Without the starting point offered by the current-state analysis, no real strategy or tactics can be developed.

The current-state analysis phase of corporate strategic planning involves gaining a “business truth” of where the organization is today so that it is possible to plan effectively for moving from the current reality to the desired results. This integrated set of foundational activities is designed to accomplish the following:

Tack down where the organization is today, reviewing:
- The organization’s vision statement
- The organization’s mission statement
- The current strategic plan and goal attainment percentage
- In the case of divisions or subsidiaries, reviewing the current alignment of strategic goals
- The organization’s hierarchy
- Key executive and management job descriptions
- Organization’s core competencies
- Key executive and management leadership competencies
- The organization’s cultural heuristics
Additionally:
- Assess operations and the decision process within the enterprise "ecosystem"
- Consider all functional areas that are involved in developing and delivering value to the marketplace
- Identify potential paths to achieving the desired end outcomes

To accomplish an understanding both the business ecosystem and eco-cycle (see #12 on the list for more about eco-cycles) in the most effective manner, an internal assessment of the organization must review organizational assets, organizational hierarchies, resources, people, culture, systems, partnerships, suppliers, business process, financial model and numerous other factors. Likewise, an external assessment looks at the marketplace for the organization, competitors, social aspects, the regulatory environment, technology and economic cycles.

For an in depth understanding of why a current-state assessment during strategic planning is critical and to learn how to conduct one, see the article "The Critical Step of Current-state Analysis & Review in Strategic Planning".

2. Were all strategic goal “candidates” systematically prioritized to ensure that the “right” goals were selected?

Hopefully, you were able to answer “yes” to this question. Applying a systematic prioritization method as part of the strategic planning process serves as a filter and a compass, helping to separate “wants” / “wishes” from actual corporate “needs” and provides direction to strategic planning. We are forced to make tough decisions that open one door and close another. Weighty strategic decisions can be made easier if we apply a decision “triage” to help structure the cognitive process we must complete. But how do we separate requirements from “desirements” in the business world fairly and consistently? Sometimes budgetary constraints drive us to adopt a strategy of eliminating options that are not actually requirements for our business, at least not at this time. For that first round of elimination, we need a litmus test of sorts. More to the point, what we need is a decision process to help us filter the wants from the needs.

One simple technique, to serve as an example, is the calculation of Relative Valuation (RV) for each candidate key outcome identified in the early stages of planning. RV places all key outcomes on a level playing field to select the ones to go into the plan now and those that should go into a backlog for later consideration in subsequent quarters.

RV looks at two simple but important variables:

Importance – On a scale of 1-10, what is the importance of the key outcome to the organization?

Satisfaction – On a scale of 1-10, what is the organization’s satisfaction level with the current situation?

The formula for determining relative value is:

RV = (I X 2) – S

RV should be calculated for each key outcome being considered, then the opportunities can be ranked to determine the highest opportunities relative to one another.

Once RV has been calculated for each key outcome, they should be ranked in order of highest to lowest RV. With RV calculated for each candidate key outcome and the list sorted from highest to lowest, there is still a problem. No organization has the capacity or the desire to take on every goal all at once, so now comes the hard part.Selections must be made on which goals will go into the plan now, and which get deferred.

Plan Execution

One very effective approach is to focus attention on only the top 20% of the ranked key outcomes, using the calculated RV. That sets up a smaller and more easily managed set of goals upon which to construct the plan. Using this approach, the remaining 80% will go into the backlog and be readdressed each time the plan is refreshed. Such an approach allows the organization to update the plan quarterly and to use data inputs based on real-time and accurate information. We will discuss more on this topic later.

For more information on prioritization and techniques to use in your own planning process, see the article "Prioritizing Organizational Wants Versus Needs - How To Tell The Difference".

3. Is your plan timeframe (not your strategy) spanning more than 12 months?

With the uncertainty we face in our current economic recovery and the care we must take in the management of working capital, a "no" answer would be preferred. If you answered yes, you might have answered in terms of your overall strategy and the fact that strategic goals are naturally longer-term to accomplish than twelve months. However, the plan tactics to accomplish corporate strategy are more effective in shorter time-frames, therefore, you should consider a shorter and more impactful planning horizon to attenuate operational plans and fiscal budgets with measurable accomplishments in the next four quarters.

