Strategic Planning

by
Prof.B. Manchanda

1
January,2016
 What is Strategic Planning?

Process to establish priorities on what you will

accomplish in the future
Forces you to make choices on what you will do
and what you will not do
Pulls the entire organization together around a
single game plan for execution
Broad outline on where resources will get allocated

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January,2016
 Why do Strategic Planning?

If you fail to plan, then you plan to fail be

proactive about the future
Strategic planning improves performance
Counter excessive inward and short-term thinking
Solve major issues at a macro level
Communicate to everyone what is most important

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January,2016
 Fundamental Questions to Ask

Where are we now? (Assessment)

Where do we need to be? (Gap / Future End
State)
How will we close the gap (Strategic Plan)
How will we monitor our progress (Balanced
Scorecard)

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January,2016
 A Good Strategic Plan should . . .

Address critical performance issues

Create the right balance between what the
organization is capable of doing vs. what the
organization would like to do
Cover a sufficient time period to close the
performance gap
Visionary convey a desired future end state
Flexible allow and accommodate change
Guide decision making at lower levels
operational, tactical, individual

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January,2016
 Strategic Planning Model
ABCDE
Where we are Where we want to be How we will do it How are we doing

Assessment Baseline Components Down to Evaluate

Specifics

Environmental Scan Situation Past, Mission & Vision Performance Performance

Present and Future Measurement Management
Background Significant Issues Values / Guiding Targets / Standards of Review Progress
Information Principles Performance Balanced Scorecard
Situational Analysis Align / Fit with Major Goals Initiatives and Take Corrective
Capabilities Projects Actions

SWOT Strengths, Gaps Specific Objectives Action Plans Feedback upstream

Weaknesses, revise plans
Opportunities,
Threats

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January,2016
 Pre-Requisites to Planning

Senior leadership commitment

Who will do what?
What will each group do?
How will we do it?
When is the best time?

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January,2016
 Assessment

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January,2016
 Assessment Model: Assessment
SWOT

Internal
InternalAssessment:
Assessment:Organizational
Organizational
assets,
assets, resources, people,culture,
resources, people, culture,
systems,
systems,partnerships,
partnerships,suppliers,
suppliers,. .. .. .

External
ExternalAssessment:
Assessment:Marketplace,
Marketplace,
competitors,
competitors, social trends,technology,
social trends, technology,
regulatory
regulatory environment, economiccycles
environment, economic cycles. .

SWOT SWOT

Good Points Possible Pitfalls

Easy to Understand Needs to be
Apply at any Analytical and
organizational level Specific
Be honest about your
weaknesses
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January,2016
 Strengths Assessment

Strengths Those things that you do well, the

high value or performance points
Strengths can be tangible: Loyal customers,
efficient distribution channels, very high quality
products, excellent financial condition
Strengths can be intangible: Good leadership,
strategic insights, customer intelligence, solid
reputation, high skilled workforce
Often considered Core Competencies Best
leverage points for growth without draining your
resources
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January,2016
 Weaknesses Assessment

Weaknesses Those things that prevent you from

doing what you really need to do
Since weaknesses are internal, they are within
your control
Weaknesses include: Bad leadership, unskilled
workforce, insufficient resources, poor product
quality, slow distribution and delivery channels,
outdated technologies, lack of planning, . . .

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January,2016
 Opportunities Assessment

Opportunities Potential areas for growth and

higher performance
External in nature marketplace, unhappy
customers with competitors, better economic
conditions, more open trading policies, . .
Internal opportunities should be classified as
Strengths
Timing may be important for capitalizing on
opportunities

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January,2016
 Threats Assessment

Threats Challenges confronting the organization,

external in nature
Threats can take a wide range bad press
coverage, shifts in consumer behavior, substitute
products, new regulations, . . .
May be useful to classify or assign probabilities to
threats
The more accurate you are in identifying threats,
the better position you are for dealing with the
sudden ripples of change

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January,2016
 Baseline

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January,2016
 Why create a baseline? Baseline

Puts everything about the organization into a

single context for comparability and planning
Descriptive about the company as well as the
overall environment
Include information about relationships
customers, suppliers, partners, . . .
Preferred format is the Organizational Profile

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January,2016
 Organizational Profile Baseline
1. Operating Environment

Products and Services Suppliers, Delivery

Channels, Contracts, Arrangements, . . .
Organizational Culture Barriers, Leadership,
Communication, Cohesiveness . . . .
Workforce Productivity Skill levels, diversity,
contractors, aging workforce, . . .
Infrastructure Systems, technology, facilities, . .
Regulatory Product / Service Regulation, ISO
Quality Standards, Safety, Environmental, . . .

