Strategic Management: 3 Steps to the Cycle of Success
Actions Speak Louder than Words
Even effective strategic planning efforts that result in the best and most appropriate decisions for a companys long term success can come up short on delivering performance improvements if they do not have the necessary support. Strategic Management, a three-step process that includes Planning, Execution, and Monitoring, is a more powerful means of optimizing the long-term performance of an organization. The last key to success is Repetition of the process.
A survey by Bain & Company, featured in our last issue of Compass Points, indicated that Strategic Planning was the top choice of senior executives as a business improvement tool. In spite of its popularity, 8% of the respondents in the survey were dissatisfied with how well strategic planning met their expectations. Perhaps some of these users actually did a poor job with the planning process itself or chose an inappropriate planning model for their business, but certainly some of them merely stopped after a successful planning and failed to follow through with the rest of the strategic management process.
Successful Strategic Management must not end with the last annual meeting or with the final compilation of the strategic planning document.
Successful strategic management must not end with the last annual planning meeting or with the final compilation of the strategic planning document. Once the strategies are chosen and the implementation plan is outlined, the entire organization must follow through with the execution of the plans objectives and the periodic monitoring of implementation progress and changes in the business environment. In this way, the managers maintain accountability for meeting their commitments and the ability to make changes to the plan as the environment changes.
To continue to build upon and leverage the success of the strategic management system, the team then repeats the planning process. With each iteration, they become more skilled with the planning tools, more aware of their capacity for effective change and more confident in their ability to understand their business environment and make the right decisions for their future.
Failing to plan is planning to fail
Imagine you are the head coach of a professional football team and you have just sent your captains onto the field to observe the coin toss minutes before the kick off for the Superbowl. Imagine further that you and the team had spent the past week enjoying the pre-game hype, talking to reporters, relaxing around the hotel pool and treating yourselves to frequent nights on the town. After all, you played well all year - certainly the team has demonstrated that it knows how to win. You have had such a good time for seven days that you suddenly realize that you are not quite sure who your opponent is. You seem to recall reading somewhere that they have routed three other teams in the playoffs by a combined score of 137 to 6. You have been so busy with other things that you forgot to decide what offensive scheme will work best and have not figured out what you will do to stop the best rushing team in the league (or was it passing that they were good at?).
It occurs to you mid-way through the third quarter, trailing 69 to 3, that you really prepared the team well for this slaughter. By putting off that coaching staff meeting at the beginning of the week, you actually paved the way for new Superbowl records for points scored in a quarter (none of them yours), penalty yards incurred and largest margin of victory. This is not the way it was supposed to be when you earned your shot at sports greatness. By not planning at all, you effectively planned for failure!
Like the coaching staff in the above scenario, senior management in any enterprise is responsible for the long-term success of the company. Their top priority is to establish Vision (course and direction), Structure (organizational makeup and allocation of resources) and Culture (the values and personality of the organization that will motivate people to do their best work). If the management team does not shoulder this burden, if the planning process is not actively pursued, then it occurs on an ad hoc basis. Strategy is then determined by one individuals vision of the future or is a by-product of the day to day unstructured interactions of the management team. This strategy-through-meetings-in-the-hallway approach often serves the needs of the simpler, smaller business for a limited amount of time. Once the enterprise grows and becomes more complex, or its markets mature and competition stiffens, the managers begin to realize that they can no longer make do with casual, informal planning.
If not formalized in some way (planning meetings and strategy document), then the plan is less likely to be well thought out and less likely to generate buy-in and enthusiastic follow-through. Organized, formal strategic planning allows for a methodical consideration of the information required to understand the business environment, a structured analysis of that information, thoughtful decision-making and realistic implementation planning.
Importance of Strategy vs. Tactics
It is important that we briefly discuss the difference between strategic and tactical planning. Consider participating in a sailing regatta. One can prepare ones vessel and team to be absolutely the best in the race. The skipper can know every sail configuration and every wind-reading technique for making the boat knife through the water at the greatest speed. The crew can be ready to execute every command at a moments notice. This preparation in no way ensures successful performance if the captain and crew have no sense of the final destination and the best course and direction to take to get there.
Without some strategic vision of the race, it is likely that their overall strategy will be one of watching their competition, taking the same general course, reacting to competitive heading changes and then hoping that once the destination becomes apparent, they are in the right position to win the race. Merely sailing the boat and making great speed (tactical execution) can be meaningless if the vessel is not moving in the direction of a desirable destination (strategic direction).
