Your 15-point strategic planning checklist – Part 2

I recently began a series of blog posts aimed at helping you objectively evaluate your planning process and identify potential issues and risks that may exist in your organisation’s current planning world. I gave you a list of questions and asked you to do your best to give a first-impression “yes” or “no” answer to each. I then explained why “yes” is the preferred answer to question 1. In today’s post I will help you evaluate your responses to questions 2 and 3.

Question 2:

Were all strategic goal candidates systematically prioritised to ensure that the right goals were selected?

Hopefully, you were able to answer “yes” to this question. Applying a systematic prioritisation method as part of the strategic planning process serves as a filter and a compass, helping to separate wants or 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 organisation?
  • Satisfaction – On a scale of 1-10, what is the organisation’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 organisation 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 goals get deferred.

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. The remaining 80% will go into the backlog and be readdressed each time the plan is refreshed.

Such an approach allows the organisation to update the plan quarterly and to use data inputs based on real-time and accurate information.

Question 3:

Does your plan time frame (not your strategy) span more than 12 months?

In this time of economic uncertainty, and in view of 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 and take more than 12 months to accomplish. However, the plan tactics to accomplish corporate strategy are more effective in shorter time frames. You should therefore consider a shorter and more impactful planning horizon to attune 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 to 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 on which to base decisions.

Having a three-year strategic plan is not considered a bad thing. I am just recommending that the strategic plan be updated quarterly along with operational plans. Utilisation 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.

My next post will help you evaluate your responses to questions 4 and 5. For clarification of any of the points mentioned above, email me or call me on 020 7099 2621.