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January,2016
 Organizational Profile Baseline
2. Business Relationships

Organizational Structure Business Units,

Functions, Board, Management Layers, . . .
Customer Relationships Requirements,
Satisfaction, Loyalty, Expectations, . . .
Value Chain Relationship between everyone in
the value chain . . . .
Partner Relationships Alliances, long-term
suppliers, customer partnerships, . . .

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January,2016
 Organizational Profile Baseline
3. Key Performance Categories

Customer
Products and Services
Financial
Human Capital
Operational
External (Regulatory Compliance, Social
Responsibility, . . . )

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January,2016
 Gap Analysis Baseline

Baseline / Org Profile Challenges / SWOT

Gap
Gap == Basis
Basis for
for Long-
Long-
Term
Term Strategic
Strategic Plan
Plan
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January,2016
 Components

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January,2016
 Major Components of the Components
Strategic Plan / Down to Action

Strategic Plan

Action Plans
Mission Why we exist
Evaluate Progress

Vision What we want to be

Goals What we must achieve to be successful

Objectives O1 Specific outcomes expressed in

O2
measurable terms (NOT
activities)
Initiatives Planned Actions to
AI1 AI2 AI3 Achieve Objectives

Measures Indicators and

M1 M2 M3 Monitors of success

Targets T1 T1 T1 Desired level of

performance and
timelines
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January,2016
 Mission Statement Components

Captures the essence of why the organization

exists Who we are, what we do
Explains the basic needs that you fulfill
Expresses the core values of the organization
Should be brief and to the point
Easy to understand
If possible, try to convey the unique nature of your
organization and the role it plays that differentiates
it from others

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January,2016
 Examples Good and Bad Components
Mission Statements

NASA
To Explore the
Universe and Search
Does a good job of expressing the core
for Life and to
Inspire the Next
values of the organization. Also conveys
Generation of unique qualities about the organization.
Explorers

Walt Disney

Too vague and and unclear. Need more

To Make People Happy
descriptive information about what makes
the organization special.

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January,2016
 Vision Components

How the organization wants to be perceived in the

future what success looks like
An expression of the desired end state
Challenges everyone to reach for something
significant inspires a compelling future
Provides a long-term focus for the entire
organization

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January,2016
 Guiding Principles and Values Components

Every organization should be guided by a set of

values and beliefs
Provides an underlying framework for making
decisions part of the organizations culture
Values are often rooted in ethical themes, such as
honesty, trust, integrity, respect, fairness, . . . .
Values should be applicable across the entire
organization
Values may be appropriate for certain best
management practices best in terms of quality,
exceptional customer service, etc.

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January,2016
 Examples of Components
Guiding Principles and Values

We
Weobey
obeythe
thelaw
lawand
anddo
donot
notcompromise
compromisemoral
moralor
orethical
ethicalprinciples
principlesever!
ever!
We
Weexpect
expectto
tobe
bemeasured
measuredby bywhat
whatwe
wedo,
do,as
aswell
wellasaswhat
whatwewesay.
say.

We
Wetreat
treateveryone
everyonewith
withrespect
respectand
andappreciate
appreciateindividual
individualdifferences.
differences.
We
We carefully consider the impact of business decisions onour
carefully consider the impact of business decisions on ourpeople
peopleand
andwe
we
recognize exceptional contributions.
recognize exceptional contributions.

We
Weare
arestrategically
strategicallyentrepreneurial
entrepreneurialininthe
thepursuit
pursuitof
ofexcellence,
excellence,encouraging
encouragingoriginal
original
thought and its application, and willing to take risks based on sound business
thought and its application, and willing to take risks based on sound business
judgment.
judgment.

We
Weare
arecommitted
committedto toforging
forgingpublic
publicand
andprivate
privatepartnerships
partnershipsthat
thatcombine
combinediverse
diverse
strengths, skills and resources.
strengths, skills and resources.

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January,2016
 Goals Components

Describes a future end-state desired outcome

that is supportive of the mission and vision.
Shapes the way ahead in actionable terms.
Best applied where there are clear choices about
the future.
Puts strategic focus into the organization specific
ownership of the goal should be assigned to
someone within the organization.
May not work well where things are changing fast
goals tend to be long-term for environments that
have limited choices about the future.

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January,2016
 Developing Goals Components

Cascade from the top of the Strategic Plan

Mission, Vision, Guiding Principles.
Look at your strategic analysis SWOT,
Environmental Scan, Past Performance, Gaps . .
Limit to a critical few such as five to eight goals.
Broad participation in the development of goals:
Consensus from above buy-in at the execution
level.
Should drive higher levels of performance and
close a critical performance gap.

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January,2016
 Examples of Goals Components

Reorganize
Reorganizethe
theentire
entireorganization
organizationfor
forbetter
betterresponsiveness
responsivenessto
tocustomers
customers

We
Wewill
willpartner
partnerwith
withother
otherbusinesses,
businesses,industry
industryleaders,
leaders,and
andgovernment
government agencies
agenciesin
in
order
orderto
tobetter
bettermeet
meetthe
theneeds
needsof
ofstakeholders
stakeholdersacross
acrossthe
theentire
entirevalue
valuestream.
stream.