Similarly, running a business without a destination in mind (beyond responding to the next customer complaint, reacting to the latest competitive move or kicking the next unit of production out the door) can yield equally unremarkable results.
The longest journey begins with but a single step
Granted, it is often difficult to find time in our hectic lives, but if the business leaders do not schedule the meetings and get the process started, then it will certainly never be completed.
The first thing that the management team should do is examine the annual cycle of their business and decide on the best time to plan. For some, it is best to conduct strategic planning immediately preceding their annual budgeting process. This affords them long-term perspective and helps make certain that the strategic objectives will receive proper funding.
Running a business without a destination in mind...can yield equally unremarkable results.
For other companies, due to the time and energy requirements of the annual budgeting process, the management team prefers to schedule the strategic planning meetings at another time of the year. For still other companies, some urgent situation in the business environment may compel them to start planning immediately, regardless of the timing of other annual events at the firm.
Once you have determined what time of year will best serve the needs of your business, then find the required meeting time on your managers schedules and get going! Do not just keep hoping for a lull in everyones schedule. Choose the strategic planning team, find the dates that work and put those dates on everyones calendar.
Make a firm commitment to both the initiation and completion of the strategic planning process. Develop this commitment with the team by keeping them focused on the destination: A clear enunciation of the companys vision for the next 3 to 5 years. Communicate the scope of the planning process, a clear set of the expected deliverables and an understanding of what each team members role and responsibility will be.
If it is your teams first time through strategic planning, make sure that you introduce the process properly. Give the team an overview of how the process will be conducted. Make it clear to all team members that this is not just an intellectual exercise. Your intentions at the onset of the planning process are to follow-through with the decisions made by the team. If you are the General Manager of the strategic business unit, then clearly, your participation in the process is critical in ensuring that the decisions made by the team will not deviate into the realm of the unreasonable or unacceptable. The decisions are ideally the product of a consensus-based selection process but are not necessarily the result of a pure democracy.
Perform the planning
Once you have the commitment of the CEO and the rest of the management team and the meeting times are set, perform the planning. Make sure that the process you have chosen to guide your planning efforts is sound and that you believe it will be the best way to achieve your desired results. Schedule your meetings offsite and make sure that you manage the agenda for each gathering to stay on schedule. Completing and acting upon an imperfect plan is much more preferred than striving for perfection and never finishing (and, consequently, never taking decisive action).
Therefore, do not expect perfection the first time through. The perfect plan does not exist. DO expect the following:
- Better understanding of your business
- Clear statement of your desired long term vision
- Specific steps that you believe will take you there
- Planning of the resources needed to make the journey
Plan the Dive, Dive the Plan
This, the mantra of all scuba divers, describes one of the most important guidelines for conducting a safe and successful diving trip. In spite of the enjoyment that comes from observing the exotic reef life of some Caribbean island, every dive is potentially a life and death situation, so, it is extremely important to follow through with the pre-dive plan.
Before each dive, the dive master explains the topography of the dive site, the depth of the dive, and the time that all divers on the trip should stay down. It is critical that everyone on the team understands and agrees upon the details of the plan.
Once under water, conducting detailed communication about changing the plan is difficult. It is each divers responsibility to follow the plan and stick with the group. It is important not to deviate and drift away from the dive team even if you see some interesting reef life off the agreed upon path.
Similarly, in the real world of daily business management, as you implement your strategic plan, people will want to diverge. It is very easy to be knocked off course by a compelling ripple in the tides of the business environment. It takes discipline to stay on track. The management team must make the commitment to stay focused on the agreed upon plan. They should only make significant changes to the plan after careful consideration as to overall implications and consequences of the change.
Typically, our available resources are fully consumed by two general activities:
- Maintaining ongoing business activities
- Working on our strategic initiatives
Taking on additional projects often means that something originally on the plan agenda will be deprived of critical resources and will falter, if not fail altogether. As with the scuba diving adventure, there will be time to review the plan and make adjustments - and this is a vital part of any living, dynamic strategic plan - but the time to do this is clearly not while you are underwater.