Although traditional strategic planning approaches have typically been oriented around longer-term planning windows, a shorter plan cycle has some definite advantages. Consider planning on a rolling 12-month basis with quarterly updates for instance. This approach is better suited for defining and achieving outcomes that are based on higher quality information, because it is more current. Let's face it, the further out plans are made, the more likely it is that you begin dealing with missing, incomplete or inaccurate data to base decisions upon. Having a 3-year strategic plan is not considered a bad thing, we are just recommending that the strategic plan be updated quarterly along with operational plans. Utilization of near-term goals and data based on current competitive and economic factors contains more relevant detail and more adeptly addresses contingency. Companies need the agility that a 12-month rolling plan provides, especially considering that with quarterly updates to support detail planning of desired key outcomes, you are always working with more factual data points to base decisions upon.

4. Do you have more than five strategic goals in your plan?

As with the previous question, "no" answer is preferred here as well. Fewer and more focused plan goals tend to be much more effective. The key here is to avoid overloading your plan with more than you can accomplish. It is far easier to envision numerous plan goals during strategic or operational planning sessions that it is to have a disciplined and more restrained approach that limits the number of plan outcomes to a manageable set.

The problem with having too many plan goals is that each goal must be threaded through the layers of the organization in order to be ultimately accomplished. Each goal Mushrooming Plan Goals

mushrooms into many supporting initiatives as the plan gets fully developed, often leading to a tangled mess that lacks any clarity or focus of what the plan goal was there to accomplish in the first place. Another reason that it is problematic to have too many simultaneous operational initiatives supporting a bloated strategic plan is that managers don't have the time themselves nor the resources at their disposal to maintain focus in such circumstances, leading to plan goals that carry-over into the next plan cycle and are not achieved on time. We suggest that as part of your planning process, you conduct a relative valuation of each plan goal (key outcome) in order to see how it stands out relative to to the others on the table. We use various formulas in our approach to accomplish this, but a simple technique is to use variables like "Importance of the outcome" and "Satisfaction with the current-state" to help score and rank your goals. The key is to have a prioritization process in place that applies a balanced set of criteria against each desired outcome.

For more information of focusing your strategic plan, see the article, “Does Your Strategic Planning Process Suffer From ADD?”.

5. Are any of your plan goals not related directly to measurable outcomes?

If you answered "yes", then why is that the case? Plan goals should really be thought of in terms of outcomes that will mean something tangible to your customers and the markets your organization serves. Following that thought, outcomes can and should always be measured and managed vertically and laterally through the layers of the organizational units responsible for taking action related to initiatives supporting plan goals. Likewise, plan outcomes need to be managed and measured where they involve parties external to the enterprise, such as: suppliers, channel partners, lobbyist, etc.

Good plan execution boils down to accountability. The execution of strategic plans in large organizations requires a complex interoperability between divisions, departments

and teams across the enterprise. We must depend upon our teams to deliver, but as the late President Reagan once said, “trust, but verify”. If you are unable to measure advancement towards the completion of each strategic goal, then isn’t accountability missing in your strategic plan? If you are not sure, then it is likely missing. Without proper accountability built into strategic and operational plans, you can expect them to fall short of expectations.

If you do feel that your plans suffer from the omission of accountability, this provides yet another opportunity to go back and make a high-impact improvement that will help achieve plan outcomes this year. Performance must be managed, and in order to manage performance - it must be measured. There is simply no way to track to the delivery of the strategic goals of the business without defined accountabilities that allow for this to happen.

Accountability requires specific time frames along with measurable targets. Earlier in the article, we discussed that plans should be refreshed quarterly. As a part of the refresh process, status reviews should be conducted to track overall progress to plan goals. These reviews offer management good visibility into the initiatives underway and help provide an understanding the interdependencies of the various programs that exist across the enterprise. Obviously, most operational initiatives will span a number of months and normally wouldn’t be expected to be launched and completed during one quarter. That said; don’t expect to cross things off the list during every quarterly review. Regardless, quarterly reviews provide for early detection of problems and give management the opportunity to take corrective action when needed.

As mentioned earlier, quarterly plan refreshes yield many benefits. In terms of accountability, the quarterly plan refreshes allow for performance feedback to be factored in during the review cycle. Based on plan goal attainment or missed targets, it and provides an excellent opportunity for management to adjust schedules and resource allocations or take corrective action with those accountable if warranted.