Manage
Manageour
ourresources
resourceswith
withfiscal
fiscalresponsibility
responsibilityand
andefficiency
efficiencythrough
throughaasingle
single
comprehensive
comprehensiveprocess
processthat
thatisisaligned
alignedto
toour
ourstrategic
strategicplan.
plan.

Improve
Improvethe
thequality
qualityand
andaccuracy
accuracyof
ofservice
servicesupport
supportinformation
informationprovided
providedto
toour
our
internal customers.
internal customers.

Establish
Establishaameans
meansby
bywhich
whichour
ourdecision
decisionmaking
makingprocess
processisismarket
marketand
andcustomer
customer
focus.
focus.

Maintain
Maintainand
andenhance
enhancethe
thephysical
physicalconditions
conditionsof
ofour
ourpublic
publicfacilities.
facilities.

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January,2016
 Objectives Components

Relevant - directly supports the goal

Compels the organization into action
Specific enough so we can quantify and measure the
results
Simple and easy to understand
Realistic and attainable
Conveys responsibility and ownership
Acceptable to those who must execute
May need several objectives to meet a goal

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January,2016
 Goals vs. Objectives Components

GOALS OBJECTIVES

Very short statement, few Longer statement, more

words descriptive
Broad in scope Narrow in scope
Directly relates to the Mission Indirectly relates to the Mission
Statement Statement
Covers long time period Covers short time period (such 1
(such as 10 years) year budget cycle)

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January,2016
 Examples of Objectives Components

Develop
Developaacustomer
customerintelligence
intelligencedatabase
databasesystem
systemto
tocapture
captureand
andanalyze
analyzepatterns
patternsin
in
purchasing behavior across our product line.
purchasing behavior across our product line.

Launch
Launchatatleast
leastthree
threevalue
valuestream
streampilot
pilotprojects
projectsto
tokick-off
kick-offour
ourtransformation
transformationto
toaa
leaner
leanerorganization.
organization.

Centralize
Centralizethe
theprocurement
procurementprocess
processfor
forimprovements
improvementsin
inenterprise-wide
enterprise-widepurchasing
purchasing
power.
power.

Consolidate
Consolidatepayable
payableprocessing
processingthrough
throughaaP-Card
P-CardSystem
Systemover
overthe
thenext
nexttwo
twoyears.
years.

Monitor
Monitorand
andaddress
addressemployee
employeemorale
moraleissues
issuesthrough
throughan
anannual
annualemployee
employeesatisfaction
satisfaction
survey across all business functions.
survey across all business functions.

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January,2016
 Down to
Specifics

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January,2016
 Down to
What are Action Plans? Specifics

The Action Plan identifies the specific steps that will be taken to achieve the
initiatives and strategic objectives where the rubber meets the road
Each Initiative has a supporting Action Plan(s) attached to it
Action Plans are geared toward operations, procedures, and processes
They describe who does what, when it will be completed, and how the
organization knows when steps are completed
Like Initiatives, Action Plans require the monitoring of progress on Objectives,
for which measures are needed

Objectives

Initiatives

Action
Plans
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January,2016
 Down to
Characteristics of Action Plans Specifics

Assign responsibility for the successful completion of the Action Plan. Who is
responsible? What are the roles and responsibilities?
Detail all required steps to achieve the Initiative that the Action Plan is
supporting. Where will the actions be taken?
Establish a time frame for the completion each steps. When will we need to
take these actions?
Establish the resources required to complete the steps. How much will it take
to execute these actions?
Define the specific actions (steps) that must be taken to implement the
initiative. Determine the deliverables (in measurable terms) that should result
from completion of individual steps. Identify in-process measures to ensure
the processes used to carry out the action are working as intended. Define the
expected results and milestones of the action plan.
Provide a brief status report on each step,
step whether completed or not. What
communication process will we follow? How well are we doing in executing our
action plan?
Based on the above criteria, you should be able to clearly define your action
plan. If you have several action plans, you may have to prioritize.

