April Showers…Bring Strategic Planning
Spring is a wonderful time of year. It’s a time of rebirth and renewal. It’s the perfect time for you to work on your strategic/long-term plan as an organization. It’s been roughly six months since you completed your annual fall-planning exercise if you are on a calendar year fiscal year, and you won’t be doing next year’s operational plan for another 6 months. It’s time to see what assumptions have changed over the past 6 months.
A well-run organization focuses their day-to-day efforts on weekly and quarterly operational plans. Although I find that I’m normally preaching operational plans in support of strategic plans, we do need to be careful that we do not succumb to the tyranny of the urgent. Operational crises can overwhelm the best-laid long-term plans. If we’re not careful, we can start to focus on the good while we miss out on the best for our team’s future. Healthy strategic planning is vital to an organization’s success by keeping us focused on our long-term destination.
Stephen Covey, in his bestselling book The 7 Habits of Highly Effective People, lists “Begin with the end in Mind” as one of his 7 habits. What this means for healthy organizations is that they should be on a continual path of planning…..strategic planning feeding into annual planning and vice versa. If we diligently and effectively perform this process, we will help to keep our organization focused on what really matters, our long-term vision, our future picture of success.
This planning meeting should be held offsite to visibly remove any daily operational temptations and should be 1-2 days in length, depending on the complexity of the organization.
The process should begin by sizing up where the organization stands relative to its strengths and weaknesses in the marketplace along with an assessment of more macro elements that can affect the organization’s future. SWOT and PESTLE are very helpful frameworks for completing this task, with SWOT focusing on our position in the marketplace relative to our competition and market conditions, and PESTLE focusing more on the macro environmental impacts that may impact the plan.
SWOT – Strengths, Weaknesses, Opportunities, Threats.
PESTLE – Political, Economic, Social, Technological, Legal, Environmental.
The next step is to complete our 10-year plan:
It should start with a vision of the future. To help cast your Vision, remember:
A vision is something you see. What will things look like 10 years from now?
We need to think big. Here are a couple helpful tips to get us in the correct frame of mind:
What is our Big Hairy Audacious Goal (BHAG, as discussed by Jerry Porras and Jim Collins in their book on successful visionary companies, Built to Last)? “A BHAG engages people-it reaches out and grabs them in the gut. It is tangible, energizing, highly focused. People “get it” right away; it takes little or no explanation.”
If you are open to Bible references, contemplate what “Immeasurably More” is for you and your organization – Ephesians 3:20 “Now to him who is able to do immeasurably more than all we ask or imagine, according to his power that is at work within us, ….”. We need to dream big and pray bigger.
What Markets should we be in? Locations?
What Product lines or Services should we be offering?
How are we marketing? Selling?
What do our operations look like?
What investments in personnel, equipment, process or product, and facilities are needed? This should be a rough cash-needs exercise, looking at the amount of cash needed to be invested in the next 10 years.
2 plans should be included in this exercise, a Blessed Beyond Measure plan, and a more realistic plan.
Think of leadership development, leadership transitions, and potential ownership transitions.
With these questions answered, what will our sales and earnings be (think rough Income Statement and Balance Sheet).
10 years is a long way out and can be difficult to relate to. If it just stays a fleeting 10-year plan, what good is it? We need to translate our 10-year plan/vision into a shorter-term proposal that can be more easily acted upon. A more detailed 3-year plan is the perfect next step in the strategic planning process.
The 3-year plan is a subset of the 10-year plan. We need to ask the same questions, going through the exact same exercise we did for 10 years, only with a 3-year time horizon. What will we look like when we arrive at our destination in 3 years, 12/31/27? This plan will be more in-depth and should include a detailed proforma Income Statement along with Cash Flow Analysis and Balance Sheet. And finally, as with the 10-year plan, this plan will have 2 scenarios, a blessed beyond measure and more realistic version.
With the 10-year and 3-year plans completed, we can incorporate any adjustments needed into our 3rd and 4th quarter 2024 plans, and we are now positioned well for the fall, when we will use the 3-year plan as input for our 2025 planning process. And the process continues…….