To make this whole process possible, job accountability should be kept current with the company’s plan goals through systematic updates to job descriptions and compensation review criteria. This is simple to say, but can be a daunting task for any size organization. Regardless, the investment in time for this activity is well worthwhile and is a requirement to truly have accountability in your strategic and operational plans.

6. Do all employees within the company know the plan goals for the current plan year and can they explain how they are expected to contribute to the achievement of the goals?

The answer should be "yes". Strategic and operational plans break down when they fail to consider those responsible for executing the plans. There are two factors to Teamwork

consider related to this point. The first is the need for plans to be well constructed so as to offer the needed details of the underlying layers of supporting initiatives. Detailed plan components should offer great clarity related to who, what, when, where and why. Of equal importance to the completeness and thoroughness of the plan, is the communication aspect.

Communication strategies as a plan component are critical in order to promote the major themes behind the plan's goals / key outcomes. The communication plan component must insure that each area of the business enterprise has been considered relative to who needs to know what information about the plan and by when they need to know it. We are an over communicated to society, so well-timed, concise and clear communication will go further towards gaining support in the organization and producing meaningful contributions during execution. We recommend the creation of marketing pitches for each of the plan goals / key outcomes. The idea here is to provide as much clarity as possible when communications related to the plan are considered. Also, consider developing personas of the "customer" that is the primary recipient of the value the plan goal will create. The customer can be an internal customer in the event that the goal does not relate to an actual market or customer group.

7. Have you communicated with key business partners and suppliers of the organization about the plan goals that might affect them and where they could assist in the achievement of one or more plan goals?

Of course, the right answer here is "yes". Always enlist the help of business relationships within the value chain that in some way support the products and services that are supplied by your organization. An external communications plan is important to the successful execution of plan goals and should contain messaging tailored to help suppliers understand why they are being asked for price reductions or quantity discounts not currently part of your normal purchasing arrangements. By communicating openly about your organization's goals and the role your external business relationships play in your success towards achieving those goals, cooperation can be gained and closer…more rewarding business relations established.

8. Is there any room for misinterpretation of the intent or desired outcome for any plan goals?

If you answered "yes", the plan goals should be revisited to correct for vagueness. Ambiguous plan goals lead to Poor Communication

variability of interpretation and misfires in execution. Not saying what we want clearly leads to misinterpretation and in planning efforts that in turn translates into risk that the actual achievement of the desired strategic outcomes may fail. Most planning processes introduce variability into the plan from the very beginning – at the time plan goals are defined. If there is room for interpretation in your plan goals, you have this issue. By using a very controlled vocabulary in defining outcome-driven goals, you can avoid this mistake. For example, a clearly defined outcome would look like this: "Reduce raw materials cost for XYZ unit by 3%." An example of a vague and more ambiguous plan goal would look like this: "Trim production costs in XYZ unit."

As we have stated in previous articles, strategy is formulated at the top and the CEO is directly accountable for establishing the direction and the process for strategic and operational planning to unfold effectively. Communication of the plan goals is a very important part of that process and another huge factor in accomplishing the creation of meaningful operational plans. One approach to consider in the overall communications strategy is to translate plan goals into strategy statements that the organization can embrace and enact. The intent is to effectively disseminate the executive vision throughout the organizational ranks so that empowered employees will be energized and capable of helping their organization. As with the business strategy, the communication of the business goals must be carefully planned and well orchestrated to achieve the intended results. Communications must target the right messages to the right people in the organization at the time that they need to receive the message.

9. Do any job descriptions for employees or officers of the company fail to correlate to defined plan goals?

If you answered "yes" to this question, you have a big opportunity area with this one. A planning approach should be accountability and performance driven. This may seem intuitively obvious, but in order to realize an organizational desired outcome, you must have a plan that is good and reasonable, yes, but you must also have the people to carry it out and they must have incentive and understanding to execute to that plan. Therefore, job descriptions and accountabilities must be in alignment with plan goals. Failure to do so jeopardizes the effectiveness of strategic and operational plans. This is a common issue that must be addressed, even in very mature organizations. We see many clients that have strategic and operational plans in place that would otherwise be considered very sound, but they lack the staff accountability to bring that plan to fruition.

Good alignment of job descriptions and job responsibilities creates accountable employees, reinforces strategic plan goals by using the communications strategy to relate directly to employees about their role and the organization's expectations of them relative to the plan. Furthermore, job alignment allows management to affect the outcomes through careful measurement of progress over time and take action when needed when tactical elements of the plan are not meeting expectations.