In spite of the potential seriousness of every scuba dive, once you have the buy-in of your colleagues, it is easy to stick to the plan. After all, you are having fun! This is not always the case when implementing a business plan. This part of the strategic management process involves a lot of hard work! Because of this, it is much more difficult to maintain energy and enthusiasm to carry on the implementation as planned. After completing the planning portion of the annual cycle, it is quite common for the team to be energized by their confidence in the plan and their new found sense of control over their destiny. The team begins the implementation effort brimming with optimism and eagerness. The planning effort itself is the interesting and intellectually stimulating part of the process, but now comes the real challenge: Its time to go to work! Actually committing the resources, making the time, uncovering and addressing obstacles - this is the hardest part and, certainly, provides the biggest challenge to diving the plan.
Execute the Implementation Plan
Usually, in order to have the resources (cash and people) to support the implementation of your strategic objectives, a company must give first priority to maintaining the healthy operation of their existing business (business as usual). In spite of the immediacy of these resource requirements, it is essential that you find a way to set aside some time to work on the strategic implementation plans (which are, presumably, not business as usual).
Herein lies an important by-product of the strategic management process: Having participated in the planning process, the individual managers on the team can use their understanding of your long-term strategies and goals to make appropriate resource decisions everyday. This enables them to prioritize their fire fighting and, potentially, eliminate some Urgent but Unimportant activities. This can free up the resources needed for attacking strategic objectives. This is why, in spite of the time required to perform the actual planning, strategic management is a net time-saver.
Monitoring Progress and Environmental Changes
If you dont know where you are going, youll probably wind up somewhere else.
Even with a clear implementation plan in place it is quite possible to lose track of whether you are accomplishing what you intended. Imagine the challenge faced by the engineers of the American transcontinental railroad. The strategic vision was that coast to coast rail transportation would unite the two halves of the country. The Central Pacific and the Union Pacific Railroad Companies began their historic roles in the implementation of this vision with the intention to meet somewhere in the middle. They did ultimately succeed when the last spike was driven on May 10th, 1869 in Promontory Summit, Utah.
Though the two companies were united by the same strategic vision, successful implementation was difficult and, in the end, extremely complicated: They actually did not agree upon their final meeting point and passed each other by 200 miles. It took a resolution by both houses of Congress to determine the point at which they would meet. Almost literally, the two companies did not know where they were going - and so they wound up someplace else.
The same holds true for our efforts to implement strategic vision for our companies. During the period of time between repetitions of our formal planning activities (for the majority of companies, an annual occurrence), the managers must monitor the progress made on the strategic objectives and also monitor changes in the business environment. Progress on the objectives during the year is dependent upon following through with the resource commitments made at the conclusion of the annual cycle of planning activities. Periodic review of the implementation plans, which drive strategic change, is critical for measuring progress and maintaining accountability: Are we on track to complete our implementation plans? Are our objectives still the best things we can do to improve our long-term prospects or has something changed in the business environment that would cause us to revise or change objectives?
Most companies find that a monthly review of action plans and a somewhat more in depth quarterly review of their assumptions, strategies and implementation plans is an effective means of keeping the plan moving forward and adjusting course and direction as required.
Tourist in New York City: How do I get to Carnegie Hall?
New York Resident: Practice, practice, practice!
Repeating the strategic planning process is one of the biggest levers for long term success. Once your initial planning effort is completed, your team is likely to be extremely excited about their new found sense of confidence and ability to shape their future. They will then live with the execution and monitoring portions of the strategic management process for one year.
Upon repeating the process the following year, they will naturally see ways to make the plan better. Perhaps they will realize that there were gaps in the market and competitive information. Their assumptions about the future will need to be modified. They may find additional elements to include in the process or new opportunities that deserve their attention and resources.
More important than increased facility with the planning process tools, you will notice that your managers are asking more insightful questions about the future success of the business. They will become more skilled at downplaying the impact of tactical noise in the business environment and more focused on the strategic direction of your enterprise. This skill will not only result in a clearer and richer strategic planning document - it will also carry through in your managers ability to prioritize both their short and long term decisions and activities. This will lead to more effective execution and monitoring of the plan as the following year unfolds.
Just as a childs performance at the piano improves with practice and proper instruction, your management teams performance will get better with each iteration of the strategic management process. Performance in this important cycle of business management just might yield a standing ovation at your next shareholders meeting.Monitoring Process - Quick Reference
Tom Ambler is a Senior Consultant with Center for Simplified Strategic Planning, Inc.
He can be reached via e-mail at