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January,2016
 Down to
Action Plan Execution Specifics

Requires that you have answered the Who, What, How,

Where, and When questions related to the project or
initiative that drives strategic execution
Coordinate with lower level sections, administrative and
operating personnel since they will execute the Action
Plan in the form of specific work plans
Assign action responsibility and set timelines Develop
working plans and schedules that have specific action
steps
Resource the project or initiative and document in the
form of detail budgets (may require reallocation prior to
execution)
Monitor progress against milestones and measurements
Correct and revise action plans per comparison of actual
results against original action plan
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January,2016
 Quantify from Action Level Up Down to
in terms of Measurements Specifics

Measure your milestones short-term outcomes at

the Action Item level.
Measure the outcomes of your objectives.
Try to keep your measures one per objective.
May want to include lead and lag measures to
depict cause-effect relationships if you are
uncertain about driving (leading) the desired
outcome.
Establish measures using a template to capture
critical data elements

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January,2016
 Down to
Criteria for Good Measures Specifics

Integrity Complete; useful; inclusive of several types of

measure; designed to measure the most important activities
of the organization
Reliable: Consistent
Accurate - Correct
Timely Available when needed: designed to use and report
data in a usable timeframe
Confidential and Secure: Free from inappropriate release or
attack
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January,2016
 Examples of Measurements Down to
Lead Indicators Specifics

Average time to initiate customer contact =>

shorter time should lead to better customer
service
Average response time to incident => below
average response times should lead to
increased effectiveness in dealing with
incident
Facilities that meet facility quality A1 rating =>
should lead to improved operational
readiness for meeting customer needs

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January,2016
 Examples of Measurements Down to
Lag Indicators Specifics

Overall customer satisfaction rating => how

well you are doing looking back
Business Units met budgeted service hour
targets => after the fact reporting of service
delivery volume
Number of category C safety accidents at
construction sites => historical report of what
has already taken place

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January,2016
 Down to
Targets Specifics

For each measurement, you should have at

least one target
Targets should stretch the organization to
higher levels of performance
Incremental improvements over current
performance can be used to establish your
targets
Targets put focus on your strategy
When you reach your targets, you have
successfully executed your strategy
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January,2016
 Down to
Sanity Check . . . Specifics

Make sure everything is linked and connected for a

tight end-to-end model for driving strategic
execution.

OBJECTIVE
Improve Employee
Satisfaction

MEASURE / TARGET
Measure 90%
Employee
Percent Satisfaction

Satisfaction gap INITIATIVE

Survey ACTION PLAN
45%
Rating
Employee
Identify issues per
Target Productivity
90% a company wide
Improvement
favorable survey
Target Actual Program
overall

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January,2016
 Evaluate

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January,2016
 Continuous Feedback Evaluate
through the Balanced Scorecard

Cascade and align from the top to create a

Strategic Management System.
Use the Balanced Scorecard framework to
organize and report actionable components.
Use the Scorecard for managing the
execution of your strategy.
Scorecard forces you to look at different
perspectives and take into account cause-
effect relationships (lead and lag indicators)
Improves how you communicate your
strategy critical to execution.
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January,2016
 Performance Management Evaluate
D2-D5: Build the Balanced Scorecard

Establish a regular review cycle using your balanced

scorecard.
Analyze and compare trends using graphs for rapid
communication of performance.
Dont be afraid to change your metrics life cycle
(inputs to outputs to outcomes)
Work back upstream to revise your plans: Action Plans
> Operating Plans > Strategic Plans
Planning is very dynamic must be flexible to change.
Recognize and reward good performance results
Brainstorm and change take corrective action on poor
performance results.

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January,2016
 Automating the Process Evaluate
D2-D5: Build the Balanced Scorecard
Low Cost Scorecard Tools
1. Dialog (www.balancedscorecard2.com)
2. Ergometrics (www.ergometrics.com)
3. ExecDash (www.idashes.net)
4. Scorecard Hosting (www.scorecardhosting.com)

High End Best of Breed Tools

1. PB Views (www.pbviews.com)
2. QPR (www.qpronline.com)
3. Rocket (www.rocketsoftware.com/portfolio/epm)

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January,2016
 Link Budgets to Strategic Plan Evaluate

The worlds best Strategic Plan will fail if it is

not adequately resourced through the
budgeting process
Strategic Plans cannot succeed without
people, time, money, and other key resources
Aligning resources validates that initiatives and
action plans comprising the strategic plan
support the strategic objectives

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January,2016
 What Resources? Evaluate
How to Link?

Every Action Plan should identify the following:

The people resources needed to succeed

The time resources needed to succeed

The money resources needed to succeed

The physical resources (facilities, technology, etc.) needed to
succeed
Resource information is gathered by Objective Owners which is provided
to the Budget Coordinators for each Business Unit.
Resources identified for each Action Plan are used to establish the total
cost of the Initiative.
Cost-bundling of Initiatives at the Objective level is used by our Business
Unit Budget Coordinators to create the Operating Plan Budget

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January,2016
 Some Final Thoughts

Integrate all components from the top to the

bottom: Vision > Mission > Goals > Objectives >
Measures > Targets > Initiatives > Action Plans >
Budgets.
Get Early Wins (Quick Kills) to create some
momentum
Seek external expertise (where possible and
permissible)
Articulate your requirements to senior leadership if
they are really serious about strategic execution

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January,2016
 Thank you !

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January,2016