Staff incentive, understanding and value to the execution of the plan are far more important than specific expertise. Employees that understand what is being done, why, when and how they can contribute become empowered team players.

10. Do performance measurements for employees and officers of the company define accountabilities that tie back to the measurement of plan goals?

Hopefully you answered "yes" to this question. If not, keep in mind that as with good job descriptions and well-aligned job accountabilities, a strategic planning process must address performance measurements that support plan goals and execution while tying back to incentives. While this is crucial to do, it adds a level of complexity to planning

that is to often overlooked. This is due in part to the level of cooperation required with Human Resources and with management across the functional areas. Aligning accountabilities with performance measurements requires a lot of discipline to think through all of the angles the first time it is enacted as a legitimate part of the planning process.

Regardless of the initial effort involved, constructing well thought out plan goals that can be measured and aligning job responsibilities and corresponding performance measurements to reinforce those goals should not be considered an optional component of the planning process. Organizations already require the structures be in place to manage performance across the enterprise. This work has already been done in almost all cases. The added dimension of alignment to plan goals puts the planning effort on good footing to providing all layers of management empowerment to measure and manage towards achievement of plan goals.

11. Were the organization’s core values and culture considered when defining the plan's underlying execution tactics?

The preferred answer is "yes", of course! These are essential ingredients that must considered when formulating strategy.

Core values are broadly shared values of the company that are evidenced in the corporate culture and the general work ethic of the employees. Some refer to core values as a shared “value system”, meaning a group shares a common set of cultural and moral beliefs. Strong core values benefit the strategic planning effort and would generally be classified as an accelerator towards goal achievement. The exception to this generalization is in the case of a negative culture that is out of step with the organization’s leadership values. In that situation, core values become an inhibitor and must be changed over time to facilitate strategy achievement. In such circumstances, the strategic planning process would need to address transition strategies for changing corporate core values.

Cultural Congruence

Likewise, culture is a critical component to short and long-term planning that, if not properly understood, can dramatically affect the execution of strategic and operational plans. Culture is the foundation of HOW the organization works and HOW work will be completed on the plan in order to realize the key outcomes. By aligning planning with culture, it is possible to harness the organization's potential to improve upon performance.

Method Frameworks classifies corporate cultures into one of four models:

Cooperative: The organization or team focuses on the customer and delivery to the customer, resulting in customization and tailoring to customer needs.
Merit Focused: The organization or team focuses on how it can organize and create predictability, reliability, low cost and structure.
Actualized: The organization or team focuses on fulfilling the human potential, helping create better lives for its customers and offering self-actualization.
Creative: The organization or team focuses on creating superiority of product or service, uniqueness, one of a kind value-add service and product.

Associated with these four distinct culture signatures are corresponding organizational hierarchies (structures). The differences in culture and hierarchy relate back to the HOW the organization works and HOW work gets accomplished and factor heavily into the operational aspect of planning.

For more information of culture, core values and working the organization’s hierarchy, see the following:

"The Definition of Strategic Planning: A White Paper"

"The Change Management Process: Accomplishing Change and Making it Stick"

12. Are all plan outcomes / goals related in some tangible way to creating value for the customers and markets served by your organization?

If you answered "yes", you can pat yourself on the back. Congratulations!

When strategic investment is focused too inwardly, customer value creation can slip into second place in priority, behind overhead reduction plans and similar initiatives. For forward-thinking executives, this creates an internal struggle about managing this dichotomy and maintaining balance between internally focused overhead reduction strategy goals on one side and those related to the creation of customer value on the other. In recent years, corporate planning became overly focused on creating shareholder value, sometimes to the exclusion of customer value. This created a gap which served to allow market share to be taken away by more nimble competitors in your space that focused on creating a better value proposition for their customers and planned accordingly. The gap is a risk we face of a potential loss of competitive advantage.

Customer-centric planning creates competitive advantage for the business by aligning organizational action with value propositions perceived by the customers and markets served by the enterprise. When this occurs, the planning effort literally creates value for the most important stakeholder of the firm – the end customer. Not to say that all plan goals are or should be specifically aimed at the customer, but with the focus on what end-value we can create for the customer through our plan goals, we've put a face or persona on the reason for the desired outcome and can work the organizational culture and hierarchy more effectively to accomplish our strategic outcomes.

For more information on customer value-centric planning, see the article, “Enterprise Myopia: Is Customer Value Being Overlooked?”.

13. Does your strategic plan include detailed operational plans to support the execution of all goals defined in the corporate strategy?

Preferred answer – "yes". An effective planning approach should be a bifurcated process allowing for the organization to plan strategically at the enterprise level and then operationally at the business unit /divisional / departmental level - with each component supporting the other. Failing the expand the planning effort far enough to reach all the way down through the organizational layers and to extend beyond the enterprise boundaries is an all to common problem with planning efforts and processes.

Planning Timelines

Those involved with strategic planning understand that business strategy involves an integrated set of actions designed to help companies gain sustainable advantage over competitors. To address the needed integration, planning should be constructed in layers that address the overall business ecosystem. The business ecosystem is a framework that allows a company to visualize the entire enterprise and design the key outcomes that will most likely benefit the company and help that organization dominate against its competitors.

In 1985, Harvard's Michael Porter introduced the value chain framework in his book, "Competitive Advantage". The client's business ecosystem looks at all of the functional areas that are involved with the developing and delivering the offering to the marketplace. Through each segment of the circle, executives choose how they intend to serve their market. From planning standpoint, it is important to assess is how the business ecosystem operates and more specifically, how decisions within one segment of the ecosystem can impact (or have consequences on) the enterprise as a whole or to specific segments of the chain. This is where well-performed operational planning can make the game-changing difference. The ecosystem highlights enterprise alignment and individual value within the sphere as important components to the organizations overall success.

14. Are the supporting initiatives of your plan goals adjusted to account for seasonal peaks and valleys?

A "yes" answer here is preferred. In addition to attenuating the many competing priorities of the business to the realities of financial budgets, the planning process must take into account the relevant business economic cycles within the business. Economic cycles, or eco-cycles as we refer to them, will positively or negatively affect market conditions, access to capital, energy, focus and many other factors that will otherwise inhibit or accelerate goal achievement. While operating budgets are annual in nature, eco-cycles are more sporadic and usually are seasonal to the business. Planning for eco-cycles builds an added layer of realistic contingency into the plan. Eco-cycles are not only financially related, but also affect the organization's energy and focus to work on plan goals.

To the extent that these eco-cycles are known and understood, they should be accounted for within strategic and operational plans. A review of trend data for previous years can help identify the peaks and valleys that will serve as predictors and leveraged into the plan. By reflecting the general timing of eco-cycles in the resulting plan, we've built in a reasonableness factor that can also be thought of as contingency to allow for the inevitable swings in activity associated with seasonal activity. We've also built in the opportunistic and responsive dimensions to planning by allowing for available slack (agility) to exist within the business operations to seize on opportunities without missing plan deadlines and compromising on goal achievement.

15. Does your organization have a strategic planning office or formal strategy governance structure?

The preferred answer to this question is, of course, “yes”. While there may be any number of ways to administer the execution of the corporate planning process and overall execution of the strategy, rest assured that is everyone is left in charge, no one will be in charge.

Monitoring and controlling is a concept from “Project Management 101” and managing the many initiatives that support strategic plan goals falls under the general classification of governance. Strategic Plan governance, whether implemented as a formal Plan Management Office or administered through a less formalized committee structure, should be responsible for the functions of selecting, managing and measuring of everything entering or within the plan portfolio. Governance provides a method to view strategic plan-related initiatives to be grouped into related programs for synergistic reporting and management activities. The plan portfolio is the overall macroscopic view of all programs and initiatives involved with strategy implementation.

A complete strategic governance model assesses all dimensions of the planning process itself, as well as the execution of the plan. Such a model addresses plans for risk management, transformation, change and communication and monitoring and controlling as described.

So That's It How did your planning process fare in this evaluation?

Here is a bonus question that can help you to ultimately decide the effectiveness of your planning process.

"Is the process your organization follows effective and repeatable in consistently defining meaningful goals that get achieved as expected when the plan is followed?"

* * *

For permission to use or reprint any portions of this copyrighted article, contact Method Frameworks at articles@methodframeworks.com.

About the Author:

Joe Evans is the President and CEO of Method Frameworks, Joe is a published author, frequent speaker and recognized expert in corporate strategic planning. To contact Method Frameworks about scheduling Mr. Evans about an upcoming speaking engagement, visit www.methodframeworks.com/business-speaker or email requests to media_relations@methodframeworks.com.

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